Dividend

(i) Bonus issues are not permitted in lieu of dividend. (ii) There must be an internal of at least 40 months between two successive announcement of bonus issues by a company. (iii) Not more than two bonus issues are allowed over a period of five years. (iv) Bonus issues are not permitted unless partly paid up shares, if any, are made fully paid up. (v) Bonus issues are permitted only out of free reserves built out of genuine profits or share premium collected in cash only. Development Rebate Reserve is considered to be a free reserve but reserves created by revaluation of fire assets or without accrual of cash resources are not permitted to be capitalized for this purpose. (vi) At any one time, the total amount permitted to be capitalized for issue of bonus shares out of free reserves shall not exceed the paid up equity capital of the company. (vii) The residual reserves after the proposed capitalisation should be at least 33 1/3% of the increased paid up capital, In calculating the minimum capital Reserve 33 1/3 %, the Development Rebate Reserve is taken into account but Capital Redemption Reserve is excluded. Any Capital Reserve on revaluation of assets or without actual of cash resources are also excluded. For this purpose, all contingent liabilities bearing on net profits shall be taken into account. (viii) 30 % of the average amount of pre-tax profits of previous three years should yield return of at lest 9 % on the increased capital of the company. (ix) A resolution should be passed approving the proposed capitalisation of profits before an application is made to the Controller of Capital Issues. The resolution should clearly mention their decision regarding the rate of dividend payable on the increased capital in the year immediately after the bonus issue is made