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bonus issue

25 March 2019

under chapter Bonus issue.. Can "Capital reserve" utilise for issue of bonus shares...? CA inter level.. please suggest the answer...

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4 Replies

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 25 March 2019

yes it can be utilized provided they are genuine profits credited to capital reserve

Shivam RC (Student) (23683 Points)
Replied 27 March 2019

As per the Provision of Section 63 of the Companies Act 2013 :

A company may issue fully paid-up bonus shares to its members out of

[i] its free reserves;

[ii] the securities premium account; or

[iii] the capital redemption reserve account:

Provided that no issue of bonus shares shall be made by capitalising reserves created by the revaluation of assets ( Revaluation Reserve ).

Hence, Capital Reserve cannot be utilised for issuing fully paid up Bonus Shares.

Regards.