BONUS SHARES SECTION-63 OF COMPANIES ACT-2013 Part 2

PROCEDURE FOR ISSUE OF BONUS SHARES
STEP-I
Call the Board Meeting:
  • As per Section 173(3): Issue Notice of atleast 7 days for calling meeting of Board of Directors.
STEP-II
Hold the Board Meeting:
  • Check the Quorum as per Section 174(1): Quorum for the Meeting of Board of Directors is 1/3rd of total strength of Board or 2 directors, whichever is higher.
  • Place before the Board Resolution for issue of Bonus Shares.
  • Pass Board Resolution for issue of shares.
  • Decide the Ratio of Shares offering to share holders.
  • Fixing the date, time, and venue of the general meeting and authorizing a director or any other person to send the notice for the same to the members.
  • Provisions of the Section 101 of the Companies Act 2013 provides for issue of notice of EGM in writing to below mentions atleast 21 days before the actual date of the EGM :
    • All the Directors.
    • Members
    • Auditors of Company
  • The notice shall specify the place, date, day and time of the meeting and contain a statement on the business to be transacted at the EGM.
  • Authorize a director to do all the work relating to issue notice of right issue.
STEP-III
File MGT-14:
  • File e-form- MGT-14 with in 30 days of Passing of Board Resolution for issue of shares.
Attachment:
  • Resolution for issue of shares.
STEP-IV
CONVENE A GENERAL MEETING:
  • Check the Quorum.
  • Check whether auditor is present, if not. Then Leave of absence is Granted. (As per Section- 146).
  • Pass Ordinary Resolution for bonus issue of shares.
STEP-V
Call the Board Meeting: As per Section 173(3): Issue Notice of atleast 7 days for calling meeting of Board of Directors.
Hold the Board Meeting
  • Pass Board Resolution for allotment of shares.
STEP-VI
Filling of e-Forms
1. File PAS-3:
  • File e-form PAS-3 with in 30 days of passing of Board Resolution for allotment of shares.
Attachment:
  • Ordinary Resolution for Bonus issue of shares.
  • Board Resolution for allotment of shares.
  • List of Allottees. (for PAS-3)- Mentioning Name, Address, occupation if any and number of securities allotted to each of the allottees and the list shall be certified by the signatory of the form pas-3.
STEP-VII
Issue Share Certificates:
  • Company will issue share certificate to the share holders with in 2 month from the date of allotment of shares.
CHECKLIST FOR ISSUE OF BONUS SHARES
  • Check whether Authorized capital is sufficient for issue of Bonus Shares.
    • If Authorized capital is enough to issue bonus shares then go ahead.
    • If authorized capital is not enough then first alter the Capital of Company by alteration in MOA. (Procedure is given in my another article).
  • Check Provision for Bonus issue in Article of Association of Company.
    • If AOA authorize to issue Bonus Share then it’s ok.
    • If AOA not authorize to issue Bonus Shares then alter the Article of Association.
  • Check availability of resources for issue of Bonus shares.
  • Check Quantum of Bonus shares.
  • Check no default in payment of interest or principle in respect of fixed deposit or debt securities issued by it.
  • Check no default in payment of statutory dues of the employees, such as, contribution to provident fund, gratuity and bonus.
  • Check is there any partly paid up share on the date of allotment.
    • If there is no Party paid up shares then it’s ok.
    • If there are partly paid up share, then first make them fully paid up shares.
CONDITIONS FOR ISSUE OF BONUS SHARES
  • Articles must contain provision for issue of bonus shares [As per Section-63(2) (a)].
  • Bonus issue must be authorised by the members of the company (by passing of Ordinary Resolution) on recommendation of Board.
  • Company should not have defaulted in payment of interest or principal in respect of fixed deposits or debt securities issued by it and no defaulted in respect of the payment of statutory dues of the employees, such as, contribution to provident fund, gratuity and bonus.
This blog is authored by Company Secretary Ronak Gupta. He is author of many blogs and runs many websites and youtube channels. His work is dedicated to corporate laws, legal, secretarial, professional services and also in strategy formulations for corporates. Mail him at: csronakgupta23@gmail.com or call at :9910226715

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