Board Resolution: Bonus Issue of Shares (Section 63)
Recommend a bonus issue at a board meeting, with the ratio, the reserves to be capitalised and the record date.
What it is
A bonus issue capitalises reserves into fully paid shares issued free to existing shareholders in proportion to their holding. Under Section 63 of the Companies Act, 2013, bonus shares can be issued only out of free reserves, the securities premium account or the capital redemption reserve, not out of revaluation reserves, and only if the articles authorise it and the members approve it in a general meeting on the board's recommendation.
When it is used
- Capitalising accumulated reserves.
- Increasing the share capital before an investment or listing.
- Rewarding shareholders without cash outflow.
What the template covers
- Company name, CIN and meeting details
- Bonus ratio and record date
- Existing and bonus shares
- Face value
- Source of the bonus issue
- Recommendation to members and authorisation
Details you will need
The generator asks for the following. Fields marked with an asterisk in the form are required; the rest can be left blank and filled in later in Word.
Company
Company Name; CIN; Registered Office
Meeting
Board Meeting Date; Place
Bonus Issue
Bonus Ratio; Record Date for Eligibility; Existing Paid-up Equity Shares (number); Bonus Shares to be Issued (number); Face Value per Share (₹)
Source
Source of Bonus Issue
Authentication
Chairman Name; Chairman DIN
Stamp duty, registration and filing
The company must not have defaulted on interest or principal of fixed deposits or debt securities, or on statutory dues to employees. Bonus shares cannot be issued in lieu of dividend. The authorised capital must be enough, or be increased first. The return of allotment is filed in Form PAS-3, and the bonus issue does not attract income-tax on receipt for the shareholder, though the cost of bonus shares is nil for capital gains.
Generate the BR — Bonus Issue of Shares
Fill in the form and download the draft as a Word file. It is a general template, not legal or professional advice; have it reviewed for your facts before you sign or rely on it.
Need this checked against your facts, or the registration or filing that follows (e.g. the related MCA e-form)? Contact SKAG and Associates
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Frequently asked questions
Can bonus shares be issued from revaluation reserves?
No. Only from free reserves, securities premium or capital redemption reserve.
Is a bonus issue taxable for shareholders?
Not on receipt. The cost of acquisition of bonus shares is nil, so the full sale price is a capital gain when sold.
Does a bonus issue need shareholder approval?
Yes, in a general meeting on the board's recommendation.
This page gives general information for reference only. Laws, stamp duty rates and filing requirements change and differ between States, so confirm the current position for your case. Related: all document templates · free tax calculators · compliance calendar and guides.