In furtherance of the Consultation Paper issued by SEBI on August 5, 2024 on ‘Streamlining the process and reduction in timelines of Bonus Issue (enabling T+2 trading of shares where T being record date)’, SEBI, by way of its Circular dated September 16, 2024, has streamlined the process for bonus issues under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (‘SEBI ICDR Regulations’) by reducing the timeline for credit and trading of bonus shares from the record date, to T+2 days, where ‘T’ is the record date. This will be applicable for all bonus issues announced on or after October 1, 2024. The operational procedure is as follows:

i.    issuers must apply for an in-principle approval within five working days of the board meeting approving the bonus issue;

ii.   the deemed date of allotment which should be on the next working day after the record date (T+1);

iii.  should be taken on record while notifying the record date (T) to the stock exchanges;

iv.  stock exchanges will notify acceptance of the record date and share details, including the deemed allotment date;

v.    issuers must submit requisite documents for crediting bonus shares, to depositories by noon on T+1 day;

vi.  distinctive numbers for the shares must be uploaded to the depository’s database;

vii. bonus shares will be available for trading on T+2;

viii. temporary ISINs are exempted, allowing direct credit to permanent ISINs for bonus shares; and

ix.  compliance with these timelines is mandatory, and any delays will attract penalties under the SEBI Circular dated August 19, 2019, on non-compliance with certain provisions of SEBI ICDR Regulations.