The Securities and Exchange Board of India on Monday, reduced the time taken for trading of bonus shares to two working days.
This will apply to all bonus issues announced on or after October 1.
The issuer proposing a bonus issue, has to apply for in-principle approval to the stock exchanges within five working days from the date of the board meeting approving the bonus issue.
After acceptance of record date, the issuer has to submit the requisite documents to depositories for credit of bonus shares in the depository system by the next working day of the record date (t+1).
The shares allotted pursuant to the bonus issue has to be made available for trading on the next working date of allotment (T+2).
A bonus issue is the distribution of free shares by the company to existing shareholders. A company may decide to distribute additional shares as an alternative to dividend payout. In a bonus issue, the number of shares increases, but the value of the investment remains the same.