SEBI writes to government to allow fractional ownership of shares

The Indian market regulator SEBI has written to the government to allow fractional ownership of shares in the domestic equity market. This comes as, changes in the Companies Act is required to enable the fractional ownership facility.

Fractional ownership of shares

SEBI chairperson Madhabi Puri Buch said on Thursday that the capital market watchdog has already written to the relevant ministry to look into the matter and see if the necessary changes in the legislation can be done.

“Since the Companies Act is under deliberation, we have requested the ministry, so let’s see what comes out,” said SEBI chairperson Madhabi Puri Buch while speaking to the media on Thursday after the board meeting.

In fractional ownership, an investor can buy or sell a fraction of the shares as well. This feature is already available in some of the markets globally including the US. As per Moneycontrol, since the pandemic year of 2020, an increasing number of Indian retail investors have been buying shares of companies listed on the US bourses and given the high prices in absolute rupee terms, many prefer to buy in fractions rather than one share.

Since Fractional Ownership allows investors to buy a portion of the share, they will be able to afford high valued stocks such as MRF (Rs 1.25 lakh), Kaycee Industries (Rs 60,628), The Yamuna Syndicate (Rs 60,300), Honeywell Automation India (Rs 57,052.05), and Page Industries (Rs 40,059).

The concept of Fractional Ownership is already seen in sectors like real estate wherein one can participate and own parts of a larger real estate property through REITs.

Also watch: SEBI issues guidelines for Small and Medium real estate investment trusts