SEBI Fast-Tracks Bonus Share Trading Timeline

• 17 Sep 2024

On 16th September, 2024, the Securities and Exchange Board of India (SEBI) announced new guidelines to expedite the trading of bonus shares, reducing the timeline to two days after the record date starting October 1, 2024.

• SEBI’s new guidelines will allow investors to trade bonus shares just two working days (T+2) after the record date, significantly speeding up the process.
• The current Issue of Capital and Disclosure Requirements (ICDR) rules did not specify a timeline for the crediting and trading of bonus shares from the record date.
• Traditionally, new bonus shares were available for trading within 2-7 working days after the record date, with existing shares continuing to trade under the same ISIN.
• The updated guidelines require companies to apply for in-principle approval from the stock exchange within five working days of the board meeting that approves the bonus issue.
• Companies must set the record date and note the deemed allotment date, which will be the next working day (T+1), to facilitate faster processing.
• Stock exchanges will issue confirmation notices with the deemed allotment date and the number of bonus shares once they receive the record date and necessary documents.
• Issuers must submit all required documents to depositories by 12 noon on T+1 day to ensure prompt crediting of bonus shares.