Explain the circumstances under which a company may issue bonus shares
ANSWER
Statutory Limitations
• A director cannot guarantee a loan.
• In a public company a director outside the age limit for appointment is not qualified for appointment as director unless a resolution upon a special notice has been passed.
• In a public company, a director must take and pay for his qualification shares, if any.
• A director must not be compensated for loss of office unless particulars are disclosed to the members who must approve of it.
• Prohibitions of tax free payments to directors.
• Disclosure of interests in contracts made on behalf of the company.