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Is it allowed for a company to issue shares as a bonus issue by taking in to account revaluation reserve created as a result Fixed Asset revaluation?

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Question added by Tegegne Abrham , General Manager , MM BEDDING INDUSTRIES PLC
Date Posted: 2014/02/25
Dasarathi Rath
by Dasarathi Rath , Sr. Accountant , Al Luban Special Investment LLC

NO, Not allowed ..

Bonus share issueing by cashing on the free resurve of the company...

The asset of a company also consist of cash resurve. A company build up its resurve by retaining part of its profit over the year... These free resurve increase and the company issue bonus share convert part resurves in to capital...

 

A company are issued bonus share resurve of the company in to share capital.. it is nothing but capitalisation resurve of the company.. Bonus share issued only..

Bonus share is not made unless the partly paid share, if any made fully paid up..

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