A bonus issue of shares is the allotment and issue by a company of shares to its existing shareholders, usually on the basis that they are fully paid at the time of issue, without any payment being required by shareholders for those shares because they are paid-up from the company's existing reserves. Under the Companies Act 2006 (CA 2006), it is possible for a company's share premium account, redenomination reserve and capital redemption reserve to be capitalised to fund an issue of fully paid bonus shares. In addition, as it is an issue of new shares, a bonus issue of shares is not caught by the restriction in CA 2006, s 849, which prohibits a company from applying an unrealised profit in paying up any amounts unpaid on its issued shares or debentures. This means, if permitted to do so by its articles of association, a company may capitalise its revaluation reserve or its merger reserve, but arguably not its fair value reserve (as Directive