Surbhi Kapoor Shares Insights on Proposed Recognition of Fractional Shares in India

Surbhi Kapoor has shared her insights on the proposal to recognise the issuance and holding of fractional shares under India’s corporate law framework, following reports that the Securities and Exchange Board of India (SEBI) has sought the inclusion of fractional shares in the proposed Companies Amendment Bill.

Fractional shares, which represent a portion of a share that is less than one whole share, could potentially widen access to equity markets, particularly for retail investors who may find it difficult to purchase a full share of high-value listed companies. The proposal also comes against the backdrop of increasing retail participation and the growth of digital investing in India.

Commenting on the proposed reform, Surbhi said: “Introducing fractional shares into the Companies Bill could be a meaningful step towards modernising India’s corporate and investment framework, particularly as retail participation and digital investing continue to expand.”

While recognising the potential benefits of the proposal, Kapoor emphasised that the reform should be accompanied by a clear regulatory framework to address investor protection and market certainty. “The reform is worth pursuing, but it should be targeted and accompanied by appropriate Sebi and depository-level regulations,” she said.

She further highlighted the need to strike a balance between improving accessibility to financial markets and ensuring adequate safeguards for investors. “This would ensure that increased accessibility does not come at the cost of investor protection or regulatory certainty,” she added.

Balancing Accessibility with Investor Protection

The proposal to recognise fractional shares has been under consideration for several years. The Company Law Committee had earlier recommended enabling the issuance, holding and transfer of fractional shares for specified classes of companies, with prescriptions for listed companies to be made in consultation with SEBI.

The potential introduction of fractional shares could be particularly relevant for retail investors as it may lower the entry barrier to investing in companies whose individual shares trade at relatively high prices. At the same time, the framework would need to address questions relating to the rights attached to fractional interests, their transferability, settlement and the role of companies, depositories and intermediaries.

Surbhi’s comments highlight that the success of such a reform would depend not merely on recognising fractional ownership in law, but on establishing clear and coordinated rules governing how such interests are created, held and administered.

A carefully calibrated framework, supported by appropriate SEBI and depository-level regulations, could therefore help facilitate greater retail participation while preserving investor protection and regulatory certainty.

Read the full article in Business Standard.

Last Updated on 31 August, 2026