Board Meeting Corporate For Bonus Issue
Description
How to fill out First Board Of Directors Meeting Minutes - Corporate Resolutions?
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FAQ
The Company shall convene a Meeting of its Board of Directors to pass a Board resolution for the following: Approving the proposal of issue of Bonus shares, the quantum and ratio of bonus shares to be issued, allotment of such bonus shares, and record date for such issue.
Bonus shares are issued by a company when it is not able to pay a dividend to its shareholders due to shortage of funds in spite of earning good profits for that quarter. In such a situation, the company issues bonus shares to its existing shareholders instead of paying dividends.
The Company announces bonus share issue in the form of a ratio, i.e., , this means every Shareholder who has 2 Shares. Hence if a Shareholder has 1,00,000 shares in his account, the Bonus = 1,00,000*1/2 = 50,000.
These Board Minutes ? Bonus and Capitalisation Issue resolve to declare a bonus issue without a subsequent shareholder resolution. These board minutes should only be used by companies with one class of share who do not require specific authority from the shareholders to issue shares.
Journal Entries (A) (1) Upon the sanction of an issue of bonus shares (a) Debit Profit & Loss Account Debit General Reserve Account Debit Capital Reserve Account (realised in cash only) Debit Securities Premium Account Debit Capital Redemption Reserve Account (b) Credit Bonus to Shareholders Account.