MUMBAI: The Securities and Exchange Board of India (Sebi) has expedited the process for enabling trading of bonus shares, which will now be available two days after the record date (T+2). Currently, such shares are typically available for trading around two weeks after the record date.
All bonus issues announced on or after October 1 will be made available for trading two days (T+2) from the record date, Sebi said in a circular issued on Monday.
The record date is the cut-off date used by the issuing company to determine which shareholders are eligible for a bonus issue.
Detailing the procedure for this the circular said any delay in compliance with the timelines as mentioned will attract penalties under 4.1 of Sebi circular dated August 19, 2019 on ‘non-compliance with certain provisions of Sebi’s ICDR regulations’.
The new procedure is as follows: the issuer proposing a bonus issue must apply for in-principle approval under Regulation 28(1) of the LODR Regulations, 2015, to the stock exchange within five working days from the date of the board meeting approving the bonus issue.
When fixing and notifying the record date (T day) to the stock exchange, the issuer must also record the deemed date of allotment on the next working day after the record date (T+1 day).
The circular also said on receipt of intimation of the record date (T day) and requisite documents from the issuer, the stock exchanges 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).
After the notification from the exchanges confirming the record date, the issuer must ensure the submission of the necessary documents to depositories for the crediting of bonus shares into the depository system by 12 p.m. on the next working day after the record date (i.e., T+1 day).
The issuer must also upload the distinctive number (DN) ranges into the DN database of the depository, and stock exchanges must update the relevant dates before the bonus shares are credited. The shares allotted pursuant to the bonus issue will be available for trading on the next working day following the allotment (T+2 day).