MUMBAI: Markets regulator Sebi on Monday proposed to uniform timelines for allotment and the subsequent trading bonus shares issued by companies.
In its consultation paper, Sebi proposes that bonus shares start trading two working days from the record date, that is on a T+2 basis where T is the record date. The current ICDR (Issue of Capital and Disclosure Requirements) rules prescribe overall timelines about issuance of bonus shares and the process.However, it does not specify any timeline for credit of bonus shares and trading of such shares from the date of issue. “Thus, the 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 issues,” Sebi said in the paper.
Currently, in cases where the companies need only board approval to allot bonus shares, such stocks need to be listed within 15 days from the nod. In cases where the companies need shareholders’ nod, listing of bonus shares need to happen within two months of the board approval. Under the proposed changes, if approved, this timeline would be cut substantially.
With regards to the procedure, Sebi said the issuer, proposing the bonus issue of shares, should apply for in-principle approval from the stock exchange within five working days of the board meeting that approves the bonus issue.
In its consultation paper, Sebi proposes that bonus shares start trading two working days from the record date, that is on a T+2 basis where T is the record date. The current ICDR (Issue of Capital and Disclosure Requirements) rules prescribe overall timelines about issuance of bonus shares and the process.However, it does not specify any timeline for credit of bonus shares and trading of such shares from the date of issue. “Thus, the 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 issues,” Sebi said in the paper.
Currently, in cases where the companies need only board approval to allot bonus shares, such stocks need to be listed within 15 days from the nod. In cases where the companies need shareholders’ nod, listing of bonus shares need to happen within two months of the board approval. Under the proposed changes, if approved, this timeline would be cut substantially.
With regards to the procedure, Sebi said the issuer, proposing the bonus issue of shares, should apply for in-principle approval from the stock exchange within five working days of the board meeting that approves the bonus issue.
