Currently, small investors can purchase whole shares of companies. Last year, the Company Law Committee proposed introducing fractional shares, and SEBI expressed interest.
The Ministry of Company Affairs plans to amend Company Law to allow fractional shares. Some issues regarding bonus and rights shares need resolution.
New System: In the upcoming system, small investors can buy expensive shares in portions. For instance, a Rs 50,000 share could be bought for just Rs 500, providing a 1% stake.
Benefits for Investors: This new system makes pricey shares accessible to common investors, boosting dividend earnings. Even partial shareholders can enjoy bonuses and dividends from big companies.
Market Advantages: Introducing fractional shares will increase small investor participation, inject capital into the market, and stimulate growth, benefiting both investors and companies.
US Inspiration: The US already allows fractional share trading, granting access to expensive stocks like Amazon and Google for small investors. Indian investors can also participate in the US market through fractional shares.
