Bonus issue credit, trading rule change: Starting next month, shareholders will receive bonus shares, if announced by a company, credited to their demat accounts soon. Market regulator SEBI has made a significant change concerning the bonus share credit into demat accounts.
On Monday, Securities and Exchange Board of India (SEBI) issued a circular suggesting a new framework to simplify bonus share trading. Now, bonus shares will be available for T+2 trading as the capital market regulator has reduced the time from the record date for credit and trading.
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Bonus Issue Credit, Trading Rule Change
Announcing the change, SEBI said, “As part of the continuing endeavor 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.”
This would bring down the time for bonus share credit in shareholders’ demat account so they can start trading in them soon i.e. in 2 days of the record date (T+2). Earlier, the time between the record date and the credit and trading of bonus shares was delayed.
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What SEBI Order Means for Shareholders
SEBI’s recent order on the credit of bonus shares means that shareholders will get the free equities credited to their demat accounts faster now – 2 trading days after the record date. The regulator has enabled T+2 trading of bonus shares where T is the record date.
As part of the framework, the issuer proposing a bonus issue will have to apply for in-principle approval to the stock exchange within 5 working days from the date of the board meeting approving the issue. The issuer will also take on record deemed date of allotment on next working date of record date (T+1 day).
After exchanges are informed about the record date (T Day), they will issue notification accepting the record date and notifying the number of shares considered in the bonus issue. The shares allotted pursuant to the bonus issue shall be made available for trading on the next working date of allotment (T+2 day).
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Bonus Share Credit Date Change
The latest change will come into effect starting Tuesday, October 1. SEBI has advised exchanges to make amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision. “Any delay in compliance with the timelines as mentioned above will attract penalties,” it noted.
