Bonus Shares to Be Credited to Demat Accounts Within 3 Days of Book Closure in India

To expedite the credit and trading of bonus shares, the market regulator SEBI has implemented a new guideline on Monday, allowing investors to trade bonus shares just two days after the record date, effective from October 1.

The current Issue of Capital and Disclosure Requirements (ICDR) rules set an overall timeline for the implementation of bonus issues, but there is no specific timeframe for the credit and trading of bonus shares from the record date.

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

According to the new guideline, trading of bonus shares will now be possible on the second working day (T+2) after the record date, which is expected to enhance market efficiency and reduce delays.

This rule will apply to all bonus issues announced on or after October 1, 2024, as informed by SEBI in a circular.

This step is expected to benefit both issuers and investors by reducing the time gap between the allotment and trading of bonus shares.

A bonus issue is a process by which a company distributes free shares to its shareholders. This increases the number of shares but keeps the investment value the same.