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 issue of bonus shares by capitalizing reserves created by the revaluation of assets.
Prior Conditions Before Issuing Bonus Shares
- Authorised by AOA;
- Recommended by Board and approved by members ;
- No default in payment of interest, principle of fixed deposit, or debt securities issued
- No default in payment of statutory dues of employees.
- No partly paid up shares
- Once recommended by the board cannot be withdrawn (RULE:14)
NOTE: No bonus in lieu of dividend is allowed.
PROCEDURE FOR BONUS ISSUE
- Convene a Meeting of the Board of Directors.
- Convene Extra Ordinary General Meeting.
- Filing Form MGT-14 with ROC: within 30 days of passing SR
Attachments:
- CTC of BR
- CTC of SR
4. Filing Form PAS-3 with ROC [Section 39(4) & Rule 12]:
The Company shall file Form PAS-3 within 30 days of passing of the resolution for allotment of shares with following attachments:
- Copy of Resolution passed in General Meeting authorizing the issue of bonus shares
- Copy of Board Resolution for Allotment of Shares
- List of Allottees
- Any other mandatory attachment if any.
5. Issue of Shares Certificates: within 2 months.
6. Maintenance of Register of Members.
out of -
(i) its free reserves
(ii) the securities premium account; or
(iii) the capital redemption reserve account:
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