Issue of bonus shares
Section 63 of the Companies Act, 2013 deals with issue of bonus shares. A company may issue fully paid-up bonus shares to its members, in any manner whatsoever, out of-- (i) its free reserves; The Act came into force on 01 Apr 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.
Section 63, The Companies Act, 2013 (Act 18 of 2013).
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… JUSTICE G.P.MITTAL J U D G M E N T G. P. MITTAL, J. - 1. By virtue of these Petitions under Section 482 of the Code of Criminal Procedure("Code"), the three Petitioners (Krishna Kumar, Subhash Chandra Gupta and Dharmendra Kr. Lila) seek quashing of the complaint under Section 63 read with Section 628 of the Companies Act, 1956(Act of 1956) filed against them by the Registrar of Companies(ROC) on the premise that they being signatory to the prospectus dated 28.04.1994 of the company M/s. Hariparwat Merryland & Resorts Ltd. authorised the issuing of the prospectus which contained untrue …
Made under this section, and citing it
3 instruments state that it was made under this provision — the power to make it comes from here, so a change to any of them changes what this section requires in practice. Newest first.
Another 3 instruments name this provision in its title or its text without being made under it.
Questions about Section 63
What does Section 63 of the Companies Act deal with?
Section 63 of the Companies Act is headed "Issue of bonus shares". A company may issue fully paid-up bonus shares to its members, in any manner whatsoever, out of-- (i) its free reserves;
How do I find court cases under Section 63 of the Companies Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Companies Act 63, section 63 Companies Act, section 63 of the Companies Act. People searching for it also type section 63 of companies act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome.
What should I read with Section 63 of the Companies Act, and has it changed?
The rules and notifications made under it are where it actually bites, and there are 3: most recently G.S.R. NO. 43(E) Companies share capital and debentures amendment rules 2023 dated 21.01.2023 (2023), then Chapter IV - The Companies (Share Capital and Debentures) Rules, 2014 (2014), and 1 more.
When did Section 63 of the Companies Act come into force?
Section 63 of the Companies Act, cited as Companies Act 63, came into force on 01 Apr 2014, having been enacted on 29 Aug 2013. It is in force as at the date shown on this page.
Other sections of this Act
- 2. Definitions5089 words
- 143. Powers and duties of auditors and auditing standards1867 words
- 230. Power to compromise or make arrangements with creditors and members1432 words
- 232. Merger and amalgamation of companies1416 words
- 149. Company to have Board of Directors1403 words
- 217. Procedure, powers, etc., of inspectors1390 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 14 Oct 2026. This page is not a substitute for legal advice.