Sebi Reduces Bonus Shares Allotment Time To T+2 Effective 1st October
This initiative aims at reducing the time taken for bonus shares to become tradable from the record date
In a bid to streamline the process of issuing bonus shares and expedite their trading, the Securities and Exchange Board of India (Sebi) reduced the time taken for trading of bonus shares to two working days.
As per a notification by Sebi on Monday, it has introduced significant changes to the timeline for crediting and trading such shares.
This initiative, aimed at reducing the time taken for bonus shares to become tradable from the record date.
As per the circular, starting from 01 October 2024, companies issuing bonus shares under the Sebi issue of capital and disclosure requirements (ICDR) regulations, 2018, will be required to adhere to a faster operational procedure.
The new process mandated that companies must apply for in-principle approval under regulation within five working days of their board approving the bonus issue.
As per the circular, the issuer must also set a record date (T day) as per regulation 42(1) of the Sebi (LODR) regulations, 2015, while designating the day immediately following the record date (T+1 day) as the deemed date of allotment.
It stated that the stock exchanges, upon receiving notice of the record date and necessary documents from the issuer, are tasked with notifying the acceptance of the record date and confirming the number of shares under the bonus issue, as well as the allotment date.
To ensure swift credit of bonus shares to shareholders, the issuer is required to submit the relevant documents to depositories by 12 pm on T+1 day, with the shares being credited to the depository system. Furthermore, issuers must upload the distinctive number (DN) ranges into the depository's DN database, and stock exchanges must update relevant information before crediting the shares.
As per Sebi, the newly allotted bonus shares will be available for trading on the next working day following the allotment (T+2 day).
Additionally, Sebi exempted the requirement for crediting bonus shares in a temporary ISIN, allowing shares to be credited directly in the existing permanent ISIN.
Sebi also advised stock exchanges and depositories to amend their respective rules and regulations to accommodate these changes. Failure to comply with the stipulated timelines will attract penalties.
This circular will apply to all bonus issues declared from 01 October 2024, onwards, marking a significant improvement in the bonus issue process. (ANI)
