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SEBI's new circular: Bonus shares declared on or after October 1 will now be available within 2 business days after the record date. Currently, shares of such issues are available only two weeks after the record date. The record date is the date when the company decides which shareholders are eligible to receive the bonus issue. Market regulator Securities and Exchange Board of India (SEBI) has issued a circular on September 16, providing T+2 business days for bonus shares. Here T means record date.
SEBI's circular gives detailed information about this entire process and states that any delay in complying with the deadline will also attract a penalty. This penalty will be imposed as per the provisions of SEBI's circular issued on August 19, 2019, which talks about penalties for non-compliance of certain provisions of SEBI's ICDR Regulation.
The process will look something like this:
1. The company issuing bonus shares shall apply to the stock exchange for approval of the issue as per SEBI (LODR) Regulations, 2015. This process should be completed within 5 working days of approval of the bonus issue in the board meeting.
2. The entity issuing the bonus issue will fix a record date (T Day) for the proposed issue and inform the stock exchanges about it. Also, the allotment information has to be given on the next working day of the record date.
3. On receipt of the required documents and information regarding the record date (T day) from the entity issuing the bonus issue, the stock exchange will issue a notification regarding the record date and the number of bonus shares. The notification will also include the likely date of allotment (T+1 day).
4. After the record date has been accepted and notification has been issued by the stock exchange, the company making a bonus issue shall submit the necessary documents to the depositories on the next day of the record date so that the bonus shares can be deposited in the depository system.
5. Shares allotted under the bonus issue will be made available for trading on the next working day (T+2 day) of allotment.