New RBI Grade B 2025 Notification will come Soon! Enroll Here

    Question

    Section 63 of the Companies Act. 2013 deals with the

    issue of bonus shares. According to Sub-section (1) of this section, a company may issue fully paid-up bonus shares to its members, in any manner whatsoever, except out of
    A its current net profit Correct Answer Incorrect Answer
    B its free reserves Correct Answer Incorrect Answer
    C the securities premium account Correct Answer Incorrect Answer
    D the capital redemption reserve account Correct Answer Incorrect Answer

    Solution

    Section 63 of the Companies Act, 2013, allows a company to issue fully paid-up bonus shares to its members, except out of its current net profit. This means that bonus shares cannot be issued using the profits earned in the current financial year. However, bonus shares can be issued using other sources such as free reserves, the securities premium account, or the capital redemption reserve account, subject to the provisions of the Companies Act.

    Practice Next