Securities and Exchange Board of India (SEBI) has issued a new circular today and aims to reduce the time taken for the credit and trading of bonus shares from the record date.
According to the new guidelines, issuers proposing a bonus issue must apply for in-principle approval from the stock exchange within five working days of the board meeting that approves the bonus issue. The record date (T day) must be communicated to the stock exchange, with the allotment date set for the next working day (T+1 day).
Upon receiving the record date and necessary documents, stock exchanges will issue notifications accepting the record date and detailing the number of shares in the bonus issue. Issuers must ensure the submission of requisite documents to depositories by 12 PM on T+1 day for credit of bonus shares. The shares will be available for trading on T+2 day, bypassing the requirement for temporary ISINs and allowing direct credit in permanent ISINs.
The circular mandates amendments to relevant bye-laws, rules, and regulations by exchanges and depositories to implement these changes. Non-compliance with the specified timelines will attract penalties as per SEBI’s previous circulars.
