02-06-2009, 10:32 PM
Dear,
Please see Rule 6 of the Companies (Issue of Capital Rules), 1996 in detail, if you have a book on company law. You can also download it from SECP's website using following link
http//www.secp.gov.pk/corporatelaws/pdf/Feb_02_1996.pdf
The company which has such reserves and intends to issues bonus shares is required to ensure that after issuance of such bonus shares, the free reserves should not be less than the 25% of total share capital (as increased by new bonus shares).
The bonus shares are also called as stock dividend. Since there is only a capitalization of reserves, it carries no payout in terms of cash.
Regards,
KAMRAN.
