SEBI enables T+2 trading of Bonus shares

SEBI, in its circular, dated September 16, 2024, addresses the facilitation of T+2 trading for bonus shares under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. Essentially, ‘T’ represents the record date. Through this development, the regulator aims to reduce the time for credit and trading of bonus shares.

Particulars include: –

1.    𝐁𝐨𝐧𝐮𝐬 𝐒𝐡𝐚𝐫𝐞𝐬 𝐓𝐢𝐦𝐞𝐥𝐢𝐧𝐞: The bonus shares will be credited and made available for trading two days (T+2) after the record date.
2.    𝐈𝐬𝐬𝐮𝐞𝐫 𝐑𝐞𝐬𝐩𝐨𝐧𝐬𝐢𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬: Issuers must apply for in-principal approval within five days of the board meeting approving the bonus issue and submit necessary documents to stock exchanges and depositories.
3.    𝐓𝐫𝐚𝐝𝐢𝐧𝐠 𝐀𝐯𝐚𝐢𝐥𝐚𝐛𝐢𝐥𝐢𝐭𝐲: Shares will be available for trading on the next working day following allotment (T+2).
4.    𝐈𝐒𝐈𝐍: Bonus shares will be credited to the permanent ISIN, bypassing the need for temporary ISIN.
5.    𝐄𝐧𝐟𝐨𝐫𝐜𝐞𝐦𝐞𝐧𝐭: These rules will apply to bonus issues announced on or after October 1, 2024.

𝐖𝐡𝐲 𝐢𝐬 𝐭𝐡𝐢𝐬 𝐢𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐭?

1.    𝐈𝐧𝐜𝐫𝐞𝐚𝐬𝐞𝐝 𝐄𝐟𝐟𝐢𝐜𝐢𝐞𝐧𝐜𝐲: By reducing the time between the record date and the availability of bonus shares for trading (T+2), SEBI is streamlining the process, allowing investors quicker access to their bonus shares.
2.    𝐈𝐧𝐯𝐞𝐬𝐭𝐨𝐫 𝐂𝐨𝐧𝐟𝐢𝐝𝐞𝐧𝐜𝐞: Ensuring that bonus shares are credited faster and available for trading more promptly can build trust in the system. Investors are less likely to face delays or uncertainties regarding the allocation and trading of bonus shares, improving their overall market experience.
3.    𝐌𝐚𝐫𝐤𝐞𝐭 𝐃𝐞𝐯𝐞𝐥𝐨𝐩𝐦𝐞𝐧𝐭: Simplifying the bonus issue process can encourage more companies to issue bonuses, benefiting the broader market ecosystem.
4.    𝐀𝐥𝐢𝐠𝐧𝐦𝐞𝐧𝐭 𝐰𝐢𝐭𝐡 𝐆𝐥𝐨𝐛𝐚𝐥 𝐒𝐭𝐚𝐧𝐝𝐚𝐫𝐝𝐬: The shift towards faster crediting and trading aligns the Indian securities market with international best practices, making it more attractive to global investors.

In essence, this change enhances both the operational efficiency and credibility of India’s equity markets.

A copy of the circular is enclosed herewith.

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