Procedure/Provisions regarding withdrawal of Bonus issue

There can be situations in listed / unlisted company regarding the withdrawal of bonus issue.

Similarly;  I have come across a problem regarding the withdrawal of Bonus issue in an unlisted company. As the bonus issue procedure was initiated by the company, Thus, the E form 23 (was filed with MCA for registering resolutions relevant to bonus issue i.e.:- 

a) Increase in authorized capital u/s 31 of the act 

b) alteration of article 3 and insertion of article 217 in article of association u/s 3 of the act.

Now due to insufficient profits, board shows its inability to issue bonus shares. What is the remedy in such situation?

When i have searched relevant provisions regarding bonus issue, the only provision in act was found that is Section 205(3) of the Companies Act, 1956 which states that “there is no prohibition on a company to capitalize its profits or reserves for the purpose of issuing fully paid-up bonus shares or paying up any amount, for the time being unpaid, on any shares held by the members of the company.

Please note, that no where in section 205 it is written that special resolution or member’s approval is required for issuing bonus shares. Also, section 192 silent about bonus issue which specifically defines the items for the registration of special resolutions. Hence procedurally bonus shares can be issued by approval of board of director only as according to AoA of the company. (read 15.1.7 of SEBI DIP guidelines of bonus issue)

But no resolution specifically of bonus issue got registered with MCA. As we have not registered any resolution of bonus issue with RoC / MCA, there is no non compliance with these authorities if we have not issued bonus shares issue later on.

In given situation the only compliance remain is to take approval of board again in the meeting next BM for withdrawal of bonus issue due to lack of profits or reserves, but in such a case there is an issue on the rights of shareholder which got affected, so should one can opt for a class meeting instead . 

To conclude An issuer, announcing a bonus issue after the approval of its board of directors and not requiring shareholders’ approval for capitalization of profits or reserves for making the bonus issue, shall implement the bonus issue within fifteen days from the date of approval of the issue by its board of directors: 

Provided that:-

where the issuer is required to seek shareholders’ approval for capitalization of profits or reserves for making the bonus issue, the bonus issue shall be implemented within two months from the date of the meeting of its board of directors wherein the decision to announce the bonus issue was taken subject to shareholders’ approval. and if  once the decision to make a bonus issue is announced, the issue can not be withdrawn.

Kindly update me in the issue and any contrary views are cordially invited.