XYZ Ltd has a huge amount of reserve in store and proposes to issue bonus shares to the shareholders...........

Companies Act-Phase (I & II) Share capital and debentures

XYZ Ltd has a huge amount of reserve in store and proposes to issue bonus shares to the shareholders. Company had not paid interest since post 3 years. Is the Company eligible to issue Bonus?

Yes

6 m + SR

Application of SEBI

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Explanation:

As per Sec 63 (2) of Companies Act

(2) No company shall capitalise its profits or reserves for the purpose of issuing fully paid-up bonus shares under sub-section (1), 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 may be prescribed.

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