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bonus share

srikumar (audit staff) (1203 Points)

02 September 2018

my Pvt company has huge reserve and surplus in balance sheet. whether issue of bonus share can I used such reserve and surplus for issue of bonus share ?

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5 Replies

Promod Agarwal (6 Points)
Replied 02 September 2018

Issue of bonus shares is covered under Section 63 of the Companies Act, 2013 read with rule 14 of The Companies (Share Capital and Debentures) Rules, 2014.

Source for issue of Bonus Shares:

As per Section- 63(1) a company may issue fully paid up bonus shares to its members out of following:

A. Free reserves.

B. Securities Premium Account.

C. Capital Redemption Reserve Account.

Source from which Bonus Shares can’t issue:

A. No issue of bonus shares shall be made capitalizing reserves created by the revaluation of assets. (Company can’t issue Bonus Shares out of reserve create from revaluation of assets).

B. The Company shall not issue shares in lieu of Dividend.

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srikumar (audit staff) (1203 Points)
Replied 02 September 2018

no revaluation reserve from the company, only accumulated profits

Promod Agarwal (6 Points)
Replied 02 September 2018

Free reserve includes accumulated reserve. free reserves includes

Free Reserve includes following items

Profit and loss accounts

General Reserve

Reserve funds

contingency reserve

Dividend equalization reserve

Workmen compensation fund

workmen accident fund