The latest Company Law Committee (CLC) Report is undoubtedly welcomed by India Inc. as it has eased several compliance checks and grids. These include overhauling the existing framework in respect of fractional shares, restricted stock units, and stock appreciation rights amongst other reforms. In so doing, the Report clarifies several ambiguities. Here’s a deep dive into the various relaxations.
Recognizing Fractional Shares
Currently, Section 4 of the Companies Act lays down provisions for an individual to hold a minimum of 1 share. In addition, schedule I – Table F also restricts a company from identifying fractional shares. However, the CLC Report recommends amending the current provision to allow issue, holding, and even transfer of fractional shares. First, of course, this is being recommended in dematerialized form only. Secondly, this recommendation is in case of fresh issuance of shares and not per se in M&A situations.
Please click here to read the full article by Sidharrth Shankar, published in The Week.
Sidharrth is the Co-Chair of the Corporate Practice at JSA. He specializes in General Corporate Commercial, Mergers & Acquisitions and Private Equity.