Monika Bahuguna
Quick Summary
Bonus issue under section 63 of Companies Act, 2013 read with rule 14 of companies (Share capital and Debentures) Rules, 2014 A company may issue fully paid bonus shares to its members out of: Free Reserves ; Security Premium Account or Capital Redemption Reserves: However, no issu
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FAQ :
A company can issue bonus shares out of its free reserves, the securities premium account, or the capital redemption reserve account.
No, a company cannot issue bonus shares by capitalising reserves created from the revaluation of assets.
The Articles of Association must authorise it, the Board must recommend it and members must approve it. There should be no default in paying interest, principal on fixed deposits or debt securities, or statutory dues of employees. Also, the company cannot have any partly paid-up shares.
No, once the Board of Directors recommends a bonus issue, it cannot be withdrawn.
The procedure involves convening board and extraordinary general meetings, filing Form MGT-14 with the Registrar of Companies (ROC) within 30 days of passing the special resolution, and filing Form PAS-3 with the ROC within 30 days of allotment.
Share certificates must be issued within two months of the allotment.
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