Appu Hotels Ltd. has the following balances: Authorised Equity Share capital ₹ 75 crore Paid up Equity share capital (100 shares of 50,00,000) ₹ 50 crore Reserves and Surplus ₹ 550 crore The Board of Directors plans to i

Section 63 read with Rule 14 of the Companies (Share Capital and Debentures) Rule, 2014 deals with the issue of Bonus shares. A company may issue fully paid-up bonus shares to its members, in any manner whatsoever, out of its free reserves, securities premium account or capital redemption reserve account. However, no bonus shares can be issued by capitalizing reserves created by the revaluation of assets. Further, the bonus shares shall not be issued in lieu of dividend. Following conditions are required to be satisfied before issuance of Bonus shares: It is authorised by the Articles of Association; It has, on the recommendation of the Board, been authorised in the general meeting of the company; The company has not defaulted in payment of interest or principal in respect of fixed deposits or debt securities issued by it; The company has not defaulted in respect of the payment of statutory dues of the employees, such as, contribution to the provident Fund, gratuity and bonus; The partly paid-up shares, if any outstanding on the date of allotment, ought to be made fully paid up; It complies with such conditions as prescribed. Rule 14 of the Companies (Share Capital and Debentures) Rules, 2014 provides that the company which has once announced the decision of its Board of Directors recommending a bonus issue, shall not subsequently withdraw the same.