Bonus shares should be available for trade two days from record date: SEBI

SEBI has proposed to make it mandatory for all bonus issues to be implemented within 15 days from the date of approval by board, and made available for trading within two days from the record date.

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Though the ICDR Regulations prescribe overall timelines regarding implementation of the bonus issue, there are no specific timelines regarding credit of bonus shares and trading of such shares, from the record date of the issue. Thus, absence of any specific guidelines on this aspect leads to non-uniformity w.r.t. timelines in which shares are credited and made available for trading in bonus issue.

Presently, as per market practice and exchange processes generally in case of a bonus issue, existing shares continue to remain available for trading post record date under existing ISIN and shares issued pursuant bonus issue are credited in existing ISIN and the same are made available for trading in 2-7 working days post record date.  

“Therefore, to have uniformity in timelines for credit and trading of bonus shares, it is imperative that timelines are prescribed for credit and trading of bonus shares from the record date, ensuring bonus issue is implemented in a timely manner,” SEBI said.

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“Accordingly, to facilitate fast credit and trading of shares allotted pursuant to bonus issue and to reduce investors’ risk of market volatility due to any delay in credit of bonus shares, it is proposed to streamline and reduce timelines of bonus issue enabling T+2 trading of shares post record date (T day). “ it added.