CS Julii Marmat (Practicing Company Secretary and Trademark Agent)’s Post

Understanding the Procedure and Restrictions on Bonus Share Issuance Issuing bonus shares is an exciting milestone for any organization, but it comes with well-defined procedures and regulatory restrictions to ensure transparency and compliance. Here’s a quick overview of the process: 1. Board Approval: The process begins with the approval of the board of directors, ensuring alignment with the company’s financial health and strategic goals. 2. Shareholder Approval: A resolution is passed at the general meeting, seeking the consent of shareholders. 3. Source of Funds: Bonus shares can be issued only from free reserves, securities premium, or surplus profits. 4. Compliance with Laws: Adherence to regulatory guidelines such as those by SEBI (in India) or equivalent authorities is mandatory. 5. Eligibility Cut-off Date: A record date is set to determine eligible shareholders. Restrictions: * Adequate Reserves: The company must ensure sufficient reserves before issuing bonus shares. * No Default: The company must not have defaulted on debt or statutory payments. * Fully Paid-Up Shares: Bonus shares can only be issued for fully paid-up equity shares. * Time Gap: Regulatory authorities may impose restrictions on the frequency of bonus issues. The procedure and restrictions safeguard shareholder interests while maintaining market stability. By following these measures, companies can celebrate growth responsibly and sustainably. #BonusShares #CorporateCompliance #ShareholderEngagement #FinancialGrowth #Transparency