Govt, Sebi in favour of fractional shares

Move may lift retail participation, diversify company ownership

- Gireesh Chandra Prasad

The ministry of corporate affairs and the capital markets regulator are in favour of allowing certain classes of companies to issue so-called fractional shares, a person aware of the development said.

Both believe that fractional shares, which are less than full shares, could increase retail investors’ access to high-value shares, boost liquidity and help companies further diversify ownership, the person cited above said on condition of anonymity.

The ministry and the Securities and Exchange Board of India (Sebi) have already had a discussion in this respect, and the regulator will give its views in a detailed presentation, the person added.

 

“Allowing fractional shares would require an amendment to the Companies Act. Probably the same norms will be set for both unlisted and listed entities, but it would be more useful for listed entities," the person said.