Saturday, July 30, 2011

check list on bonus issue

Checklist for Bonus Issue.
1. Check there is a provision in the Article for Bonus Issue, if not alter the article suitably.
2. See that the expanded capital after the issue is within the authorized capital, if not increase the authorized capital.
3. If share capital is partly paid-up, make them fully paid-up before issue of Bonus shares.
4. Ensure that the bonus issue is not made within 12 months of your right issue, if any.
5. Ensure that there is no default in statutory payment like PF, Gratuity, Bonus, Interest on FD, Debentures, Preference shares etc.
6. Ensure that Bonus issue is made out of free reserve built out of genuine profit or share premium collected in cash and not from the revaluation reserve
7. Convene the Board meeting to consider the issue of bonus shares. & to fix up the date, time, place for holding general meeting to pass ordinary resolution or special resolution (If article so require)Note that bonus issue should be made within 6 month from the date of approval of Board of directors.
8. If allotee are NRI, take the permission of RBI if required under FEMA 1999
9. Ensure that the management intention regarding the rate of dividend to be declared in the year immediately after the bonus issue is indicated in the resolution.
10. Because of the use of the words ‘Holders of equity shares’ used in Section 81, it would be advisable to always pass a Special Resolution for issuing them to the members registered as on a particular date, proportionately
11. Issue notice of General Meeting (at least 21 clear days notice) along with Explanatory statement.
12. Hold the General Meeting & pass the resolution. File form 23 if Special resolution is passed within 30 days.
13. Publish a notice of record date for the purpose of determining the eligibility of Bonus issue
14. Hold Board meeting for allotment of Bonus shares & complete all formalities like issue of share certificates, entries in Register of members.
15. Ensure that share certificates to be issued pursuant to bonus shares should be issued as far as possible. And in respect of the balance, in denomination of 1, 2, 5,10, 20-25 shares.
16. File Form 2 within 30 days of allotment.

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