Bonus Issue of Shares under Section 63

Bonus issue services from Patron Accounting cover the eligibility check, board and member resolutions, and the ROC filings in MGT-14, PAS-3 and SH-7 where the authorised capital must be raised. Unlike a fresh share issue, a bonus issue does not dilute existing shareholders. Our team has supported 10,000+ businesses since 2009.

A bonus issue is a corporate action on the company’s share capital. Where the goal is to raise fresh funds instead of rewarding shareholders, our issue of shares service applies, and where the authorised capital must be raised first, our change in authorised capital service handles the SH-7 step.

A company can make a bonus issue only when the Section 63(2) conditions are met. These protect creditors and ensure the issue is backed by genuine reserves.

• AOA authorisation: The Articles must permit a bonus issue; if not, they are amended first.
• Board and member approval: Recommended by the Board and authorised in general meeting.
• No defaults: No default on deposits or debt securities, or on employee statutory dues like provident fund, gratuity and bonus.
• Fully paid-up shares: Any partly paid-up shares must be made fully paid-up before the bonus issue.
• Sufficient authorised capital: If the authorised capital is not enough, it is increased through SH-7 first.

Where the authorised capital must be raised, our change in authorised capital service handles the SH-7 step.

• Latest audited financials showing the reserves.
• Articles of Association and authorised capital details.
• Board and general meeting resolutions.
• Bonus ratio and record date particulars.
• Certified list of allottees with name, address and shares.
• Valid DSC of the signatory for ROC filings.

Need the full checklist? We share a ready bonus issue checklist when you engage us.

All fees and charges listed are indicative only and do not constitute a binding offer. Final amounts may vary depending on the volume of work and the complexity involved.

Any SH-7 increase in authorised capital, with its MCA fee and stamp duty, and the depository charges for demat shares, are charged on actual basis. The exact fee depends on the bonus ratio, the reserves used and whether a capital increase is needed. Contact us for a detailed quote.

Get a free Bonus Issue of Shares consultation - Call +91 945 945 6700 or WhatsApp us. No-obligation assessment.

10,000+ Businesses Served | 4.9 Google Rating | 50,000+ Documents Filed | 15+ Years

"We wanted to reward our shareholders without raising cash. Patron structured the bonus issue from our reserves and handled every filing." - Director, manufacturing company, Pune.

"Patron raised our authorised capital through SH-7 and completed the bonus issue and PAS-3 without a single ROC query." - Founder, services company, Delhi.

Trusted by leading brands including Hyundai, Asian Paints and Bridgestone for accounting and compliance support.

With offices in Pune, Mumbai, Delhi, and Gurugram, Patron Accounting serves businesses across India - both in-person and remotely.

A bonus issue connects with other share capital actions. Patron handles the linked work too.

• Change in Authorised Capital for the SH-7 increase before a bonus issue.
• Issue of Shares when the goal is to raise fresh capital rather than reward shareholders.
• Transfer of Shares for changes in shareholding between members.
• ESOP Management and Compliance for employee share plans.
• Private Limited Company Compliance for ongoing annual compliance.

Sources: Section 63(1) of the Companies Act, 2013 permits a bonus issue of fully paid-up shares out of free reserves, the securities premium account or the capital redemption reserve account, but not reserves created by revaluation of assets.

Conditions: Section 63(2) requires AOA authorisation, a Board recommendation authorised in general meeting, no default on deposits or debt securities or on employee statutory dues, and that any partly paid-up shares are made fully paid-up.

Irreversible recommendation: Under Rule 14 of the Companies (Share Capital and Debentures) Rules, 2014, a Board recommendation for a bonus issue, once announced, cannot be withdrawn.

Filings: MGT-14 is filed within 30 days of the resolution, PAS-3 within 30 days of allotment under Section 39(4) and Rule 12, and SH-7 where the authorised capital is increased; share certificates follow within two months.

Refer to the MCA portal for forms and to Section 63 on IndiaCode for the bare provision.

A bonus issue is one-way once recommended. The Board’s recommendation cannot be withdrawn, the source must be the right reserve, and the authorised capital must be in place first. Getting the sequence right from the start avoids rejected filings and a stalled corporate action, so the reward reaches your shareholders cleanly.

Plan your bonus issue - Call +91 945 945 6700 or WhatsApp us. We respond within 2 hours.

A bonus issue under Section 63 rewards existing shareholders with fully paid-up shares by capitalising free reserves, securities premium or the capital redemption reserve, without any cash outflow or dilution. Getting the permitted source, the AOA, the authorised capital and the MGT-14 and PAS-3 filings right is what makes it clean and irreversible in the right way.

Patron Accounting, with qualified CAs and CSs and offices in Pune, Mumbai, Delhi and Gurugram, manages the full bonus issue so the reward reaches your shareholders without a hitch.

10,000+ Businesses | 4.9 Rating | 50,000+ Documents Filed | 15+ Years. Book a free consultation today.