Success Ltd., a listed company with an authorized, issued and subscribed capital of ₹ 35 crore comprising of 3.5 crore equity shares of ₹ 10 each and a paid up capital of ₹ 34 crore decided to issue bonus shares in the r

The following are the steps involved in issue of Bonus Shares by Success Ltd.: A listed entity issuing bonus shares should ensure that the issue is in conformity with the Regulations for bonus issue laid down by SEBI (ICDR) Regulations, 2009. The procedure for issue of bonus shares by Success Ltd. is enumerated below: Ensure that bonus issue has been made out of free reserves built out of the genuine profits or securities premium collected in cash only. Ensure that reserves created by revaluation of fixed assets are not capitalized. Ensure that the company has not defaulted in payment of interest or principal in respect of fixed deposits or debt securities issued by it or in respect of the payment of statutory dues of the employees such as contribution to provident fund, gratuity, bonus etc. Ensure that the bonus issue is not made in lieu of dividend. There should be a provision in the articles of association of the company permitting issue of bonus shares; if not, steps should be taken to alter the articles suitably. The share capital as increased by the proposed bonus issue should be well within the authorised capital of the company; if not, necessary steps have to be taken to increase the authorised capital. Finalise the proposal and fix the date for the Board Meeting for considering the proposal and for authorizing the taking up of incidental and attendant matters. The date of the Board Meeting at which the proposal for bonus issue is proposed to be considered should be notified to the Stock Exchange(s) where the company's shares are listed. If there are any partly paid-up shares, ensure that these are made fully paid-up before the bonus issue is recommended by the Board of directors. Hold the Board Meeting and get the proposal approved by the Board of directors. The resolution to be passed at the General Meeting should also be approved by the Board of Directors in its meeting. The intention of the Board of directors regarding the rate of dividend to be declared in the year after the bonus issue should be indicated in the resolution for bonus issue to be passed by members in general meeting. Immediately after the Board meeting intimate the Stock Exchange(s) regarding the outcome of the Meeting. Ensure that the company has announced bonus issue after the approval of Board of Directors and did not require shareholders' approval for capitalization of profits or reserves for making bonus issue as per the Article of Association, had implemented bonus issue within fifteen days from the date of approval of the issue by the board of directors of the company and must not have the option of changing the decision. However, where the company was required to seek shareholders' approval for capitalization of profits or reserves for making bonus issue as per the Article of Association, the bonus issue has implemented within two months from the date of the meeting of the Board of Directors where in the decision to announce bonus was taken subject to shareholders' approval. As per section 63 (2) (c) of the Companies Act, 2013, every company has to take shareholders' approval for issuing bonus shares. Arrangements for convening the general meeting should then be made keeping in view the requirements of the Companies Act, with regard to length of notice, explanatory statement etc. Also three copies of the notice should be sent to the Stock Exchange(s) concerned. Hold the general meeting and get the resolution for issue of bonus shares passed by the members. A copy of the proceedings of the meeting is to be forwarded to the concerned Stock Exchange(s). In consultation with the Regional Stock Exchange fix the date for closure of register of members or record date and get the same approved by the Board of directors. Issue a general notice under Section 91 of Companies Act, 2013 in respect of the fixation of the record date in two newspapers one in English language and other in the language of the region in which the Registered Office of the company is situated. Give 7 days' notice to the Stock Exchange(s) concerned before the date of book closure/record date. After the record date process the transfers received and prepare a list of members entitled to bonus shares on the basis of the register of members as updated. This list of allottees is to be approved by the Board or any Committee thereof. The list usually serves as allotment list and on this basis the allotment is to be made to the eligible members. File return of allotment with the Registrar of Companies within 30 days of allotment (Section 39 of the Companies Act, 2013). Also intimate Stock Exchange(s) concerned regarding the allotments made. Ensure that the allotment is made within fifteen days of the date on which the Board of directors approved the bonus issue. Submit an application to the Stock Exchange(s) concerned for listing the bonus shares allotted.