Bonus share issue: Sebi to fast-track trading process under T+2 timeline from October 1

Come October 1, bonus shares will be available for T+2 trading, reducing the time from the record date for credit and trading.

In a circular released on Monday, the Securities and Exchange Board of India (Sebi), the markets regulator, fast-tracked the process for the bonus issue of equity shares under the T+2 settlement system.

A record date or T day is the last date on which the company issuing the bonus shares decides which shareholders are eligible for bonus issue.

“As a part of the continuing endeavour to streamline the process of bonus issue of equity shares, in consultation with the market participants, it has been decided to reduce the time taken for credit of bonus shares and trading of such shares, from the record date of the Bonus Issue under SEBI (ICDR) Regulations, 2018,” Sebi said in the statement.

Presently, the equity shares from bonus issues are available in about two weeks from the record date.

The market regulator stated that any delay in compliance with the timelines mentioned in the circular released on Monday will attract penalties.

Additionally, Sebi also described the process for T+2 timeline.

Here is the procedure:

1. The company proposing a bonus issue of equity shares will be required to apply for in-principle approval under the Sebi regulations within five working days from the date of the board meeting approving bonus isse.
2. The company, while fixing the record date or the T day and informing it to the stock exchange of the proposed bonus issue, should also record the deemed date of allotment on the next working day of the record date.

 3.  After receiving the record date intimation and getting the required documents from the company, the stock exchange will issue a notification accepting the record date. Additionally, it will notify the number of shares that might be offered in the bonus issue. The notification will mention the deemed date of allotment.

 4. After the stock exchange issues a notification, the company should ensure that all the required documents are submitted to depositories for credit of bonus shares in the depository system by 12 pm on the next working day after the record date.