Requirements in relation to bonus issue

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6.34

ABC Bhd is considering a proposal to undertake a bonus issue. Based on its latest consolidated audited accounts, ABC Bhd has share premium of RM100 million and revaluation reserves of RM60 million. ABC Bhd however has accumulated losses of RM180 million. Can ABC Bhd undertake a bonus issue?
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No, ABC Bhd cannot undertake a bonus issue as its accumulated losses (RM180 million) exceed the necessary reserves required for capitalisation of bonus issues (i.e. RM100 million + RM60 million = RM160 million).