Saturday, February 18, 2012

Can a Private Company issue bonus shares? if so what is the procedure?

Yes Private Company can issue bonus shares by capitalizing the current year profits and accumulated reserves.

Below is the procedure for Bonus issue of shares by Private Company:

1> check the Articles of Association( AOA) of company whether it has clause for capitalization of profits, if AOA does not have alter it by passing special resolution.
2> pass ordinary resolution to issue the bonus shares and specify the no. of shares issues and pro ratio, price at which shares are issued. Resolution should be register with ROC in form-23.
3> conduct board meeting to issue the shares.
4> file return on allotment Form-2 and issue the share certificates with effect to the allotment.

Relevant Sections: Regulation No.96 of TABLE A, 75(2),192,31