An analysis confirms that loss-making companies can issue bonus shares from their Securities Premium Account, contingent on compliance with Section 63 of the Companies Act.
Loss-Making Companies Can Issue Bonus Shares
Recent analysis indicates that companies suffering losses may still issue bonus shares through their Securities Premium Account, provided they meet the conditions stipulated in Section 63 of the Companies Act. This guidance clarifies the conditions under which such issuances are permissible.
The eligibility for issuing bonus shares hinges on a company's adherence to statutory requirements and the absence of financial or statutory defaults. Thus, companies must maintain compliance with various governance standards while managing their financial health.
This analysis is particularly relevant for corporate lawyers and companies exploring the issuance of bonus shares while navigating financial difficulties. Practitioners must ensure that clients are aware of these conditions to prevent regulatory pitfalls.
Citations
- Companies Act (2026) Section 63
