Bonus Issue of Shares - Capitalization of Reserves

Provision for Issuance of Bonus Shares under Companies Act, 2013  

Section 63. (1)  

A company may issue fully paid-up bonus shares to its members, in any manner whatsoever, out of— 

1. its free reserves; 
2. the securities premium account; or 
3. the capital redemption reserve account: 

 

Conditions for issuing Bonus Shares: 

1. It is to be authorised by the AOA 
2. It has on recommendation of the Board and authorised in General Meeting 
3. It has not defaulted in payment of Interest or principal in respect of fixed deposits or debt securities issued by company 
4. It has not defaulted in respect of the payment of statutory dues for the employees such as contribution to pf, gratuity and bonus 
5. The partly paid-up share, if any are to be made fully paid up 

 

Procedural Part: Bonus Issue 

1. Check enabling provisions of AOA 
2. Ensure no defaults in payment of interest/principal w.r.t. fixed deposit, debt securities, statutory dues etc. 
3. Board Meeting to approve Bonus Issue 
4. General Meeting for approval of the shareholders for Bonus Issue 
5. Board Meeting for Allotment of Bonus Shares 
6. Filing ROC form for allotment (PAS-3) 
7. Issue of Share Certificates