Startup Services · Bonus Issue

Issuance of Bonus Shares convert reserves into equity for existing shareholders.

A bonus issue lets a company capitalise its free reserves, securities premium, or capital redemption reserve into fully paid-up shares distributed to existing shareholders free of cost — governed strictly by Section 63 of the Companies Act.

A bonus issue is the allotment of additional fully paid-up shares to existing shareholders, in proportion to their existing holding, funded not by fresh cash but by capitalising the company's free reserves, securities premium account, or capital redemption reserve. It increases the number of shares in issue and the company's paid-up capital, without any new investment coming into the company.

Section 63 of the Companies Act 2013 permits a bonus issue only out of specified sources — free reserves, the securities premium account, or the capital redemption reserve — and expressly prohibits capitalising reserves created by revaluation of assets. The company must also not have defaulted on payment of statutory dues to employees or on repayment of deposits, debentures, or preference shares, and the issue must be authorised by the articles and approved by shareholders.

At Beyonte Compliances, we assist companies with confirming eligibility, verifying the source of funds for capitalisation, obtaining the necessary approvals, and completing the allotment and ROC filings for the bonus issue.

What Our Bonus Issue Service Covers

Eligibility Verification

Confirming the company has no default in payment of statutory dues, deposits, debentures, or preference shares before proceeding.

Source of Funds Review

Verifying the reserves proposed to be capitalised qualify under Section 63 and are not revaluation reserves.

Articles Authorisation Check

Reviewing the articles of association to confirm they authorise a bonus issue, and amending them if required.

Board & Shareholder Approval

Preparing resolutions for board recommendation and shareholder approval of the bonus issue and ratio.

Capitalisation Entries

Advising on the accounting entries required to capitalise reserves into share capital in the company's books.

Allotment Resolution

Preparing the board resolution allotting bonus shares to shareholders as on the record date.

PAS-3 Filing

Filing Form PAS-3 with the Registrar of Companies within 30 days of allotment of the bonus shares.

Register & Certificate Updates

Updating the register of members and coordinating issuance of share certificates or demat credit for the bonus shares.

Our Process

Eligibility Check

Confirming the company meets all conditions under Section 63, including no defaults on statutory dues or borrowings.

Board Recommendation

The board recommending the bonus issue and ratio, based on available free reserves or securities premium.

Shareholder Approval

Shareholders approving the bonus issue at a general meeting, where required by the articles.

Allotment

Allotting the bonus shares to shareholders in proportion to their holding as on the record date.

ROC Filing

Filing Form PAS-3 with the Registrar of Companies and updating statutory registers.

Why It Matters

✓Rewards existing shareholders without requiring any fresh cash investment

✓Increases paid-up capital and can improve the company's market perception

✓Improves liquidity of shares by increasing the number outstanding

✓Strict eligibility checks prevent an invalid or non-compliant issue

✓Correct source-of-funds verification avoids using prohibited reserves

✓Timely PAS-3 filing avoids penalties for delayed reporting

✓Clean documentation supports future fundraising and due diligence

✓Does not alter shareholders' proportionate ownership of the company

Frequently Asked Questions

No. Section 63 expressly prohibits capitalising reserves created by revaluation of assets for the purpose of issuing bonus shares — only free reserves, the securities premium account, and the capital redemption reserve can be used.

No. A company cannot issue bonus shares if it is in default in respect of payment of statutory dues to employees, or repayment of any deposits, interest, debentures, or preference shares, until the default is made good.

Yes, unless the articles of association already authorise it, shareholder approval by ordinary resolution (or as prescribed by the articles) is required in the general meeting before a bonus issue can be made.

No. Because bonus shares are allotted to all shareholders in the same proportion as their existing holding, each shareholder's percentage ownership of the company remains unchanged.

Capitalise your reserves into a bonus share issue.

Talk to our team about eligibility, approvals, and filings for your bonus issue.