Latest News | Company Law Committee Suggests Fractional Shares Issuance, Easier Fund Raising Norms for Distressed Cos

New Delhi, Apr 13 (PTI) Enabling issuance of fractional shares, easing norms for distressed companies to raise funds and recognising special purpose acquisition companies as well as permitting their listing on stock exchanges are among the recommendations made by the government-constituted Company Law Committee.

The panel, currently chaired by Corporate Affairs Secretary Rajesh Verma, has also suggested prohibiting the conversion of co-operative societies into a company and replacing requirement of furnishing affidavits with the filing of self-certification/ declaration.

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The Company Law Committee (CLC) was constituted by the corporate affairs ministry to make recommendations on changes aimed at facilitating and promoting greater ease of doing business as well as ensuring effective implementation of the Companies Act, 2013 and the Limited Liability Partnership Act, 2008.

The ministry has sought comments from stakeholders till May 6 on the CLC report, which was submitted to the government last month.

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Others suggestions of the panel include allowing certain companies to revert to the financial year followed in India, facilitating certain companies to communicate with their members in only electronic form, allowing companies to hold general meetings in virtual, physical or hybrid modes, and creating an electronic platform for maintenance of statutory registers by companies.

According to the committee, the companies law can be amended to insert provisions that enable issuance, holding and transfer of fractional shares. Such shares should only be issued in the 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 for the time being on account of any corporate action," the report said.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)