Dear All,
Can bonus share be issued from share premium amount?
My company has issued share at a premium during the year. so my question is where the company can issue bonus share during the same year from that share premium amount?
Thanking You,
Tushar Drolia
the provision of section 78(1) would apply for the utilization securities premium for issuing bonus shares. As per the section securities premium account can be used to issue bonus shares as per the section given below:
Application of premiums received on issue of 1[securities].—(1)
Where a company issues 1[securities] at a premium, whether for cash or
otherwise, a sum equal to the aggregate amount or value of the premiums on
those 1[securities] shall be transferred to an account, to be called "the 1[securities]
premium account"; and the provisions of this Act relating to the reduction of the
1[securities] capital of a company shall, except as provided in this section, apply
as if the 1[securities] premium account were paid-up 1[securities] capital of the
company.
(2) The 1[securities] premium account may, notwithstanding anything in subsection
(1), be applied by the company—
(a) in paying up unissued 1[securities] of the company to be issued to
members of the company as fully paid bonus 1[securities];
(b) in writing off the preliminary expenses of the company;
(c) in writing off the expenses of, or the commission paid or discount
allowed on, any issue of 1[securities] or debentures of the company; or
(d) in providing for the premium payable on the redemption of any
redeemable preference 1[securities] or of any debentures of the company.
the provision of section 78(1) would apply for the utilization securities premium for issuing bonus shares. As per the section securities premium account can be used to issue bonus shares as per the section given below:
Application of premiums received on issue of 1[securities].—(1)
Where a company issues 1[securities] at a premium, whether for cash or
otherwise, a sum equal to the aggregate amount or value of the premiums on
those 1[securities] shall be transferred to an account, to be called "the 1[securities]
premium account"; and the provisions of this Act relating to the reduction of the
1[securities] capital of a company shall, except as provided in this section, apply
as if the 1[securities] premium account were paid-up 1[securities] capital of the
company.
(2) The 1[securities] premium account may, notwithstanding anything in subsection
(1), be applied by the company—
(a) in paying up unissued 1[securities] of the company to be issued to
members of the company as fully paid bonus 1[securities];
(b) in writing off the preliminary expenses of the company;
(c) in writing off the expenses of, or the commission paid or discount
allowed on, any issue of 1[securities] or debentures of the company; or
(d) in providing for the premium payable on the redemption of any
redeemable preference 1[securities] or of any debentures of the company.
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