Sebi proposes uniform timeline to ensure credit, trading of bonus shares

Markets regulator Sebi on Monday proposed a uniform timeline to ensure timely credit and trading of bonus shares in a bid to streamline the process to enable T+2 trading of such shares after the record date.

The current ICDR (Issue of Capital and Disclosure Requirements) rules prescribe overall timelines regarding implementation of the bonus issue, however, there are no specific timeline on credit of bonus shares and trading of such shares, from the record date of the issue.

"Thus, 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 issue," Sebi said in its consultation paper.

Currently, after a bonus issue, existing shares continue to trade under the same ISIN, and the new bonus shares are credited and available for trading within 2-7 working days post record date.

Therefore, to have uniformity in timelines for credit and trading of bonus shares, it is imperative that timelines are prescribed for credit and trading of bonus shares from the record date, ensuring bonus issue is implemented in a timely manner, Sebi said.

"Accordingly, to facilitate fast credit and trading of shares allotted pursuant to bonus issue and to reduce investors' risk of market volatility due to any delay in credit of bonus shares, it is proposed to streamline and reduce timelines of bonus issue enabling T+2 trading of shares post record date (T day)," Sebi said.

The shares allotted pursuant to the bonus issue will be made available for trading on the next working date of allotment (T+2 day), it added.

The Securities and Exchange Board of India (Sebi) has sought comments till August 26 on the proposals.