Section 63 Issue of bonus shares – Companies Act 2013

Amended and updated notes on section 63 of Companies Act 2013. Detail discussion on provisions and rules related to issue of bonus shares.

Amended and updated notes on section 63 of Companies Act 2013. Detail discussion on provisions and rules related to issue of bonus shares.

Chapter IV (Sections 4372) of the Companies Act, 2013 (CA 2013) deals with the provisions related to share capital and debentures. Section 63 of CA 2013 provides for issue of bonus shares.

Recently, we have discussed in detail section 62 (Further issue of share capital) of CA 2013. Today, we learn the provisions of section 63 of Companies Act 2013 read with the Companies (Share Capital and Debentures) Rules, 2014.

Section 63 of the Companies Act, 2013 has been notified by the Ministry of Corporate Affairs (MCA) vide Notification No. S.O. 902(E) issued dated 27.03.2014. This notification was come into force from 1st April, 2014 i.e. the commencement date of section 63 is 1-4-2014.

Name of ActThe Companies Act 2013
Enacted byParliament of India
Administered byMinistry of Corporate Affairs (MCA)
Number of Chapters29
Number of Sections484 (470-43+57)
Number of Schedules7
You are reading:
Chapter No.IV
Chapter NameShare Capital and Debentures
Section No.63
Section NameIssue of bonus shares
Monthly Updated EditionCompany Law PDF

Section 63 of Companies Act 2013: Issue of bonus shares

Section 63 shall come into force on 1st April, 2014 vide Notification No. S.O. 902(E) issued dated 27.03.2014.

(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.


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