Bonus Share Rule: SEBI’s big decision on bonus shares
Bonus Share Rule Change- SEBI has reduced the time between credit and trading of bonus shares to T+2 days after the record date. The new rule will come into effect from October 1, which will give shareholders the benefit of faster trading.
Market regulator SEBI has reduced the time between credit and trading of bonus shares. Now all bonus shares will be available for trading two days after the record date. Earlier, these shares used to come for trading about two weeks after the record date. This new rule will come into effect on October 1, and the record date will be considered a trading day (T-Day).
SEBI has directed that companies issuing bonus shares must apply for in-principle approval from the stock exchanges within five working days of their board’s approval.
Bonus Share Rule Change: The record date is the cutoff date on which shareholders will be entitled to bonus shares. In a circular issued on September 16, SEBI informed that T+2 trading of bonus shares has been enabled, where T stands for record date. The circular gives details related to the process, and it also states that any kind of delay will be penalized by SEBI.
What are bonus shares?
Bonus shares are additional shares that the company provides to its investors for free. Just like companies give bonuses to their employees, listed companies give free shares to their investors. The company decides how many bonus shares it will issue.
Now this will be the process
Bonus issue proposal: On the day the company’s board approves the bonus issue, within five working days from that date, it will have to apply to the stock exchange for in-principle approval under SEBI (LODR) Regulations 2015.
Fixing record date: As per SEBI rules, the company will have to fix a record date (T-Day) and inform the stock exchange. The next day of the record date (T+1 day) will be considered as the allotment date.
Depositing shares in the depository: The company will deposit the bonus shares in the depository system by 12 noon on the next working day (T+1 day) of the record date.
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