Quote by – Anand Lakra, Partner, J Sagar Associates (JSA) on Summary of Report of Company Law Committee (2022)
“The recommendations provide procedural flexibility to companies which would result in wider participation from shareholders and would be cost and time effective. The Report contemplates permitting companies to hold shareholder meetings in electronic/hybrid modes, doing away with affidavits and replacing them with self-declarations, maintenance of registers in electronic form and serving documents to shareholders in electronic form etc. Such recommendations would facilitate the ease of doing business in India and bring in best practices from more developed markets. Two other key recommendations deal with the ability to issue and trade fractional shares and recognising Restricted Stock Units (RSU) and Stock Appreciation Rights (SAR). Presently, fractional shares are not permitted to be issued or traded. Given the recent increase in retail shareholder participation in the public markets, this is an excellent recommendation as it would enable retail shareholders to trade in shares which hitherto were inaccessible. Since the Companies Act did not expressly regulate RSUs and SARs, it led to uncertainty on their ability to issue such instruments. RSUs, as an employee benefit tool is prevalent in western markets and SARs have been in existence for publicly traded companies in India for quite some time under the relevant SEBI regulations” Anand Lakra, Partner, J Sagar Associates (JSA)