hello friends
please tell the procedure for issuing bonus shares for a Private Company (unlisted). nd please forward me the necessary drafting, if possible...
thanks & regards manish goyal
manish goyal (article assistant) (24 Points)
19 August 2009hello friends
please tell the procedure for issuing bonus shares for a Private Company (unlisted). nd please forward me the necessary drafting, if possible...
thanks & regards manish goyal
Ankur Garg
(Company Secretary and Compliance Officer)
(114773 Points)
Replied 19 August 2009
Hi Manish,
The Companies Act, 1956 does not contain any provisions dealing with bonus shares. Section 205(3) of the Companies Act, 1956 there is no prohibition on a company to capitalise its profits or reserves for the purpose of issuing fully paid-up bonus shares or paying up any amount, for the time being unpaid, on any shares held by the members of the company.
You need to check whether your Articles of Association contains any restriction on capitalization of profits or reserves for issuing fully paid up bonus shares.
Regulations 96 & 97 of Table A to Schedule I of the Companies Act, 1956 contain provisions relating to capitalisation of profits and reserves of the company. As per these regulations the proposal to issue bonus shares has to be approved by the shareholders of the company in general meeting upon recommendation by the Board of Directors of the company However if these regulations have been excluded from the Articles of Association of the company then it shall be sufficient if the Board approves the bonus issue.
To conclude if your AOA required obtaining shareholders approval then you need to pass Ordinary Resolution and file form 23 along with form 2 for allotment otherwise it shall be sufficient to pass Board resolution for allotment of bonus shares.
Best Regards
Landmark Judgments: Important Provisions of the EPF & ESI Act interpreted by the Honorable Supreme Court of India