Bonus Shares Issue Checklist for Private Limited Companies in India – 2025 Guide

Checklist For Issue of Bonus Shares: Issuing bonus shares is a strategic move many private limited companies use to reward shareholders without draining cash reserves. But before you move ahead, you must comply with the legal and procedural requirements laid out under the Companies Act, 2013 and the latest updates in 2025.

In this blog post, we provide a complete step-by-step checklist to issue bonus shares in 2025, especially tailored for Private Limited Companies in India.

📌 What Are Bonus Shares?

Bonus shares are fully paid-up shares issued by a company to its existing shareholders free of cost, in proportion to their existing shareholding, out of free reserves, securities premium, or surplus in the profit & loss account.

🎯 Why Issue Bonus Shares?

• ✅ Increase paid-up share capital without fresh funds
• ✅ Improve shareholder confidence and goodwill
• ✅ Signal strong financial health
• ✅ Avoid cash payout as in dividend
• ✅ Maintain optimal capital structure

✅ Legal Basis for Issuing Bonus Shares in India (2025)

Bonus shares are governed by:

• Section 63 of the Companies Act, 2013
• Relevant rules under the Companies (Share Capital and Debentures) Rules, 2014
• AOA provisions of the company

📝 Eligibility Checklist Before Issuing Bonus Shares (2025)

Here’s the updated checklist to ensure your private limited company is fully compliant before issuing bonus shares:

1. 🔍 Check Authorisation in Articles of Association (AOA)

• ✅ Ensure the AOA allows capitalization of reserves.
• ❌ If not, alter the AOA via a special resolution in a general meeting.

2. 💼 Availability of Free Reserves or Securities Premium

• ✅ Issue bonus shares only from:
  • Free reserves (built out of genuine profits)
  • Securities premium collected in cash
  • Capital redemption reserve
• ❌ Do not use:
  • Revaluation reserves
  • Securities premium from non-cash consideration (e.g. share swaps)

3. 🧾 No Default Condition

As per Section 63:

• ✅ No default in repayment of deposits or interest
• ✅ No default in statutory dues of employees (PF, gratuity, bonus, etc.)

4. 💵 All Shares Fully Paid-Up

• ❌ Bonus shares can’t be issued if any partly paid-up shares exist.
• ✅ Make all shares fully paid-up before proceeding.

5. 🧠 Board Approval

• Pass a Board Resolution approving:
  • The bonus issue
  • The ratio (e.g., 1:1 or 2:5)
  • Date of issue
  • Record date (if applicable)

📑 Procedure for Issue of Bonus Shares – Step-by-Step (2025)

Step 1: Hold Board Meeting

• Approve the bonus issue
• Fix date for general meeting (if shareholder approval is required)

Step 2: Check AOA Provisions

• If AOA doesn’t permit capitalization:
  • Pass Special Resolution to amend AOA

Step 3: Hold General Meeting (if required)

• For amending AOA or capital increase
• Pass ordinary/special resolution (as applicable)

Step 4: File ROC Forms

• File MGT-14 within 30 days (for special resolution)
• File SH-7 if there’s an increase in authorized capital

Step 5: Allotment of Bonus Shares

• Hold Board Meeting for bonus allotment
• Pass resolution for allotment
• File PAS-3 (Return of Allotment) within 30 days

Step 6: Issue Share Certificates

• Issue within 2 months of allotment as per Section 46
• Update Register of Members

📦 Documents Required

• Certified copy of AOA
• Board resolution
• Shareholder resolution (if applicable)
• List of shareholders
• Certificate of no default
• PAS-3, SH-7, MGT-14 forms

📈 Bonus Issue Ratio – Popular Examples

• 🔹 1:1 – One bonus share for each existing share
• 🔹 2:5 – Two bonus shares for every five shares held
• 🔹 3:10 – Three bonus shares for every ten shares

Choose a ratio based on your reserves, capital structure, and shareholder base.

❓ FAQs on Bonus Issue by Private Limited Companies

Q1. Can a private company issue bonus shares without holding a general meeting?

Yes, if the AOA authorizes the Board, and no shareholder resolution is needed.

Q2. Can revaluation reserves be used?

No, only free reserves or securities premium in cash are allowed.

Q3. Can bonus shares be issued to promoters only?

No, bonus shares must be issued proportionately to all existing shareholders.

Q4. Is it mandatory to increase authorised capital?

Only if paid-up capital post-bonus exceeds authorised capital. In such case, SH-7 must be filed after passing a resolution.

Checklist for Issue of Bonus Shares (2025) for Listed Companies – SEBI ICDR & LODR Guidelines

SEBI Regulations Governing Bonus Issue (2025)

Bonus issue by listed companies in India is governed under:

• Regulation 293 of SEBI ICDR Regulations, 2018
• Regulation 29, 42, and 43 of SEBI LODR Regulations, 2015
• Section 63 of the Companies Act, 2013

Let’s now deep-dive into the ultimate checklist as per SEBI guidelines.

📋 Checklist for SEBI LODR Compliances (2025)

Alongside ICDR, SEBI’s LODR Regulations mandate several disclosures and timelines:

✅ 1. Board Meeting Intimation (Reg. 29)

• At least 2 working days’ prior intimation to stock exchange(s) before holding Board Meeting to consider bonus issue.

✅ 2. Outcome of Board Meeting

• Within 30 minutes of conclusion of Board Meeting:
  • Disclose decision to stock exchanges (bonus ratio, record date, etc.)
  • Update website and inform press, if applicable

✅ 3. Fixing Record Date (Reg. 42)

• Record date must be announced in advance (at least 5 working days notice).
• This is the cut-off date to determine eligible shareholders for bonus allotment.

✅ 4. Corporate Action Filing (via RTA/NSDL/CDSL)

• Inform NSDL/CDSL via Registrar for corporate action filing to credit bonus shares in demat accounts.

✅ 5. Credit of Bonus Shares

• Ensure bonus shares are credited to shareholders’ demat accounts on or before the due date.

This must align with timelines stated in the Board resolution and corporate action filing.

✅ 6. Compliance Certificate

• Post allotment, file a compliance certificate under Regulation 7(3) (LODR) to confirm RTA activities are in order.

📄 Required Resolutions & Filings

Here’s a quick list of internal resolutions and regulatory filings:

⚠️ Common Mistakes to Avoid

• ❌ Using premium from non-cash consideration
• ❌ Ignoring pending convertible instruments
• ❌ Missing timelines for implementation
• ❌ Not aligning authorized capital with post-bonus capital
• ❌ Failing to disclose outcome within 30 minutes of Board Meeting

📌 Pro Tip: How to Plan a Smooth Bonus Issue

1. Start with a capital review – check available free reserves/premium.
2. Align Board and Secretarial team on SEBI timelines.
3. Pre-check AoA for bonus power and authorized capital.
4. Get legal vetting of Board agenda and resolutions.
5. Co-ordinate with RTA and Stock Exchanges well in advance.
6. Maintain a compliance calendar from Board Meeting to bonus allotment.

Bonus Issue – Key Conditions for Listed Companies

You must ensure full compliance with SEBI ICDR Regulation 293 (Bonus Issues) and the related provisions you’ve cited.

Let’s cross-verify your company’s position with each condition:

✅ Conclusion

Issuing bonus shares in 2025 for listed companies is a strategic move to reward shareholders and boost liquidity. However, it’s subject to strict SEBI ICDR and LODR regulations.

This 2025 bonus issue checklist ensures that you stay compliant, avoid penalties, and complete the process smoothly.

If you’re looking for templates, resolutions, or need advisory help, feel free to connect with a qualified Company Secretary (CS) or SEBI-registered compliance expert.

⚠️ Disclaimer

This blog is intended to provide a brief overview of the regulatory framework governing the issue of bonus shares by listed companies under SEBI ICDR and LODR Regulations. It is not a DIY compliance guide and should not be treated as professional or legal advice.

Non-compliance with SEBI regulations can result in severe penalties and reputational damage, which are far more costly than the fee for professional compliance. Always consult a qualified Company Secretary, SEBI-registered professional, or legal advisor before initiating any corporate action like a bonus issue.