Shareholder approval is being sought at the company's annual general meeting in Mumbai on September 5.
In the notice to the AGM, the company explains that the proposed 1:1 bonus issue will take the current equity well above the authorised capital of Rs 10 crore.
The 1:1 bonus recommended earlier this year by the Lakme board will capitalise the share premium account and reserves to the extent of Rs 6.71 crore. The company will issue 67,10,707 new equity shares to the existing 67,10,707 shareholders.
Lakme is also seeking approval for selling of its Miaami Pharma and Chemicals division to Bal Pharma for Rs 5 crore. After the transfer of Tata Pharma business, the Miaami division which manufactures parenterals does not fit into Lakme's main business activity.
Last year Lakme formed a 50:50 joint venture with Hindustan Lever to market cosmetic products. All brands owned by Lakme were transferred to Lakme's 100 per cent subsidiary called Lakme Brands, which then licensed the brands to Lakme-Lever.
Lakme will then become a purely manufacturing company. Lakme Brands will also own the technologies and related intellectual property rights of the brands. The joint venture with Lever will also market Lever's international brands.