Sebi Speeds Up Bonus Share Trading: T+2 Timeline From Oct 1
By Rediff Money Desk, New Delhi Sep 16, 2024 20:55
Sebi introduces new guidelines for faster bonus share trading, allowing investors to trade bonus shares just two days after the record date starting October 1.
New Delhi, Sep 16 (PTI) In a bid to speed up the process of crediting and trading bonus shares, markets regulator Sebi on Monday introduced new guidelines, whereby investors will be able to trade bonus shares just two days after the record date starting October 1.
The current ICDR (Issue of Capital and Disclosure Requirements) rules prescribe overall timelines regarding the implementation of the bonus issue. However, there is no specific timeline for credit of bonus shares and trading of such shares, from the record date of the issue.
Currently, after a bonus issue, existing shares continue to trade under the same ISIN, and the new bonus shares are credited and available for trading within 2-7 working days after the record date.
Under the guidelines, trading in bonus shares will now be enabled on the second working day (T+2) after the record date, boosting market efficiency and reducing delays.
This will be applicable for all bonus issues announced on or after October 1, 2024, the Securities and Exchange Board of India (Sebi) said in a circular.
The move is expected to benefit both issuers and investors by reducing the time gap between bonus share allotment and trading.
Issuing the operational procedure, Sebi said companies proposing a bonus issue is required to apply for in-principle approval from the stock exchange within five working days of the board meeting that approved the bonus.
When the company sets the record date (T day) for the bonus issue, it needs to note the deemed date of allotment, which is the next working day (T+1 day).
After receiving the record date and necessary documents, stock exchanges will issue a confirmation notice that includes the deemed allotment date and the number of shares being issued as bonuses.
Issuers are required to submit all documents to the depositories by 12 pm on T+1 day to facilitate the quick credit of bonus shares.
Also, the regulator has eliminated the earlier requirement to use a temporary ISIN for bonus shares, permitting direct credit into the existing permanent ISIN of the company's shares.
The current ICDR (Issue of Capital and Disclosure Requirements) rules prescribe overall timelines regarding the implementation of the bonus issue. However, there is no specific timeline for credit of bonus shares and trading of such shares, from the record date of the issue.
Currently, after a bonus issue, existing shares continue to trade under the same ISIN, and the new bonus shares are credited and available for trading within 2-7 working days after the record date.
Under the guidelines, trading in bonus shares will now be enabled on the second working day (T+2) after the record date, boosting market efficiency and reducing delays.
This will be applicable for all bonus issues announced on or after October 1, 2024, the Securities and Exchange Board of India (Sebi) said in a circular.
The move is expected to benefit both issuers and investors by reducing the time gap between bonus share allotment and trading.
Issuing the operational procedure, Sebi said companies proposing a bonus issue is required to apply for in-principle approval from the stock exchange within five working days of the board meeting that approved the bonus.
When the company sets the record date (T day) for the bonus issue, it needs to note the deemed date of allotment, which is the next working day (T+1 day).
After receiving the record date and necessary documents, stock exchanges will issue a confirmation notice that includes the deemed allotment date and the number of shares being issued as bonuses.
Issuers are required to submit all documents to the depositories by 12 pm on T+1 day to facilitate the quick credit of bonus shares.
Also, the regulator has eliminated the earlier requirement to use a temporary ISIN for bonus shares, permitting direct credit into the existing permanent ISIN of the company's shares.
Source: PTI
Read More On:
DISCLAIMER - This article is from a syndicated feed. The original source is responsible for accuracy, views & content ownership. Views expressed may not reflect those of rediff.com India Limited.
You May Like To Read
TODAY'S MOST TRADED COMPANIES
- Company Name
- Price
- Volume
- Srestha Finvest
- 0.89 (+ 4.71)
- 26988152
- Jaiprakash Power Ven
- 23.30 (+ 5.19)
- 17901534
- Sanofi Consumer Heal
- 5,024.95 (+ 0.86)
- 13904974
- AvanceTechnologies
- 0.90 (+ 4.65)
- 10535686
- Sylph Technologies L
- 1.03 ( -9.65)
- 10492427
MORE NEWS
Ratan Tata: A Legacy of Integrity & Purpose -...
Mahindra Group MD Anish Shah pays tribute to Ratan Tata, praising his vision and...
Rupee Rises 1 Paisa to 83.95 vs US Dollar
The Indian rupee strengthened by 1 paisa to 83.95 against the US dollar in early trade...
Ratan Tata Passes Away: Kumar Mangalam Birla...
Aditya Birla Group Chairman Kumar Mangalam Birla mourns the loss of Ratan Tata, calling...