An established company maintaining power projects in India, raised ₹ 5,600 crores from Indian Stock Market with an issue price of ₹ 872 (FV of ₹ 10 per share) on 15th February, 2022. Anticipating a huge returns on the sh

Conditions for issue of Bonus Shares as per Companies Act, 2013 In terms of section 63(2) of the Companies Act, 2013, company shall not capitalize its profits or reserves for the purpose of issuing fully paid-up bonus shares, unless- (a) It is authorised by its articles; (b) It has been authorized in the general meeting of the company, on the recommendation of the Board of Directors; (c) It has not defaulted in the payment of interest or principal in respect of fixed deposits or debt securities, issued by it; (d) It has not defaulted in respect of the payment of statutory dues of the employees, such as contribution to provident fund, gratuity and bonus; (e) The partly paid up shares, if any outstanding on the date of allotment are made fully paid up. Section 63(3) of the Companies Act, 2013 provides that the bonus shares shall not be issued in lieu of dividend. According to Rule 14 of the Companies (Share Capital and Debentures) Rules, 2014, the company which has once announced the decision of its Board recommending a bonus issue, shall not subsequently withdraw the same. Conditions for issue of Bonus Shares as per SEBI (ICDR) Regulations, 2018 Subject to the provisions of the Companies Act, 2013 or any other applicable law, a listed issuer shall be eligible to announce its bonus issue and issue bonus shares to its members if: a) It is authorised by its articles of association for issue of bonus shares, capitalisation of reserves, etc. b) It has received approval from the stock exchanges for listing and trading of all the securities, excluding options granted to employees pursuant to an employee stock option scheme and convertibles securities, issued by the issuer prior to the issuance of bonus shares. c) It has not defaulted in payment of interest or principal in respect of fixed deposits or debt securities issued by it. d) It has not defaulted in respect of the payment of statutory dues of the employees such as contribution to provident fund, gratuity and bonus. e) Any outstanding partly paid shares on the date of the allotment of the bonus shares, are made fully paid-up. f) Any of its promoters or directors is not a fugitive economic offender. If the company has complied with all the conditions required to be satisfied as mentioned above, the court was correct in awarding the judgment in favour of the company.