The Concept Of Fractional Share Investing In India

Nishtha Garhwal, Alliance School of Law, Alliance University, Bangalore

ABSTRACT

If we look at the Indian stock market, the idea of fractional share investing is something that is not permitted. However, this concept of fractional investments of shares in the stock market is very popular as far as the US stock market is concerned. If we look at the current scenario, an investor has to purchase at least an entire single share, however, under the concept of fractional share investment, an investor is allowed to purchase only a portion of one unit of a share. Although the concept is not yet introduced in the Indian stock market, however, the introduction of this concept would allow small investors to make investments in the Indian equity market. The Ministry of Corporate Affairs has constituted the Company Law Committee in 2019. This Committee released its third report in April 2022. Under this report, the government had been urged to amend and improve the Companies Act, 2013 in order to permit companies to issue fractional shares. Although the idea is not yet the part of Indian stock market, however, it could become a reality soon. This article tries to study how fractional share investing would improve the ease of doing business and how it will be a positive step in the Indian stock market.