Business: Market regulator Sebi on Monday proposed a uniform timeline to ensure timely credit and trading of bonus shares, in order to streamline the process to enable T+2 trading of such shares after the record date. The current ICDR (Issue of Capital and Disclosure Requirements) regulations prescribe overall timelines with respect to implementation of bonus issues, however, there is no specific timeline on credit of bonus shares and trading of such shares from the record date of the issue. Thus, in the absence of any specific guidelines on this aspect, there is a disparity with respect to the timelines for crediting and making available for trading of shares in bonus issues,” Sebi said in its consultation paper.
Currently, after a bonus issue, existing shares continue to trade under the same ISIN, and new bonus shares are credited and made available for trading within 2-7 working days after the record date. Therefore, in order to have uniformity in the timelines for credit and trading of bonus shares, it is necessary to prescribe timelines for credit and trading of bonus shares from the record date, so that the bonus issue can be implemented in a timely manner, Sebi said. “Accordingly, in order to facilitate faster credit and trading of shares allotted pursuant to the bonus issue and to mitigate the investors’ exposure to market volatility on account of any delay in credit of bonus shares, it is proposed to streamline and reduce the timelines for bonus issues to enable T+2 trading of shares after the record date (T Day),” SEBI said. The shares allotted as per the bonus issue will be made available for trading on the record date. It said that the proposal will be considered on the next working date of allotment (T+2 day). The Securities and Exchange Board of India (SEBI) has sought comments on the proposals by August 26.
