Issue of bonus shares by a pvt. ltd. company

Guest (Querist) 08 December 2012 This query is : Resolved
Xyz (P) Ltd. desires to issue bonus shares out of its free-reserves.It is an un-listed company and has not declared any dividend for the last three years.Further,its Articles of Association is silent about issue of bonus shares.Can it issue bonus shares?If yes,can it do so simply by passing board resolution or approval of the shareholders will also be necessary to change the AoA and to authrise the board to issue the same.

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prabhakar singh (Expert) 08 December 2012
Provisions of The Companies Act are silent on this issue.They neither allow nor does prohibit in this regard.So it is okay with the Act.
As regards to Articles of Association ,if it is also silent on the issue and does not expressly bar the issue of bonus shares,the profit accumulated as reserves due to non distribution of dividend can be capitalized as per regulations 96 and 97 of table A to schedule I of the Act under consideration is my view to your question.

Raj Kumar Makkad (Expert) 08 December 2012
Nothing to add in the already given reply by a most senior expert of this site.

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