In a circular issued on Monday, the Securities and Exchange Commission allowed T+2 trading in the bonus issue, which means shares allotted in the bonus issue will be available for trading on the business day following the allotment.
The entitlement date is the cut-off date for shareholders to become eligible for the bonus issue.
This notice applies to all bonus issues announced on or after October 1, 2024.
The measure is aimed at streamlining the procedure for free issue of shares, the circular said, adding that penalty will be imposed in case of delay in complying with the stipulated deadline.
The Securities and Exchange Commission has also laid down operational procedures for implementing this. According to the new standard, a company proposing to issue shares must apply for in-principle approval from the stock exchange within five business days from the date of the board of directors’ meeting approving the share issue. The issuer must notify the stock exchange of the record date (T date) and at the same time, record the deemed allotment date on the next business day after the record date (T+1 day). After receiving the notice of the record date (T date) and necessary documents from the issuer, the stock exchange must approve the record date and issue a notice informing the number of shares to be contemplated in the share issue. The notice must also include the deemed allotment date.
Following this, the issuing company must submit the necessary documentation to the depository to deposit the bonus shares into the depository system by 12pm on the business day following the record date.
Issuers will need to upload the Unique Number (DN) range in the custodian’s DN database and stock exchanges will need to ensure the relevant dates are updated before the bonus shares are credited.
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