Sebi speeds up bonus-issue process, shares to be made available for trading on T+2

As of now, the shares is available for trading around two weeks from the record date.

All bonus issues announced on or after October 1 will be made available for trading two days from the record date.  As of now, the shares from such issues are available only after about two weeks from the record date.

Record date is the cutoff date that the issuer company considers to decide which shareholders are eligible for a bonus issue.

The Securities and Exchange Board of India (Sebi) has enabled T+2 trading of bonus shares where T is the record date, through a circular issued on September 16.

The circular detailed the procedure for this and added that any delay in compliance with the timelines as mentioned in the procedure will attract penalties as given under point 4.1 of SEBI circular SEBI/HO/CFD/DIL2/CIR/P/2019/94 dated August 19, 2019 on ‘Non-compliance with certain provisions of SEBI ICDR Regulations’.

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The procedure is as follows:

1.The Issuer proposing a bonus issue shall apply for the in-principle approval under Regulation 28(1) of SEBI (LODR) Regulations, 2015, to the Stock Exchange within 5 working days from the date of board meeting approving the Bonus issue.

2.The Issuer while fixing and intimating the record date (T day) to the Stock Exchange as required under Regulation 42(1) of SEBI (LODR) Regulations, 2015, for the proposed bonus issue, shall also take on record deemed date of allotment on next working date of record date (T+1 day).

3.Upon receipt of intimation of the record date (T Day) and requisite documents from the Issuer, the Stock Exchange(s) shall issue 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).

4.After issuance of notification issued by the Stock Exchange for acceptance of record date, the Issuers shall ensure submission of the requisite documents to Depositories for credit of bonus shares in the depository system latest by 12 P.M. of next working day of the record date (i.e. T+1 day).

5.The Issuer shall ensure upload of the distinctive number (DN) ranges in the DN database of the depository and stock exchange(s) shall ensure updation of relevant dates before credit of bonus shares.

6.The shares allotted pursuant to the bonus issue shall be made available for trading on the next working date of allotment (T+2 day).