Investing Made Easy: SEBI Proposes Fractional Ownership of Shares in India
The Securities and Exchange Board of India (SEBI) has written to the government to allow fractional ownership of shares, enabling investors to purchase portions of high-priced stocks, similar to real estate REITs.
Fractional OwnershipSharesSebiReal EstateReitsReal Estate MumbaiJun 28, 2024
The concept of fractional ownership is already prevalent in some global markets, including the US. Since the pandemic year of 2020, an increasing number of Indian retail investors have been buying shares of companies listed on the US bourses. However, due to the high prices in absolute rupee terms, many investors prefer to buy in fractions rather than one share.\n\nFractional ownership would allow investors 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). This would democratize access to high-priced stocks, making it easier for individual investors to diversify their portfolios.
The Securities and Exchange Board of India (SEBI) is the primary regulator of the Indian capital markets. As a market watchdog, SEBI is responsible for protecting the interests of investors and promoting the development of the capital markets. SEBI chairperson, Madhabi Puri Buch, has been instrumental in driving reforms in the Indian capital markets.\n\nSEBI's proposal for fractional ownership requires changes to the Companies Act, which is currently under deliberation. If approved, this would mark a significant shift in the Indian capital markets, making it more inclusive and accessible to individual investors.
Frequently Asked Questions
What is fractional ownership?
Fractional ownership is a concept where an investor can buy or sell a fraction of the shares as well.
Why is fractional ownership necessary?
Fractional ownership is necessary to make investing more accessible to individual investors, especially for high-priced stocks.
How does fractional ownership work?
In fractional ownership, an investor can buy a portion of the share, rather than the entire share.
Is fractional ownership already available in other markets?
Yes, fractional ownership is already available in some global markets, including the US.
What are REITs?
REITs or Real Estate Investment Trusts are a type of investment vehicle that allows investors to own parts of a larger real estate property.
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