law: Companies Act, 2013 
  63.
  
    Issue
  
  of bonus shares.
  1.      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:
  Provided
  
  that no issue of bonus shares shall be made by capitalising reserves created by
  
  the revaluation of assets.
  1.     
  2.      No company shall
  
  capitalise its profits or reserves for the purpose of issuing fully paid-up
  
  bonus shares under sub-section (1 ), unless—
  a.     
  
    it
  
  is authorised by its articles;
  b.    
  
    it
  
  has, on the recommendation of the Board, been authorised in the general meeting
  
  of the company;
  c.     
  
    it
  
  has not defaulted in payment of interest or principal in respect of fixed
  
  deposits or debt securities issued by it;
  d.    
  
    it
  
  has not defaulted in respect of the payment of statutory dues of the employees,
  
  such as, contribution to provident fund, gratuity and bonus;
  e.     
  
    the
  
  partly paid-up shares, if any outstanding on the date of allotment, are made
  
  fully paid-up;
  f.     
  
    it
  
  complies with such conditions as may be prescribed.
  3.      The bonus shares
  
  shall not be issued in lieu of dividend.