It's bonus time for BSE shareholders

Board to discuss bonus issue plan next week.

The Bombay Stock Exchange (BSE), Asia’s oldest bourse, is likely to issue bonus shares to its shareholders. The BSE board is scheduled to take up the matter at its meeting set for November 8.

BSE sources said shareholders, especially its members, were insisting on issue of bonus shares.

Besides, there is also the need to expand the exchange’s capital base, which is Rs 78.74 lakh at present, prompting the bourse to go for a bonus issue.

BSE is planning to list its shares on its exchange platform, which necessitates a higher capital base. The bourse’s reserves are Rs 1,558 crore as of March 2008, with Rs 50 crore as the authorised share capital.

The current bearish market has led to some BSE members selling shares of the exchange at less than Rs 5,200 apiece, the price at which new shares were issued to institutional investors last year.

The issue of bonus shares is expected to improve returns for shareholders.

BSE has been weighing options to list ever since it completed the demutualisation process 18 months ago. Exchange authorities have been considering two options for listing. One, listing without an initial public offer (IPO) and the other, post-IPO listing.

It is learnt that the proposal to list shares without the IPO has not found favour with capital market regulator Securities and Exchange Board of India (Sebi).

BSE has not set any time-frame for listing. With market conditions not conducive for an IPO, there have been reports of some off-market deals between brokers. Many members have suggested an exit route, which will be possible only when its shares are listed.

There could be some demand for BSE’s shares, following Sebi’s recent clarification, which raised the ceiling on single-entity shareholders from 5 per cent to 15 per cent. There are also reports that some of BSE existing shareholders want to consolidate their shareholding in the exchange.