SEBI’s plans to introduce fractional shares in the Indian markets to regulate fractional ownership are likely to witness a delay as the Centre is still mulling over the market regulator’s proposal, CNBC Awaaz reported quoting sources.
Madhabi Puri Buch, Chairperson, Securities and Exchange Board of India (SEBI) had said last year that the regulator is keen on introducing fractional shares. However, this will require changes to be made to the Sebi Act and also the Companies Act. “Something that we were very keen to do, we could not do. So, for instance, fractional shares. Somebody came with that (and) we thought it was a good idea,” Buch had said.
If the SEBI proposal gets approved by the government, it would let people with limited capital invest in shares of high-value firms, thereby rendering the stock market more accessible. How? Investors who do not have the means to buy a whole share of a company will be able to own a fraction of a share and become a stakeholder.
Notably, fractional shares arise through corporate actions such as mergers and acquisition, stock splits, etc. At present, these cannot be traded.
This concept is already prevalent in the United States and several Indian investors own fractional shares of tech majors such as Meta and Alphabet.
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