bonus share

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shreepal (Querist)
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13 October 2008 why capital redemption reserve & security premium are not use for convertion of partly paid up share into fully paid up share through issue of bonus share?
please give me reply fast.i am waiting for your reply about it.

Bharath Kumar

Bharath Kumar (Expert)
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14 October 2008 The security premium account can be used only for the 4 purpose mentioned in the Companies Act
- Issue of Fully paid bonus shares
- To write off preliminary expenses
- To write off expenses / commission/ discount on issue of shares or debentures
- For Premium on redemption of redeemable preference shares / debentures

The capital redemption reserve account can be applied by the company, in paying up unissued shares of the company to be issued to members of the company as fully paid bonus shares.

Since the act has stipulated clearly the purpose for which they can be used, we shall not be able to use them for any other purpose

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