if company has reserves of 1crore , paid up capital of 1lakh and turnover of 7crore how much amount can be used to issue bonus shares?
What should be the quantum of ratio of bonus issue?
As per Section 63(1) of the Companies Act, 2013,
A company may issue fully paid-up bonus shares to its members, in any manner whatsoever, out of—
(i) its free reserves;
(ii) the securities premium account; or
(iii) the capital redemption reserve account.
As per Section 63(2) of the Act, Company can also capitalise its profits or reserves for the purpose of issuing bonus if:
(a) it is authorised by its articles;
(b) it has, on the recommendation of the Board, been authorised in the general meeting of the company;
(c) it has not defaulted in payment of interest or principal in respect of fixed deposits or debt securities issued by it;
(d) it has not defaulted in respect of the payment of statutory dues of the employees, such as, contribution to provident fund, gratuity and bonus;
(e) the partly paid-up shares, if any outstanding on the date of allotment, are made fully paid-up;
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