Bonus shares announced on or after October 1 will now become available within two business days after the record date. Currently, shares in such issues become available only two weeks after the record date. The record date is the date when the company decides which shareholders are eligible to receive the bonus issue.
SEBI New circular: Bonus shares announced on or after October 1 will now be available within 2 business days after the record date. Currently, shares of such issues are available only two weeks after the record date. The record date is the date when the company decides which shareholders are eligible to receive the bonus issue. Market regulator Securities and Exchange Board of India (Sebi) has issued a circular on September 16, providing for T+2 trading days for bonus shares. Here T stands for record date.
Sebi’s circular gives detailed information about this entire process and states that any delay in complying with the deadline will also attract a penalty. This penalty will be imposed as per the provisions of SEBI’s circular issued on August 19, 2019, which talks about the penalty for not complying with some provisions of SEBI’s ICDR Regulations.
This process will be something like this:
1. The company issuing bonus shares will apply to the stock exchange for approval of the issue as per SEBI (LODR) Regulations, 2015. This process should be completed within 5 working days of the approval of the bonus issue in the board meeting.
2. The entity issuing the bonus issue will fix a record date (T day) for the proposed issue and inform the stock exchanges about it. Also, information about the allotment will have to be given on the next working day of the record date.
3. On receiving the necessary documents and information about the record date (T day) from the entity issuing the bonus issue, the stock exchange will issue a notification regarding the record date and the number of bonus shares. The notification will also contain the likely date of allotment (T+1 day).
4. After the stock exchange accepts the record date and issues a notification, the company issuing the bonus issue will submit the necessary documents to the depositories on the next day of the record date, so that the bonus shares can be credited to the depository system.
5. Shares allotted under bonus issue will be made available for trading on the next working day (T+2 day) of allotment.
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