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2. INTRODUCTION
1. WHEN THE ADDITIONAL SHARE ARE TO BE
ISSSUED TO THE EXISTING SHAREHOLDERS
WITHOUT RECEIVING ANY PAYMENT FROM
THEM, ITS CALLED AS “ISSUE OF BONUS
SHARES”.
2. BONUS SHARES ARE ISSUED TO THE EXISTING
SHAREHOLDERS OUT OF THE ACCUMULATED
PROFITS AND RESERVES.
3. BONUS SHARE ARE ALWAYS FULLY PAID UP.

3. PROCESS OF BONUS ISSUE
Check if Articles permit the issue of bonus shares. Else, articles should be
amended.
Check whether bonus issue is within limits of authorized share capital of
the company. Else, memorandum and articles have to be suitably
amended.

4. Convene a Board Meeting to:
• Consider proposal for 'Bonus Issue' and the proportion in which it
should be issued.
• Fix up the date, time and place of the EGM to be convened for
securing the approval of the shareholders.
• Approve date of closing the Register of Members and transfer books.
Issue notices along with the explanatory statement to all members relating
to the above EGM.
Pass an ordinary resolution in the general meeting for issue of bonus
shares.
In case a special resolution is passed (i.e. for alteration of articles), form
MGT-14 to be filed with ROC within 30 days.

5. Convene a Board meeting for allotment of shares.
File form No.PAS - 3 with ROC for Return of Allotment within 30 days
from the date of bonus issue and MGT-14 for issue of securities.
Deliver share certificates to the shareholders within 2 months from the
date of allotment of bonus shares.

6. IMPORTANT POINTS TO
REMEMBER
1. For issue of Bonus shares, following points need to be
checked:
 Company has not defaulted in payment of interest or principal
in respect of fixed deposits or debt securities issued;
 It has not defaulted in respect of the payment of statutory dues
of the employees such as contribution to provident fund,
gratuity and bonus;
 The partly paid-up shares, if any outstanding on the date of
allotment are made fully paid up.
 The bonus shares shall not be issued in lieu of dividend.

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