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    Issue of bonus shares

    Posted By : Vidushi / Published on : 16-Jul-2022 05:17 AM / View : 450 / Comment : 1

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    Hi Members,

    Can a company issue bonus shares in the ratio of 1 : 1 ? Is there
    any limit on the amount to be used from the reserve for the said
    purpose ?

    Read more on : shares bonus issue

    • Yes, a company can issue bonus shares in the ratio of 1:1, subject to the availability of sufficient reserves. The Companies Act, 2013 does not specify any limit on the amount to be used from the reserve for issuing bonus shares.

      However, it is important to note that before issuing bonus shares, the company must comply with the provisions of the Companies Act, 2013 and its articles of association. The company must also obtain the necessary approvals, if any, from the stock exchanges where its shares are listed.

      Further, bonus shares can only be issued to the existing shareholders of the company in proportion to their existing shareholding. The purpose of issuing bonus shares is to reward the shareholders without diluting their ownership in the company.

      Additionally, the issuance of bonus shares does not change the total value of the shares held by the shareholders. Instead, it increases the number of shares held by each shareholder, while reducing the earnings per share and increasing the liquidity of the shares.

      13-04-2023 / 12:18:02 PM
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