Bonus SHares

nope we can't issue bonus share from capital reserve but it can be issued from free reserves

• Profit and loss account
• general reserve
• revenue reserve

it cannot be issued from non cash reserves...bonus shares can be issued only through cash reserves,.....like revaluation reserve ,....

agree with jyotsana..

The Various sources of for bonus shares are as follows:-

1- Capital Redemption Reserve( Sec.80)

2- Securities Premium( realized in cash only)-{Sec.78}

3- Capital Reserve (realized in cash only)-{ SEBI Guidelines}

4- General Reserve

5- P & L (Cr. balance)

The above order is as per its objective & utility.

Originally posted by : Sneha..sunshine..
	it cannot be issued from non cash reserves...bonus shares can be issued only through cash reserves,.....like revaluation reserve ,.... agree with jyotsana..

Revaluation reserve( revaluing fixed assets) are not taken for bonus issue{ SEBI Guidelines}. The creation of this reserve is a mere book entry. It does not yield any flow of cash.

The items mentioned above in serial order are more so related to flow of cash. The objective behind bonus issue is to strengthen capital structure without creating any burden on liquidity by artificial transfers.

i agree with Faiz Ahmed..

Well Explained by Faiz.

Originally posted by : Faiz Ahmed
	Originally posted by : Sneha..sunshine.. it cannot be issued from non cash reserves...bonus shares can be issued only through cash reserves,.....like revaluation reserve ,.... agree with jyotsana.. Revaluation reserve( revaluing fixed assets) are not taken for bonus issue{ SEBI Guidelines}. The creation of this reserve is a mere book entry. It does not yield any flow of cash.   The items mentioned above in serial order are more so related to flow of cash. The objective behind bonus issue is to strengthen capital structure without creating any burden on liquidity by artificial transfers.

thanks faiz ji..by mistake i gave the wrong example..u are 100% correct....only cash reserves can be used....thanks

ya , i forget this point as highlighted by faiz

fully agreed with faiz

Originally posted by : Faiz Ahmed
	The Various sources of for bonus shares are as follows:- 1- Capital Redemption Reserve( Sec.80) 2- Securities Premium( realized in cash only)-{Sec.78} 3- Capital Reserve (realized in cash only)-{ SEBI Guidelines} 4- General Reserve 5- P & L (Cr. balance)     The above order is as per its objective & utility.

I Agree with Faiz Ahmed view. 

Therefore capital reserve can be used if it is realized in cash only as per SEBI Guidelines.

Thanks guys for appreciation.. . I knew some of you replied with slight error by mistake only.. So only I posted to give a correct picture.

CAPITAL RESERVE

This can be only used at the time of  Liquidation of the company

FOR ISSUE OF BONUS SHARE

We Have to Use FIRST CURRENT YEAR PROFIT

If it is not sufficient we can use GENERAL RESERVE Or RETAINED PROFIT

 CONCLUSION

CAPITAL RESERVE Cannot be Used for Issue of BONUS SHARE

you CAN issue fully paid bonus shares from the balances in the securities premium account..

Originally posted by : vinod bhandari
	CAPITAL RESERVE This can be only used at the time of  Liquidation of the company FOR ISSUE OF BONUS SHARE We Have to Use FIRST CURRENT YEAR PROFIT If it is not sufficient we can use GENERAL RESERVE Or RETAINED PROFIT  CONCLUSION CAPITAL RESERVE Cannot be Used for Issue of BONUS SHARE

I am sorry to ask you, from where you got these details.

You said to use first current year profits then ,when will you use CRR , Securities Premium which are having use namely to issue bonus shares and that too specifically mentioned in the Act.

Moreover, as per SEBI Guidelines, no company shall issue any bonus issue in lieu of dividend.

It means current year distributable profits can only go to shareholders in the form of dividend or a reserve can be created but bonus shares cannot be issued.

Hope you got the point.