{"id":424,"date":"2019-04-05T07:32:24","date_gmt":"2019-04-05T07:32:24","guid":{"rendered":"https:\/\/rta.saginfotech.com\/blog\/?p=424"},"modified":"2020-03-12T09:38:15","modified_gmt":"2020-03-12T09:38:15","slug":"procedure-bonus-issue-of-shares","status":"publish","type":"post","link":"https:\/\/rta.saginfotech.com\/blog\/procedure-bonus-issue-of-shares\/","title":{"rendered":"Complete Procedure for Bonus Issue of Shares by Companies"},"content":{"rendered":"\n<p><strong>Bonus shares<\/strong> are given to the <strong>pre-existing shareholders<\/strong> free of cost in case the company accumulates benefits on earning. This is done to replace the <strong>dividend<\/strong> which has to be given to the shareholders thereby giving them free shares.<\/p>\n\n\n\n<p><strong>As the bonus\nshares capitalize a fraction of the reserve, it is just a bookkeeping\ntransaction and therefore its benefits are:<\/strong><\/p>\n\n\n\n<p>1. The share capital is much more relevant to the employed asset.<\/p>\n\n\n\n<p>2. much more\nmanageable revenues making its ability much more in the market. Even\nthough the  share units increases but the shareholding remains the\nsame prior to the bonus issue which is also known as to be scrip\nissue, bonus shares, or capitalization issue.<\/p>\n\n\n\n<p>While this seems to\nbe in line with the rights issue but unlike the bonus share which is\ngenerated just by money transfer from company reserve to equity\ncapital i.e. the capitalization of reserves. It is beneficial for the\ncompanies having a fruitful revenue reserve and also wants to\ncapitalize liquid assets.<\/p>\n\n\n\n<p>The main agenda for\ncompanies to issue bonus shares is to heighten retail involvement and\nfurther hike the equity base. However, when the share prices\nincrease, the investors may find hard to buy the shares. Also to note\nthat the overall capital of the company will remain the same even if\nthe bonus shares issued.<\/p>\n\n\n\n<p>Earlier when the\nController of Capital issues was in power they were followed by the\ncompanies but when SEBI came into existence, unlisted Private Limited\nCompanies and Public Limited Companies were liberated for issuing\nbonus shares.<\/p>\n\n\n\n<p><strong>And recently the\nCompanies Act, 2013 has added Section 63 for bonus share provision.\nAs per the Companies act 2013, Section- 63(1), the fully paid-up\nbonus shares can be issued when:<\/strong><\/p>\n\n\n\n<p>         A. Free reserves.<\/p>\n\n\n\n<p>         B. Securities Premium Account.<\/p>\n\n\n\n<p>         C. Capital Redemption Reserve Account.<\/p>\n\n\n\n<p><strong>Condition when no\nbonus shares can be issued:<\/strong><\/p>\n\n\n\n<p>         A. Re-valuation of asset-based reserve capitalization<\/p>\n\n\n\n<p>         B. cannot replace dividend with a bonus share<\/p>\n\n\n\n<p><blockquote><p><strong><em>Read More:  <\/em><\/strong><a rel=\"noreferrer noopener\" aria-label=\"Complete Procedure For Dematerialisation Of Shares Under RTA (opens in a new tab)\" href=\"https:\/\/rta.saginfotech.com\/blog\/procedure-dematerialization-of-shares-under-rta\/\" target=\"_blank\"><strong><em>Complete Procedure For Dematerialisation Of Shares Under RTA<\/em><\/strong><\/a><\/p><\/blockquote><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Steps for Issuing of Bonus Shares:<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Call Board Meeting:<\/strong><\/h3>\n\n\n\n<p>As per Section\n173(3) an Issue Notice of at least 7 days for having a meeting of\nBoard of Directors<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Board Meeting Holding:<\/strong><\/h3>\n\n\n\n<ul><li>Quarom as per Section 174(1) requiring Meeting of Board of Directors is 1\/3rd of the total strength of Board or 2 directors, any of them is higher can be taken <\/li><li>Place resolution, pass it and decide the number of bonus share to be issued along with the date, time and venue of general meeting for the announcement of issuance of shares <\/li><li>Section 101 of the Companies Act 2013 is to provide issue of notice of EGM at least 21 days earlier to All the Directors, Members, Auditors of Company. <\/li><li>Notice will be having complete date time and venue of the general meeting as well as the director authorized for the issue of right issue. <\/li><li>A particular statement has to be conveyed as of business discussion in the EGM with place date, day and time of the board meeting<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>File MGT-14:<\/strong><\/h3>\n\n\n\n<p>It is required to\nfile e-form- MGT-14 within 30 days of Passing of Board Resolution for\nthe issue of shares with an attached resolution for issue of shares.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Convene a General Meeting:<\/strong><\/h3>\n\n\n\n<p>After checking out\nthe quorum, and auditor and then to pass Ordinary Resolution for\nbonus issue of shares.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Filling of e-Forms:<\/strong><\/h3>\n\n\n\n<p>File PAS-3 within 30\ndays of the passing of Board Resolution for allotment of shares\nincluding some attachments such as Ordinary Resolution for Bonus\nissue of shares, Board Resolution for allotment of shares, List of\nAllottees. (as per Annexure B of PAS-3)- having Name, Address,\noccupation if any and number of securities allotted to each of the\nallottees and further the list shall be certified by the signatory of\nthe form pas-3.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Issue Share\nCertificates:<\/strong><\/h3>\n\n\n\n<p>The company is\nmandated to issue shares within 2 months from the date of share\nallotment.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Complete Issue of Bonus Share Check-List:<\/strong><\/h2>\n\n\n\n<p><strong>-&gt;<\/strong>Check whether Authorized capital is sufficient for the issue of Bonus Shares.<\/p>\n\n\n\n<ul><li>It is ok if Authorized capital is enough to issue bonus shares <\/li><li>In case the authorized capital is insufficient then first modify the Capital of Company by changes in MOA. <\/li><\/ul>\n\n\n\n<p><strong>-><\/strong>Check out Provision for Bonus issue in Article of Association of Company.<\/p>\n\n\n\n<ul><li>It is ok if AOA authorize to issue Bonus Share <\/li><li>In case AOA does not authorize to issue Bonus Shares then changes required in the Article of Association. <\/li><\/ul>\n\n\n\n<p><strong>-&gt;<\/strong>Check the availability of resources for the issue of Bonus shares.<\/p>\n\n\n\n<p><strong>-&gt;<\/strong>Check Quantum of Bonus shares.<\/p>\n\n\n\n<p><strong>-&gt;<\/strong>Check no default in the payment of interest or principal in respect of fixed deposit or debt securities issued by it.<\/p>\n\n\n\n<p><strong>-&gt;<\/strong>Check no default in the payment of statutory dues of the employees, such as gratuity, contribution to provident fund and bonus.<\/p>\n\n\n\n<p><strong>-&gt;<\/strong>Check is there any partly paid-up share on the date of allotment.<\/p>\n\n\n\n<ul><li>It is ok if\n\tthere are no Party paid-up shares\n\t<\/li><li>In case there\n\tare partly paid up share, then first change them to fully paid-up\n\tshares.\n<\/li><\/ul>\n\n\n\n<p><div class=\"sagrta-box\">\n<h2>Dedicated SAG RTA Team to Handle Client Transactions and Queries <\/h2>\n<p>Appoint SAG RTA as Your RTA Service Provider Now<\/p>\n<a href=\"#\" data-toggle=\"modal\" data-target=\"#exampleModal\" rel=\"noopener noreferrer\" class=\"download-free-btn\">Appoint RTA Agent Now<\/a>\n<\/div><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bonus shares are given to the pre-existing shareholders free of cost in case the company accumulates benefits on earning. This is done to replace the dividend which has to be given to the shareholders thereby giving them free shares. As the bonus shares capitalize a fraction of the reserve, it is just a bookkeeping transaction [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":429,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Procedure for Bonus Issue of Shares by Companies | SAG RTA<\/title>\n<meta name=\"description\" content=\"Knowing the complete steps for issuing of bonus shares by companies. 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