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    Question

    A company shall not capitalize its profits or reserves for the purpose of issuing fully paid-up bonus shares unless__________________

    A Authorized by MoA Correct Answer Incorrect Answer
    B Partly paid-up shares, if any outstanding on the date of allotment, are made fully paid-up Correct Answer Incorrect Answer
    C On the recommendation of Board been authorized in the general meeting of the company Correct Answer Incorrect Answer
    D Both b & c Correct Answer Incorrect Answer
    E All a, b & c Correct Answer Incorrect Answer

    Solution

    ‘Companies Act’  Section 63.Issue of bonus shares- (2) No company shall capitalise its profits or reserves for the purpose of issuing fully paid-up bonus shares under sub-section (1), unless— (a) it is authorised by its articles; (b) it has, on the recommendation of the Board, been authorised in the general meeting of the company; (c) it has not defaulted in payment of interest or principal in respect of fixed deposits or debt  securities  issued by it; (d) it has not defaulted in respect of the payment of statutory dues of the employees, such as, contribution to provident fund, gratuity and bonus; (e) the partly paid-up shares, if any outstanding on the date of allotment, are made fully paid-up; (f) it complies with such conditions as may be prescribed.

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