Section 63 of Companies Act, 2013

Section 63 of Companies Act, 2013

Issue of bonus shares.

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.

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Section 63 of Companies Act, 1956

Criminal liability for misstatements in prospectus

(1) Where a prospectus issued after the commencement of this Act includes any untrue statement, every person who authorized the issue of the prospectus shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to fifty thousand rupees, or with both, unless he proves either that the statement was immaterial or that he had reasonable ground to believe, and did up to the time of the issue of the prospectus believe, that the statement was true.

(2) A person shall not be deemed for the purposes of this section to have authorized the issue of a prospectus by reason only of his having given -

(a) the consent required by section 58 to the inclusion therein of a statement purporting to be made by him as an expert, or

(b) the consent required by sub-section (3) of section 60.