of the existing guidelines for the issue of bonus spar contained m Section M of the "Guidelines for Disclosure and In estc Protection' issued by the Securities and Exchange (SEBI) on 11th June, 1992, SEBI issued, on 13th Apnl, 1994, revised guidelines for the issue of bonus shares. It is worth nothing that the reused guidelnues have done away-with certain requirements relating to the issue of bonus shares namely Profitability Test, Residual Resene Test, etc. keeping inie;v the current pace of liberallsation and reforms in die pnimary market
Under the earlier guidelines "Profitability Test" and "Residual Reser.e Test' were compulsory requirements for companies issuing bonus shares. The ProJitnhihty Test was to make a calculation to show that 30 per cent of the aN erage profits before tax for previous three years should yield at least 10 per cent dividend on expanded capital base The Residual Reserve Test vvas to make a calculation to show that reserves left uucapitalised should constitute at least 40 per cent of the mcreased paid-up capital after bonus issue
A company must, while issuing bonus shares, ensure that the following conditio Dsguidelines are duly complied vith:
I No bonus issue shall be made within 12 months of any pnblicrights Issue.
2. These gmdelines are applicable to existing fisted companies who shall fonvald to SEBI a certificate duly signed by the issuer companv and duly cour by its statutory auditor or by a company secretary in practice to the effect that the terms and conditions for issue of bonus shares as laid down IU these guidelines have been complied with.
3. Issue of bonus shares after any publicrights issue IS subject to tire condition that no bomls issue shall be made which will-dilute the value or - right s of the holders of debeuiures, convertible fully or partly
In'other words. no company shall, pending conversion of FCDs,PCDs. issue any shares by way of bonus unless similar benefit is extended to the holders of such FCDsPCDs, through resonation of shares in proportion lo such convertible part of FCDsPCDs, through reservation of shares in proportion to such convertible part of fCDsPCDs. The shares so reser-.i may be issued at the time of conversion(s) of such debentures on fix Sam terms on which the bonus issues were made.
' 4. The bonus issue is made out of free resort es bnilt out of the genre profits or share premium collected in cash only.'
5. Reserve created by revaluation of fixed assets are DOt Hi Ad
6. The declaration of bonus issue, in lieu of dr.idencL is not
172 -S: SECRETARIAL PRACTiCE
issues', rights issues', etc.
For these guidelines, please refer to the preceding heading
:4. To issue notices to members relatingtotheaforesaid genera along with the explanatory
5. To pass a resolution in the general meeting as per Articles It- it is special copy thereof to be filed Ninth the Registrar within 30 days
Tote. Steps nos. 3(b), 4 and 5 are not required if the Articles do nap expressly provide for shareholders approve al in a general meeting.
6. To obtain the approval oftlle losers -e Barik of India, under the Foreign Exchange Regulation Act, 1973, for allotment of bonus share to non-residt members, if any
7. To prepare provisional allotment sheets', i.e., the 11st of members showing tlieir present sharelloldirig and the number of bonus slrares to which -they are entitled.
8. To convene another Board meeting to: approve the 'provisional allotment sheets' and to pass as allotment resoluhon.n :
9. To issue Allotment Letters to the membersalong vith a circular explaining how the allotment has been made. :
10. To file with the Registrar with 30 days of allotment a 'Retnrn of Allotment' stating: (l? the number and nominal utmost of the bonus shares so allotted. (ii) names, addresses and occupations of the allottees; and (iii j a COP! of the reSo}utioD authorising the issue of such shares' [Sec. 75(1)(c)(i)].
11. To snake necessary eiltries in the Register of Members.
12, To prepare and issue new bonus shares certificates.
|
