Hold the general meeting on the day fixed for the meeting and approve the bonus issue by passing the Ordinary Resolution by simple majority in accordance with Section 114 (1) of the Act and to authorize Board of Directors to allot bonus shares.
Convene the General Meeting: The Extraordinary General Meeting must be convened, and the issue of bonus shares must be authorized by passing Ordinary resolution by simple majority as per section 114(1) of the Act and authorize the Board to allow the bonus shares.
Conditions for Issue of Bonus Shares
- The issue of bonus shares must be authorized by the Articles of the company.
- The issue of bonus shares must be recommended by the resolution of the Board of Directors. …
- The Controller of Capital Issues must give permission to the issue.
The Company must be authorized by Articles of Association of the Company to issue bonus shares, if not than the company must alter its Articles of Association as per the provisions of section 14 of the Companies Act, 2013. … The Company shall authorize bonus issue of shares in its General Meeting.
Eligible person to get securities under Preferential Allotment: Any person,if it is authorized by Special Resolution, including person allotted shares under right issue or ESOP therefore it can be said that any person either existing shareholder or outsider is eligible to get securities under preferential allotment.
Is valuation required for bonus issue?
As a result, the intrinsic value of each equity share will always be less after the bonus issue. The company issued one Bonus Share for every five shares held by the Equity Shareholders. You are asked to compute the value of each Equity Share before and after the issue of Bonus shares of the company.
Is MGT 14 required for bonus issue?
File e-Form MGT-14 with the Registrar of Companies regarding board resolution for issuance of bonus shares in case of public companies as private companies are exempted to file board resolution for issuance of bonus shares.
A Company may issue Bonus Shares out of- its free reserves; Securities Premium Account; Capital Redemption Reserve Account. Further, it has been provided that Issue of Bonus Shares shall not be made out of Capitalising Reserves created out of revaluation of Reserves.
Therefore, a Section 8 Company cannot issue bonus shares.
Bonus shares are shares issued to shareholders of a company free of any cost.
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Accounting.
| Debit | Undistributed Profit Reserves / Share Premium Reserve / or Other reserves | Number of bonus shares × nominal value of 1 share |
| Credit | Share Capital Account | Number of bonus shares × nominal value of 1 share |
What is ordinary resolution and special resolution?
Ordinary Resolution is one in which the general meeting requires a simple majority to move the resolution. Special resolution means a resolution that needs a clear majority to approve the resolution at the general meeting. … On the other hand, the special resolution needs at least 75% support for the resolution.
What are the types of resolution?
Three forms of resolutions are available: ordinary resolution, special resolution, and unanimous resolution. There is no concept of special resolutions in Board meetings, and very few unanimous resolutions are also required. However, all three are covered in the case of general meetings.
What decisions require a special resolution?
What decisions require a special resolution to be passed?
- To change the company name. …
- To amend the company’s articles of association. …
- A reduction in the company’s share capital.
- Disapplication of shareholder pre-emption rights.
- Certain cases where the company purchases its own shares.