The issuance of additional free shares to existing shareholders by capitalising the company's accumulated free reserves — no cash consideration is paid by shareholders; the existing reserves are converted into paid-up capital and distributed as new shares.
Explanation
A bonus issue under Section 63 of the Companies Act, 2013 is an accounting exercise: the company transfers amounts from free reserves, securities premium account, or capital redemption reserve to the paid-up share capital account, and issues corresponding shares to existing shareholders at no cost. No new money comes into the company and no money goes out. The total wealth of shareholders remains unchanged immediately after the bonus (the share price falls proportionately). The purpose: (a) convert undistributed reserves into permanent paid-up capital; (b) improve liquidity by reducing per-share price (making shares more affordable for retail investors); (c) signal confidence in future earnings. A company cannot issue bonus shares from revaluation reserves.
Statutory Provision
Section 63(1), Companies Act, 2013: 'A company may issue fully paid-up bonus shares to its members, in any manner whatsoever, out of — (i) its free reserves; (ii) the securities premium account; or (iii) the capital redemption reserve account.' Section 63(3): 'The company shall not capitalise its profits or reserves for the purpose of issuing fully paid-up bonus shares, if it has, on the date of the Board meeting, made any default in payment of interest or principal in respect of fixed deposits or debt securities issued by it.'
A forensic investigation technique (Brain Electrical Oscillation Signature — BEOS) that uses EEG to detect brain responses to crime-specific stimuli — premised on the theory that a guilty person's brain will involuntarily recognise information only the perpetrator would know.
Explanation
Brain mapping (BEOS) uses electroencephalography (EEG) to measure the P300 brainwave — a specific electrical response that occurs when the brain recognises something meaningful. The test presents the subject with crime-specific information (descriptions of the crime scene, the victim, the method) and monitors whether the brain's response indicates 'recognition' — the theory being that only the actual perpetrator would have this specific experiential knowledge. Like polygraph and narco analysis, BEOS was held in Selvi (2010) to be unconstitutional when administered compulsorily — both as a form of compelled self-incrimination and as an invasion of mental privacy. India was an early adopter of BEOS (developed by Dr. Champadi Rajan Mukundan at NIMHANS, Bangalore) but the technique's scientific validity remains contested internationally.
Statutory Provision
No statutory authorisation. Governed by Selvi v. State of Karnataka (2010) 7 SCC 263: 'we must also address the constitutional validity of the use of BEOS which is also sometimes referred to as "Brain Mapping." ... We hold that subjecting a person to the BEOS technique without the person's consent violates Article 20(3) and Article 21 of the Constitution.' India is one of the few countries where BEOS has been admitted in courts (before the Selvi prohibition) — the Pune Aarushi Talwar case and the Manu Sharma murder case both involved BEOS evidence.
The obligation of a party in legal proceedings to prove the facts they assert — in criminal cases, the prosecution bears the burden of proving guilt beyond reasonable doubt; in civil cases, the burden is on the person who would fail if no evidence were given.
Explanation
Under the Bharatiya Sakshya Adhiniyam (BSA), 2023, burden of proof operates on three levels: (a) Legal burden (onus probandi) — the obligation to prove a fact on the balance of probabilities or beyond reasonable doubt; (b) Evidential burden — the duty to introduce sufficient evidence to raise an issue; and (c) Standard of proof — the measure required to discharge the burden. Section 101 BSA (formerly Section 101 IEA): 'Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist.' Section 102 BSA: the burden of proof initially lies on the person who would fail if no evidence were given on either side.
Statutory Provision
Section 101, Bharatiya Sakshya Adhiniyam (BSA), 2023 (formerly Section 101 IEA): 'Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person.' Section 102 BSA (formerly Section 102 IEA): 'The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.'
Ei Incumbit Probatio Qui Dicit Non Qui Negat (Latin)
Definition
The accused is presumed innocent and the prosecution bears the burden of proving guilt beyond reasonable doubt.
Explanation
In criminal proceedings, the presumption of innocence places the burden on the prosecution — the accused need prove nothing; the burden can shift by specific statutory presumptions.
Statutory Provision
Bharatiya Sakshya Adhiniyam (BSA), 2023, Sections 94-97 (burden of proof and presumptions); Article 20(3) Constitution (right against self-incrimination).
A corporate action where a company purchases its own previously issued shares from existing shareholders — reducing the number of outstanding shares, returning surplus cash to shareholders, and potentially improving earnings per share.
Explanation
Buyback of shares under Sections 68-70 of the Companies Act, 2013 allows companies to repurchase their own shares from the market or through a tender offer to shareholders. Key conditions: (a) authorised by the Articles; (b) approved by Board or shareholders (as the case may be); (c) the buyback cannot exceed 25% of paid-up capital and free reserves; (d) post-buyback debt-equity ratio cannot exceed 2:1; (e) no further buyback within 1 year of completion. Methods: open market (from the stock exchange); tender offer (fixed price to all shareholders); odd-lot buyback (for small shareholders). A buyback is the most tax-efficient way to return cash to shareholders: the gain is taxed as capital gains (lower rate) rather than as dividend income.
Statutory Provision
Section 68(1), Companies Act, 2013: 'Notwithstanding anything contained in this Act, a company may purchase its own shares or other specified securities (herein referred to as buy-back) out of — (i) its free reserves; (ii) the securities premium account; or (iii) the proceeds of the issue of any shares or other specified securities: Provided that no buy-back of any kind of shares or other specified securities shall be made out of the proceeds of an earlier issue of the same kind of shares or same kind of other specified securities.'
