SEBI Reduces Time For Transfer And Trading Of Bonus Shares, Check Key Details

The Securities and Exchange Board of India (Sebi) has reduced the time between the credit of bonus shares and their trading from the record date of the bonus issue. The bonus shares will be available for trading two days after the record date. Earlier, these shares used to be available for trading about two weeks after the record date. This new rule will come into effect on October 1. The record date will be considered as a trading day (T-Day). SEBI directed the bonus shares issuing companies to apply for in-principle approval to the stock exchanges within five working days of their board’s approval of the bonus issue. Bonus shares are additional shares a company offers to its investors for free. The quantity of bonus shares is decided by the company. The record date is the cutoff date on which shareholders will be entitled to bonus shares. In a circular issued on September 16, SEBI informed that T+2 trading of bonus shares has been enabled, where T stands for record date. The circular provides details regarding the process and states that the delay will be penalised by SEBI.

In a press release, the market regulator listed the operational procedure of the same. It includes:

Bonus issue proposal: On the day the company’s board approves the bonus issue, within five working days from that date, it will have to apply to the stock exchange for in-principle approval under SEBI (LODR) Regulations 2015.

Fixing record date: As per SEBI rules, the company has to fix a record date (T-Day) and inform the stock exchange. The next day (T+1 day) of the record date will be considered the allotment date.

Acceptance By SEBI: Upon receipt of intimation of the record date (T Day) and requisite documents from the Issuer, the stock exchange shall issue a notification accepting the record date and notifying the number of shares considered in the bonus issue. The notification shall include the deemed date of allotment (T+1 day).

Depositing shares: The company will deposit the bonus shares in the depository system by noon on the next working day of the record date (T+1 day).