Multiple choice

Which is an incorrect statement?

  1. The issue of Bonus shares is subject to sanction from the SEBI

  2. The prior approval of capitalisation of reserves upto Rs.1 crore is totally exempted

  3. Bonus issues beyond the ratio of 1 : 1 is not permitted

  4. Partly paid equity shares are issued as bonus shares
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The question asks for the INCORRECT statement. Partly paid shares cannot be issued as bonus shares because bonus shares are fully paid-up shares issued free of cost to existing shareholders from accumulated reserves. Companies must issue only fully paid-up bonus shares.

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