How to disclose increase in authorised share capital by way of bonus issue in balance sheet
How to disclose increase in authorised share capital by way of bonus issue in balance sheet
Bonus shares are issued by converting the reserves of the company into share capital. It is nothing but capitalization of the reserves of the company. There are some conditions which need to be satisfied before issuing Bonus shares:
1) Bonus shares can be issued by a company only if the Articles of Association of the company authorizes a bonus issue. Where there is no provision in this regard in the articles, they must be amended by passing special resolution act at the general meeting of the company.
2) It must be sanctioned by shareholders in general meeting on recommendations of BOD of company.
3) Guidelines issue by SEBI must be complied with. Care must be taken that issue of bonus shares does not lead to total share capital in excess of the authorized share capital. Otherwise, the authorized capital must be increased by amending the capital clause of the Memorandum of association. If the company has availed of any loan from the financial institutions, prior permission is to be obtained from the institutions for issue of bonus shares. If the company is listed on the stock exchange, the stock exchange must be informed of the decision of the board to issue bonus shares immediately after the board meeting. Where the bonus shares are to be issued to the non-resident members, prior consent of the Reserve Bank should be obtained.
Anyhow if the capital clause has been amended as reqd above, u just need to show the new authorised capital of the company without giving any reason in the notes or schdule. Only the No. of shares of previous year need to be mentioned in brackets.
E.g:
Authorised share Capital Rs. 10,00,000
10,000 (PY 9000) shares of Rs, 10/- each
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