The Securities and Exchange Board of India (SEBI) has updated the rules for trading bonus shares. Under the new rule, the T+2 system will now apply to trading bonus shares.
This means that shares can be traded two days after the record date (T), making the process faster.
SEBI released a circular on Monday about this change, which will come into effect for all bonus shares issued after October 1.
Currently, investors must wait two weeks to trade bonus shares, but this new rule will shorten that time, benefiting investors significantly.
Penalties for Not Following the T+2 Rule
In its circular, SEBI stated that companies failing to follow the T+2 rule may face penalties.
The “record date” refers to the day investors receive their bonus shares.
The new rule ensures that investors can trade their bonus shares much sooner.
Complete details of the rule are outlined in SEBI’s circular.
Steps Companies Must Follow for Bonus Share Issuance
1) The company must apply for stock exchange approval within five days of the board meeting where the bonus issue was approved.
2) When setting the record date (T day) and informing the stock exchange, companies must also provide T+1 details.
3) Upon receiving the record date information, the stock exchange will approve the date and notify the number of shares to be issued in the bonus issue, including T+1 details.
4) By 12 noon on T+1 day, the company must submit necessary documents to credit bonus shares to the depository system.
5) The company must also upload the DN range in the DN database of the depository.
6) Finally, the bonus shares will be available for trading on T+2.
