21-05-2012, 12:18 PM
BONUS ISSUE
Conditions for bonus issue.
92. Subject to the provisions of the Companies Act, 1956 or any other applicable law for the time
being in force, a listed issuer may issue bonus shares to its members if:
(a) it is authorised by its articles of association for issue of bonus shares, capitalisation of
reserves, etc.:
Provided that if there is no such provision in the articles of association, the issuer shall pass a
resolution at its general body meeting making provisions in the articles of associations for
capitalisation of reserve;
(b) it has not defaulted in payment of interest or principal in respect of fixed deposits or debt
securities issued by it;
© it has sufficient reason to believe that it has not defaulted in respect of the payment of
statutory dues of the employees such as contribution to provident fund, gratuity and bonus;
(d) the partly paid shares, if any outstanding on the date of allotment, are made fully paid up
Restriction on bonus issue.
93. (1) No issuer shall make a bonus issue of equity shares if it has outstanding fully or partly
convertible debt instruments at the time of making the bonus issue, unless it has made reservation of
equity shares of the same class in favour of the holders of such outstanding convertible debt
instruments in proportion to the convertible part thereof.
(2) The equity shares reserved for the holders of fully or partly convertible debt instruments shall
be issued at the time of conversion of such convertible debt instruments on the same terms or same
proportion on which the bonus shares were issued.
Bonus shares only against reserves, etc. if capitalised in cash.
94. (1) The bonus issue shall be made out of free reserves built out of the genuine profits or
securities premium collected in cash only and reserves created by revaluation of fixed assets shall
not be capitalised for the purpose of issuing bonus shares.
(2) Without prejudice to the provisions of sub-regulation (1), the bonus share shall not be issued in
lieu of dividend.
Completion of bonus issue.
95. (1) An issuer, announcing a bonus issue after the approval of its board of directors and not
requiring shareholders’ approval for capitalisation of profits or reserves for making the bonus issue,
shall implement the bonus issue within fifteen days from the date of approval of the issue by its
board of directors:
Provided that where the issuer is required to seek shareholders’ approval for capitalisation of
profits or reserves for making the bonus issue, the bonus issue shall be implemented within two
months from the date of the meeting of its board of directors wherein the decision to announce the
bonus issue was taken subject to shareholders’ approval.
(2) Once the decision to make a bonus issue is announced, the issue can not be withdrawn.