BONUS ISSUE AS PER SEBI (ICDR) REGULATION 2009

                                               DETAILS  OF  BONUS  ISSUE  AS SEBI GUDILINES

                       (ISSUE OF CAPITAL AND DISCLOSURE  REQUIREMENT S)REGULATIO 2009

                                                                   REGULATION 92-95

This provision is as per  SEBI (ICDR) REGULATION 2009 but subject to provision of companies act 1956/2013.

Condition for issue of bonus share:- Regulation 92

1.       It must be authorized by the article of association. If it is not authorized  by the article of association a special resolution is required to be passed to amend the article.

2.       The company should not be defaulted in payment of interest or principal in respect of fixed deposit or debt Securities.

3.       There is no such circumstances should be exist which causes reason to believe that the company is defaulted in payment of statutory dues of employees.

4.       At the date of allotment of bonus share all the shares already issued must be fully paid

Restriction on issue of Bonus share: Regulation 93

1.       No issuer shall issue bonus issue unless reservation has been made for all compulsorily convertible debt instrument which are converted at a latter date.

2.       Shares  issued under compulsorily convertible debt instrument are in line with the bonus shares issued under SEBI(ICDR) REGULATION 2009.

Sources of funds for issue of Bonus share: Regulation 94

                                                                           Bonus shares can be issued only by the use of following fund:

1.       Free reserve.

2.       Security premium collected in cash.

N.B.  Revaluation reserve can not be used to issue of bonus share.

Completion of Bonus issue: Regulation 95

                                                 Unlike dividend Bonus issue can be made after approval of BOD. Provided that share holder approval is not required for capitalization of profit or reserve.

In normal case when approval of shareholder is not required to issue bonus share it has to complete within 15 days from the date of approval of BOD.Otherwise it should be completed within 2 months From the date of the meeting of its broad of directors subject to approval of shareholder. After announcing Bonus issue it can not be withdrawn.

Point need to remember :

                                             If after Bonus issue authorized capital falls short from the total share capital after bonus issue a special resolution is required to increase the authorized capital.

Example:

                       

  A company having Authorised share capital is rs 10 crore and proposes to issue bonus share in the ratio of 1:1.

Fully paid up share capital	Rs 4crores	4000000 shares of rs 10 each
Partly paid-up capital (to be made fully paid-up before bonus issue)	Rs 1 crores	1000000 shares of rs 10 each ,rs 5 paid-up
250000 convertible debenture of rs 100 each convertible into fully paid-up shares of rs 10 each in the ratio of 2 equity shares for every 1 debenture	Rs 5 crores	500000 shares of rs 10 each
Total capital after convertion	Rs 5.5 crores	550000 shares of rs 10 each

If the company propose to issue bonus shares in the ratio of 1:1 then post-issue capital will be rs 11 crores. So bringing the authorized capital to rs 11 crores a special resolution is required to be passed .