As per Section 63(1), a company may issue fully paid-up bonus shares to its members, in which of the following manner provided that no issue of bonus shares shall be made by capitalising reserves created by the revaluation of assets. 1. Its free reserves 2. The securities premium account 3. The capital redemption reserve account

Section 63 (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. (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. Section 63 (3) The bonus shares shall not be issued in lieu of dividend. Section 68 : Mentions the Power of company to purchase its own securities. Section 71 is related to the issue of debentures.