Bonus Shares
Overview – Bonus Shares
Bonus Shares are additional shares issued by a company to its existing shareholders without any additional cost, based on the number of shares they already hold. These shares are issued by capitalizing the company’s reserves or retained earnings, essentially converting accumulated profits into share capital.
Issuing bonus shares is a way for companies to reward shareholders, increase the liquidity of shares, and adjust the market price of shares without affecting the company’s overall valuation. Bonus shares do not involve any cash outflow from the company and are governed by the provisions of the Companies Act, 2013.
At Cardiff Services, we provide end-to-end assistance in bonus share issuance, including board and shareholder approvals, regulatory compliance, documentation, and filing with the Registrar of Companies (RoC).
Features – Bonus Shares
Issued free of cost to existing shareholders
Allotted in a fixed ratio (e.g., 1:1, 2:1) based on current holdings
Issued by capitalizing free reserves or retained earnings
No cash outflow involved
Increases paid-up share capital of the company
Reduces accumulated reserves proportionally
Does not affect the company’s net worth
Requires Board and Shareholders’ approval
Record date is fixed to determine eligible shareholders
Enhances stock liquidity and affordability
Compliant with Companies Act, 2013 and SEBI (if listed)
Signals company’s strong financial position
Documents Required – Bonus Shares
Board Resolution approving the bonus issue
Shareholders’ Resolution (if required as per Articles of Association)
Notice and explanatory statement for Board and General Meetings
Latest audited financial statements of the company
Statement showing availability of free reserves for capitalization
Altered Memorandum and Articles of Association (if authorized share capital needs to be increased)
Register of Members (to identify eligible shareholders)
Form MGT-14 (for filing resolutions with the Registrar of Companies)
Form PAS-3 (Return of Allotment) filed with the Registrar of Companies
Intimation to stock exchanges and related filings (for listed companies)
Allotment documents or dematerialization instructions
Valuation Report (if required under special conditions)
Procedure – Issuance of Bonus Shares
Review Articles of Association (AOA)
Check if the AOA permits the issuance of bonus shares.
If not, alter the AOA by passing a special resolution.
Verify Availability of Free Reserves
Ensure sufficient free reserves or securities premium are available for capitalization.
Board Meeting
Convene a board meeting to approve the bonus issue and fix the ratio, record date, and meeting date for shareholder approval (if required).
Shareholders’ Approval (if required)
Hold a general meeting to pass an ordinary resolution, if the AOA or Companies Act requires shareholder approval.
File Resolutions with ROC
File Form MGT-14 with the Registrar of Companies for board/shareholder resolutions, if applicable.
Increase Authorized Share Capital (if required)
If bonus shares exceed the current authorized capital, pass a resolution to increase it and file necessary forms (SH-7) with the ROC.
Fix Record Date
Set a record date to determine eligible shareholders entitled to receive bonus shares.
Allotment of Bonus Shares
Hold a board meeting to approve the allotment of bonus shares to eligible shareholders.
File Return of Allotment
File Form PAS-3 with the ROC within 30 days of allotment.
Credit Shares to Demat Accounts or Issue Share Certificates
Credit bonus shares to shareholders’ demat accounts or issue physical share certificates if shares are not in demat form.
Update Statutory Registers
Update the Register of Members and other relevant statutory records.
With Cardiff Services, your bonus share issuance is fully compliant, efficient, and professionally managed from start to finish.
Frequently Asked Questions
A company name search ensures that your chosen business name is unique, legally compliant, and not already registered with Companies House UK. It helps you avoid legal disputes, trademark issues, and confusion in the Cardiff business market.
If your desired name is already registered, you’ll need to choose a different name or modify it. Using a taken name could result in rejection by Companies House or potential legal issues. Our experts can help you brainstorm alternative names that are compliant and market-ready.
It’s not advisable to use a name that’s too similar to another company, especially within the same industry. Similar names can confuse customers and risk trademark disputes. A company name search helps you identify these risks early.
For a company name search in Cardiff, you may need:
Proposed company name
Business entity type (Ltd, LLP, Partnership, etc.)
Jurisdiction (Cardiff / UK)
Owner or shareholder details (if applicable)
Business description
A “high probability” result means your proposed company name is likely to be available, but further checks are recommended. This is why our detailed Cardiff Company Name Search Report includes both identical and similar names for clarity.
Certain words are restricted under UK law (e.g., “bank,” “insurance,” “government”). If you want to use them, you’ll need special approval from regulatory bodies. We guide you through this process if your Cardiff business requires such terms