Chapter 15 - GUIDELINES FOR BONUS ISSUES - SEBI (Disclosure and Investor Protection Guidelines) 2000

CHAPTER XV GUIDELINES FOR BONUS ISSUES 15.0 A listed company proposing to issue bonus shares shall comply with the following: 15.1.1 (a) No company shall, pending conversion of FCDs/PCDs, issue any shares by way of bonus unless similar benefit is extended to the holders of such FCDs/PCDs, through reservation of shares in proportion to such convertible part of FCDs or PCDs. (b) The shares so reserved may be issued at the time of conversion(s) of such debentures on the same terms on which the bonus issues were made. 15.1.2 The bonus issue shall be made out of free reserves built out of the genuine profits or share premium collected in cash only. 15.1.3 Reserves created by revaluation of fixed assets are not capitalised. 15.1.4 The declaration of bonus issue, in lieu of dividend, is not made. 15.1.5 The bonus issue is not made unless the partly-paid shares, if any existing, are made fully paid-up. 15.1.6 The Company - (a) has not defaulted in payment of interest or principal in respect of fixed deposits and interest on existing debentures or principal on redemption thereof and (b) has sufficient reason to believe that it has not defaulted in respect of the payment of statutory dues of the employees such as contribution to provident fund, gratuity, bonus etc. 15.1.7 1 (A company which announces bonus issue after the approval of board of directors and does not require shareholders approval for capitalisation of profits or reserves for making bonus issue as per the Articles of Association, shall implement bonus issue within fifteen days from the date of approval of the issue by the board of directors of the company and shall not have the option of changing the decision.) 2 (Provided where the company is required to seek shareholders approval for capitalisation of profits or reserves for making bonus issue as per the Articles of Association, the bonus issue shall be implemented within two months from the date of the meeting of the board of directors wherein the decision to announce bonus was taken subject to shareholders approval.) 15.1.8 (i) The Articles of Association of the company shall contain a provision for capitalisation of reserves, etc. (ii) If there is no such provision in the Articles the company shall pass a Resolution at its general body meeting making provisions in the Articles of Associations for capitalisation. 15.1.9 Consequent to the issue of Bonus shares if the subscribed and paid-up capital exceed the authorised share capital, a Resolution shall be passed by the company at its general body meeting for increasing the authorised Capital. 15.1.10 A certificate duly signed by the issuer company and counter signed by statutory auditor or by Company Secretary in practice to the effect that the provision of clause 15.1.1 to 15.1.9 have been complied with shall be forwarded to the Board. ********* 1 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009, for the following: A company which announces its bonus issue after the approval of the Board of Directors must implement the proposal within a period of six months from the date of such approval and shall not have the option of changing the decision. 2 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/02 dated February 24, 2009, for the following: A company which announces its bonus issue after the approval of the Board of Directors must implement the proposal within a period of six months from the date of such approval and shall not have the option of changing the decision.