"A Bonus share is a distribution of capitalized undivided profit having an identity and value capable of being bought and sold." in reference to the…

Pre-requisites for issue of bonus shares As per section 63 (2) of the Companies Act, 2013, no company shall capitalise its profits or reserves for the purpose of issuing fully paid-up bonus shares, unless: a. it is authorised by its Articles, b. it has on the recommendation of the Board, been authorised in the general meeting of the company. c. it has not defaulted in payment of interest or principal in respect of fixed deposits or debt securities issued by it. d. it has not defaulted in respect of the payment of statutory dues of the employees, such as, contribution to provident fund, gratuity and bonus. e. the partly paid-up shares, if any outstanding on the date of allotment, are made fully paid-up. f. it complies with such conditions as prescribed by Rule 14 of the Companies (Share capital and debenture) Rules, 2014, that a company which has once announced the decision of its Board recommending a bonus issue, shall not subsequently withdraw the same.