1Bonus means Issue of Shares by a Company without any consideration.
Bonus Issue: It is an additional dividend given to the shareholders that can be in cash or in the form of stock. When companies have outstanding performance with surplus profit, they may decide to issue bonus to the shareholders.
Capitalisation of Profits: Process of converting profits or reserves into paid-up capital. A company may capitalise its profits or reserves which otherwise are available for distribution as dividends among the members by issuing fully paid bonus shares to the members.
Bonus must be ISSUED AT PAR. Consequent upon bonus issue if the SUBSCRIBED OR PAID UP CAPITAL OF THE COMPANY EXCEEDS THE AUTHORISED CAPITAL, then a resolution shall be passed by the company at its GBM for increasing its authorised capital to that extent.
Return Filed with ROC: A return of bonus issue along with a copy of resolution authorising the issue of bonus shares is also required to be filed with the Registrar of Companies.
Sec. 63(1) of Companies Act, 2013 –
A company may issue FULLY PAID UP bonus shares to its members, in any manner whatsoever, out of—
- its free reserves∗;
- the securities premium account; or
- the capital redemption reserve account:
