The Securities and Exchange Board of India (SEBI) has announced a reduction in the time taken for the credit of bonus shares and their eligibility for trading to two days from the record date. According to a circular issued on Monday, SEBI has introduced T+2 trading of bonus issues, meaning that shares allotted as part of a bonus issue will be available for trading on the next working day following allotment.
The record date marks the cut-off for shareholders to qualify for the bonus issue. This new regulation will apply to all bonus issues announced after October 1, 2024.
The objective of this move is to streamline the process of issuing bonus shares, as mentioned in the circular. Any delay in adhering to the prescribed timelines will result in penalties. SEBI has also provided detailed operational procedures for the implementation of these new norms.
Under the new guidelines, 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 approves the bonus issue. When fixing and notifying the record date (T day) to the stock exchange, the company must also record the deemed date of allotment on the next working day after the record date (T+1 day).
Upon receiving notification of the record date (T Day) and the required documents from the issuer, the stock exchange will issue a notification confirming the record date and the number of shares involved in the bonus issue. This notification will also include the deemed date of allotment.
Subsequently, the issuer company must ensure the submission of the necessary documents to depositories for the credit of bonus shares into the depository system no later than 12 pm on the next working day following the record date.
Additionally, the issuer is required to upload the distinctive number (DN) ranges into the DN database of the depository. Stock exchanges must ensure the updating of relevant dates before the credit of bonus shares.
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