The Securities and Exchange Board of India (Sebi) has announced a reduction in the timeframe for the credit of bonus shares and their eligibility for trading. These shares will now be available for trading two days from the record date, as detailed in a circular issued on Monday. This allows for T+2 trading of bonus shares, meaning the shares allotted in a bonus issue will be available for trading on the subsequent working day following the allotment.
The record date marks the cutoff for shareholders to qualify for a bonus issue. The new regulation will apply to all bonus issues announced after October 1, 2024. The initiative aims to streamline the process for issuing equity shares and includes provisions for penalties in case of delays in compliance with the stipulated timelines.
Operational procedures have been outlined for the new process. Companies proposing a bonus issue must apply for in-principle approval from the stock exchange within five working days from the date of the board meeting that approved the bonus issue. Additionally, when fixing and notifying the record date (T day) to the stock exchange, companies must also record the deemed date of allotment as the next working day (T+1 day).
Upon receiving notification of the record date and necessary documents from the issuer, the stock exchange is required to issue a notification accepting the record date and indicating the number of shares included in the bonus issue. This notification must also mention the deemed date of allotment.
The issuing company must submit the required documents to depositories for the credit of bonus shares in the depository system by 12 pm on the next working day following the record date. The issuer must upload the distinctive number (DN) ranges in the depository’s DN database, and stock exchanges must ensure the relevant dates are updated before the credit of bonus shares.
The information provided reflects the procedural changes announced by Sebi and does not represent the views of the Economic Times.