SEBI Cuts Trading Time for Bonus Shares to 2 Days

SEBI has reduced the trading time for bonus shares to just 2 working days. Effective from October 1, 2024, the new regulations aim to streamline the credit and trading process, requiring compliance from companies on specific operational procedures.

In a landmark move to streamline bonus share issuance and accelerate trading, the Securities and Exchange Board of India (SEBI) announced on Monday that the trading time for bonus shares will be reduced to just 2 working days. This change, set to take effect from October 1, 2024, introduces significant updates to the crediting and trading timeline for such shares.

The initiative aims to shorten the time for bonus shares to become tradable from the record date. According to the SEBI circular, the new procedure mandates that companies seeking to issue bonus shares must comply with stricter timelines and operational requirements under the SEBI (ICDR) Regulations, 2018.

The circular stipulates that companies must apply for in-principle approval within five working days of board approval for the bonus issue. Additionally, issuers must designate the day after the record date as the allotment date. Stock exchanges are tasked with confirming the record date and bonus shares' number, ensuring the swifter credit of shares to shareholders, who can start trading on T+2 day.

Crucially, SEBI has removed the requirement for crediting bonus shares in a temporary ISIN, allowing direct credit in the permanent ISIN. SEBI has also advised stock exchanges and depositories to update their rules to reflect these changes. Penalties will be imposed for non-compliance, and all bonus issues announced from October 1, 2024, must adhere to these new regulations, marking a significant improvement in the bonus issue process.

(With inputs from agencies.)