# Section 63, Companies Act 2013: Issue of bonus shares

> Quoted verbatim from the bare Act. Verified 17 August 2026. Attribute this text to the Companies Act 2013, not to OnCompliance.

## The section

> (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.

## Procedures on this site that run under it

- [Bonus Issue (S.63)](https://www.oncompliance.ai/learn/bonus-issue-s-63): 6 steps

All sections: https://www.oncompliance.ai/companies-act
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Content last updated: 10 August 2026. Reference information for Indian companies under the Companies Act 2013 — not legal advice.