The Securities and Exchange Board of India (SEBI) has decided to shorten the time taken for credit of bonus shares and their subsequent trading to two days from the record date. This new rule will apply to all bonus issues announced from October 1.
Currently, there is no specific timeline for credit of bonus shares and their trading, but it typically takes longer than what has been laid down by SEBI under the new rule.
Bonus shares will now be credited to investor accounts a day after the record date and will be available for trading on the second working days after the record date, SEBI said in a circular on Monday.
The record date, or the T day, is the cut-off date for determining which shareholders are eligible to receive bonus shares.
As per the new norms, the company proposing a bonus issue of shares will be required to apply to the stock exchange for an in-principle approval under the SEBI regulations within five working days from the date of the board meeting approving the bonus issue. Additionally, when informing about the record date, companies must also specify the deemed date of allotment, which will be the next working day (T+1 day).
Upon receipt of intimation of the record date and requisite documents, the stock exchange will confirm the record date and notify the number of shares involved in the bonus issue, including the deemed date of allotment.
Following this, the issuer company will have to ensure submission of requisite documents to depositories for credit of bonus shares in the depository system latest by 12 pm of the next working day of the record date.