SEBI Speeds Up Bonus Shares Trading to Just 2 Days Starting October 2024
The Securities and Exchange Board of India (SEBI) has introduced a new rule to make the trading of bonus shares faster. Starting from October 1, 2024, the time taken for trading bonus shares will be reduced to just 2 working days.
New Faster Process
According to SEBI’s new guidelines, companies issuing bonus shares must follow a quicker process:
- Apply for in-principle approval within five working days of the board’s approval.
- Set a record date (T day) and designate the next day (T+1 day) as the allotment date.
- Submit necessary documents to depositories by 12 P.M. on T+1 day.
- Ensure shares are credited to the depository system and update the distinctive number (DN) ranges.
Direct Credit to Permanent ISIN
SEBI has also removed the requirement for crediting bonus shares in a temporary ISIN, allowing shares to be credited directly to the existing permanent ISIN.
Penalties for Non-Compliance
Companies that fail to comply with these timelines will face penalties. This new rule will apply to all bonus issues announced from October 1, 2024, onwards.
Doubts Revealed
SEBI -: SEBI stands for the Securities and Exchange Board of India. It is a government organization that regulates the stock market in India to protect investors and ensure fair trading.
Bonus Shares -: Bonus shares are extra shares given to existing shareholders for free, based on the number of shares they already own. It’s like a company giving you extra pieces of a pie because you already have some.
Trading -: Trading means buying and selling shares or stocks in the stock market. When you trade shares, you are exchanging them for money.
Record Date -: The record date is a specific date set by a company to determine which shareholders are eligible to receive bonus shares. If you own shares on this date, you get the bonus shares.
Approvals -: Approvals are permissions that companies need to get from SEBI and other authorities before they can issue bonus shares. It’s like getting a green signal to go ahead.
ISIN -: ISIN stands for International Securities Identification Number. It is a unique code used to identify specific shares or bonds. Think of it like a special ID number for shares.
Non-compliance -: Non-compliance means not following the rules set by SEBI. If companies don’t follow the new rules, they will have to pay penalties, which are like fines.
Penalties -: Penalties are punishments or fines that companies have to pay if they break the rules. It’s like getting a time-out or losing points for not following instructions.
