Securities and Exchange Board of India (SEBI) has issued Circular No. CIR/CFD/PoD/2024/122 on September 16, 2024, aimed at improving the efficiency of bonus share issues. Effective from October 1, 2024, the circular mandates a reduction in the time for trading bonus shares from the record date. Issuers must apply for approval of the bonus issue within five working days of the board meeting and fix the record date (T day), with the deemed date of allotment being T+1. Stock exchanges will notify the record date and allotment date, while issuers are required to submit documents to depositories by noon the next working day (T+1). Bonus shares will be available for trading on T+2. Additionally, the requirement for temporary ISINs for bonus shares is exempted, allowing direct credit into the permanent ISIN. Exchanges and depositories must update their regulations accordingly. Non-compliance will result in penalties as outlined in SEBI’s previous circular on non-compliance. This initiative is part of SEBI’s efforts to streamline processes and protect investor interests.
Securities and Exchange Board of India
Circular No. CIR/CFD/PoD/2024/122 Dated: September 16, 2024
To
All Listed Entities
All Nationwide Stock Exchanges
All Depositories
All Registered Registrar & Share Transfer Agents
Dear Sir/Madam,
Sub: Enabling T+2 trading of Bonus shares where T is the record date
1. As a part of the continuing endeavor to streamline the process of Bonus issue of equity shares, in consultation with the market participants, it has been decided to reduce the time taken for credit of bonus shares and trading of such shares, from the record date of the Bonus Issue under SEBI (ICDR) Regulations, 2018.
2. The operational procedure to implement the above is as given below:
(i) The Issuer proposing a bonus issue shall apply for the in-principle approval under Regulation 28(1) of SEBI (LODR) Regulations, 2015, to the Stock Exchange within 5 working days from the date of board meeting approving the Bonus issue.
(ii) The Issuer while fixing and intimating the record date (T day) to the Stock Exchange as required under Regulation 42(1) of SEBI (LODR) Regulations, 2015, for the proposed bonus issue, shall also take on record deemed date of allotment on next working date of record date (T+1 day).
(iii) Upon receipt of intimation of the record date (T Day) and requisite documents from the Issuer, the Stock Exchange(s) shall issue notification accepting the record date and notifying the number of shares considered in the bonus issue. The notification shall include the deemed date of allotment (T+1 day).
(iv) After issuance of notification issued by the Stock Exchange for acceptance of record date, the Issuers shall ensure submission of the requisite documents to Depositories for credit of bonus shares in the depository system latest by 12 P.M. of next working day of the record date (i.e. T+1 day).
(v) The Issuer shall ensure upload of the distinctive number (DN) ranges in the DN database of the depository and stock exchange(s) shall ensure updation of relevant dates before credit of bonus shares.
(vi) The shares allotted pursuant to the bonus issue shall be made available for trading on the next working date of allotment (T+2 day).
(vii) The directions issued pursuant to SEBI Circular No. CIR/MRD/DP/21/2012 dated August 02, 2012 and CIR/MRD/DP/ 24 /2012 dated September 11, 2012 requiring credit of bonus shares in temporary ISIN shall be exempted in case of bonus issue of equity shares, and credit of shares directly in permanent ISIN (existing ISIN) shall be permitted in case of bonus issue of equity shares.
3. The Exchange(s) and Depositories are advised to make amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision, as may be applicable.
4. This circular shall be applicable for all bonus issues announced on or after October 01, 2024. Any delay in compliance with the timelines as mentioned above will attract penalties as determined under point 4.1 of SEBI circular SEBI/HO/CFD/DIL2/CIR/P/2019/94 dated August 19, 2019 on Non-compliance with certain provisions of SEBI ICDR Regulations’.
5. This circular is being issued in exercise of the powers under section 11 read with section 1 1A of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
6. This circular is available on SEBI website at www.sebi.gov.in under the category: ‘Legal →Circulars’.
Yours faithfully,
Yogita Jadhav
General Manager
Corporation Finance Department
+91 22 2644 9583
Email – [email protected]
