Section 63: Issue of bonus shares
What this section makes a company do, step by step, with the eForms and the days each step allows. Then the section itself, quoted in full.
The procedure, step by step.
Every step in order, the days each one allows, and the eForm it files.
Bonus Issue (S.63)
6 steps · about 126 days · PAS-3, MGT-14, SH-6| Step | Allows | Files |
|---|---|---|
| Pass Board Resolution | 7 days | — |
| Pass Ordinary Resolution at GM | 30 days | — |
| Fix Record Date & Allot | 14 days | — |
| File PAS-3 with ROC | 15 days | PAS-3 |
| File MGT-14 | 30 days | MGT-14 |
| File SH-6 | 30 days | SH-6 |
Section 63 in full.
(1) A company may issue fully paid-up bonus shares to its members, in any manner whatsoever, out of—
(i) its free reserves;
(ii) the securities premium account; or
(iii) the capital redemption reserve account:
Provided that no issue of bonus shares shall be made by capitalising reserves created by the revaluation of assets.
(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.
(3) The bonus shares shall not be issued in lieu of dividend.
Quoted from the Companies Act 2013 (Act 18 of 2013) as amended, and checked against the MCA text on 17 August 2026. Reproduction of an Act is permitted under section 52(1)(q) of the Copyright Act 1957.
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