Question

Bonus shares can be issued if the __________.

• A. Article of association permit it
• B. Proposal is approved by the shareholders in the general meeting
• C. Issue is made out of free reserves
• D. All of the above

Answer 1

The correct option is D All of the above

As per Section 63 of The Companies Act, 2013:-

A) A company may issue fully paid-up bonus shares to its members in any manner.

Whatsoever out of:

1) its free reserves;

2) the securities premium account; or

3)the capital redemption reserve account:

B) No company shall capitalize its profits or reserves for the purpose of issuing fully paid-up bonus shares unless—

1) it is authorized by its articles;

2) it has, on the recommendation of the Board, been authorized in the general

meeting of the company.