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CS Executive · Corporate Accounting and Financial Management · Related Aspects of Company Accounts

Which statement about issuing bonus shares is correct under the Companies Act, 2013?

Partly paid-up shares outstanding on the date of allotment must be made fully paid-up before bonus shares are issued. The Act also requires articles authorisation, general meeting approval, no default on deposits or debt securities, and forbids bonus shares in lieu of dividend.

  1. ABonus shares may be issued in lieu of dividend if members agree
  2. BPartly paid-up shares outstanding on allotment date must first be made fully paid-upCorrect
  3. CArticles authorisation is not needed if the Board recommends
  4. DA company that defaulted on fixed deposit interest may still capitalise reserves

Explanation

Section 63(2)(e) requires outstanding partly paid-up shares to be made fully paid-up on the allotment date. Bonus shares cannot be issued in lieu of dividend, articles must authorise, and default on deposit interest or principal bars the issue.

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