In view of the provisions of the Companies Act, 2013 relating to 'securities premium', state whether the amount lying in securities premium account of a company can be used: For issuance of bonus shares;
CS Executive · Company Law · PYQS · December 2015
In view of the provisions of the Companies Act, 2013 relating to 'securities premium', state whether the amount lying in securities premium account of a company can be used: For issuance of bonus shares;
Answer & Explanation:
(i) Sources for issue of Bonus shares According to section 63(1), a company may issue fully paid-up bonus shares to its members, in any manner whatsoever, out of- (i) its free reserves; (ii) the securities premium account; or (iii) the capital redemption reserve account. Hence amount securities premium account may be utilized by the company for bonus issue.
Topics: Company Law
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