1:1, 2:1, 1:2, 1:5, 3:1, & 4:1 Among Popular Bonus Issues: Big News On Credit Of Free Shares In Demat Account

A major announcement has been made by market regulator Sebi which speeds up the claim for bonus shares reward. Continuing its endeavour to streamline the process of the Bonus issue of equity shares, Sebi in consultation with market participants, has decided to reduce the time taken for credit of bonus shares and trading of such shares, from the record date of the Bonus Issue.

What does that mean? Simply put, you will be able to receive your bonus shares in the demat account in two days from the record date from the earlier timeframe of two weeks.

The new change in credit of bonus shares will come into effect from October 1, 2024.

Here are the guidelines from Sebi for implementing and crediting bonus shares in investors' account:

- 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 board meeting approving the Bonus issue.

- 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).

- Upon receipt of intimation of the record date (T Day) and requisite documents from the Issuer, the Stock Exchange(s) shall issue a 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).

- 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).

- The Issuer shall ensure the upload of the distinctive number (DN) ranges in the DN database of the depository and stock exchange(s) shall ensure the updation of relevant dates before the credit of bonus shares.

- The shares allotted pursuant to the bonus issue shall be made available for trading on the next working date of allotment (T+2 day).

Sebi said, "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."

What are bonus shares? Bonus shares are one of the many corporate actions that listed companies announce on several occasions. Bonus shares are like incentives which are free of cost given to investors. Under this corporate action, new shares are issued at the existing Face Value of equity shares of the company. Hence, the face value remains the same post-bonus issue.

Generally, some of the popular bonus issue ratios announced by listed companies are --- 1:1, 1:2, 1:5, 1:3, 1:4, 3:1, 4:1, and 2:1 among others. However, notably, the bonus issues ratio vary from company to company.