Bonus Shares: A New Perspective

In the case of listed companies, the Securities and Exchange Board of India's DIP (disclosure and investor protection) and ICDR(Issue of Capital and Disclosure Requirements) regulations currently, the said company cannot issue bonus shares by capitalizing its revaluation reserves.

The Question arises whether an unlisted company can do so.....Well, the guidance note issued by ICAI clearly states that the company cannot issue bonus shares out of reserve created by the revaluation of its assets.

However, in case of Bhagvati Developers Vs. Peerless General Finance & Investment Co, the SC held that a non listed company can do so....The enactment of companies bill addressed the issue and stated a company including non listed, cannot issue bonus shares by capitalizing its revaluation reserves.

This clarifies the situation of the Bonus Issue under IPO and Public Issue of Securities.

What is Trade to Trade Settlement System?

A Trade to Trade settlement system is such that delivery is absolutely mandatory. 

Day-trading (intra-day buying and selling) is not encouraged in stocks that are in trade-to-trade segment.

If you sell shares (from your demat account) that are under trade-to-trade transaction & buy them back later on the same day, then the investor in such a case has to give delivery for the shares sold. 

However, a day later, the investor shall get delivery of the shares bought which clearly signifies that each trade is separate.

If you do not have shares in your demat account, you cannot sell them. This is because you have to give delivery. The shares that you buy, come into your demat account after a couple of days; thus you cannot sell them on the same day.