3.RECOGNISING ISSUANCE AND HOLDING OF FRACTIONAL SHARES, RSUs AND SARs
Section :Section
62(1)
Issue to
be addressed :
The
Act in its present form does not permit the holding of Fractional shares i.e.,
a portion of a share less than one share unit. Fractional shares may arise as a
consequence of corporate actions like mergers, issue of bonuses or rights
issues.Further, there are no provisions under the Act, in relation to the
Restricted Stock Units [RSUs] and Stock Appreciation Rights [SARs], which are
schemes linked to shares of a Company, aimed at granting its employees
ownership rights in the company.
Amendments /Proposed Recommended by the Committee
The Committee felt that CA-13 should be
amended to insert provisions that enable issuance, holding and transfer of
fractionalshares for a class or classes of companies, in such manner as may be
prescribed. Such shares should only be issued in dematerialised form. For
listed companies, such prescriptions may be made in consultation with SEBI. It
is also clarified that this recommendation only pertains to cases that would
involve a fresh issue of fractional shares by the company and not to those
cases where fractional shares get created forthe time being on account of any
corporate action.With regard to Restricted Stock Units [RSUs] and Stock
Appreciation Rights [SARs], an amendment is proposed to Section 62 (1) to allow
additional employee compensation schemes linked to the value of the share
capital of a company
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