This section applies where shares are held by a company as treasury shares.
No dividend may be paid, and no other distribution (whether in cash or otherwise) of the company's assets (including any distribution of assets to members on a winding up) may be made to the company, in respect of the treasury shares.
Nothing in this section prevents—
an allotment of shares as fully paid bonus shares in respect of the treasury shares, or
the payment of any amount payable on the redemption of the treasury shares (if they are redeemable shares).
Shares allotted as fully paid bonus shares in respect of the treasury shares are treated as if purchased by the company, at the time they were allotted, in circumstances in which section 724(1) (treasury shares) applied.