Whether Current Year Profit Can be Used for Bonus Issue?

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CA Aashish (Querist)
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04 November 2009 Dear Friends!

Kindly let me know if the current years profit can be used to issue Bonus Share in the case of private com.

If Yes! Please quote the relevant case laws/interprataion. If NO than also!

Regards

CA Aashish
caaashishupadhyay@gmail.com

Ankur Garg

Ankur Garg (Expert)
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04 November 2009 Hi,

Bonus may also be issued from the reserves created out of revaluation of capital
assets

The Supreme Court held in case of Bhagwati Developers v Peerless General Finance & Investment Co. Ltd and Others (2005) 62 SCL 574 (SC) decided on 9th August, 2005 that proviso of section 205(3) permits capitalisation of profit or reserves of a company for the purpose of issuance of fully paid up shares. However, the shares issued by way of capitalisation of revaluation reserves will not be considered for promoters contribution under the SEBI guidelines.

In view of the above current years profit can not be used to issue Bonus Share in the case of private or public company.

Also visit the link below:

https://www.caclubindia.com/experts/experts_message_display.asp?group_id=270180

Regards

CA Aashish

CA Aashish (Querist)
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04 November 2009 Thanks Ankur for your valuable replies!

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