The Securities and Exchange Board of India (Sebi) has recommended a uniform timeline to ensure that bonus shares are credited on time in order to make them available for trading within two days from the record date.
The rules under Issue of Capital and Disclosure Requirements currently state that the new bonus shares are credited and available for trading within two to seven working days within the record date. However, it does not give a specific timeline for credit of bonus shares.
"Thus, the absence of any specific guidelines on this aspect leads to non-uniformity with respect to timelines in which shares are credited and made available for trading in bonus issues," Sebi said in its consultation paper.
In order to bring uniformity in timelines for credit and trading of bonus shares, Sebi said it is proposing to streamline and reduce timelines of bonus issue enabling T+2 trading of shares post record date," Sebi said. In this case, T refers to the record date.
Sebi said that once the board meeting approves the bonus issue, the issuer has to seek in-principle approval from the stock exchange within five working days.
Once the record date or T day is notified to to the stock exchange, the issuer has to set the next working day as the allotment day (T+1). The documents must be submitted to the depositories for crediting bonus shares must be submitted by 12 pm on T+1 day.
Following this, the bonus shares will be available for trading on the next working day, which is T+2 day, according to Sebi.
The regulator has invited suggestion comments on the proposal till August 26.
