SECURITIES AND EXCHANGE BOARD OF INDIA
SECONDARY MARKET DEPARTMENT
Mittal Court, A Wing, Gr. Floor,
224, Nariman Point, Mumbai 400 021
SMDRP/POLICY/CIR- 16/99
June 14, 1999
To:
The Executive Directors/Presidents / Managing Directors, All Stock Exchanges
Dear Sir,
Sub : Abolition of Standard Denomination for Equity Shares
The Central Government has issued various Circulars with regard to ‘Standard denominations for corporate securities, inter alia, [No.F.1/7/SE/81 dated February 17,1981], [No.1/7/SE/81 dated January 22,1983], [No.F.1/7/SE/81 dated October 6,1983] and [No.F.1/7/SE/81 dated December 13,1983], directing the companies to have uniform denomination of Rs.10/- or Rs.100/- for equity shares.
It has been decided to give flexibility to companies to fix any denomination of its equity shares which are presently limited to Rs.10 or Rs.100. In view of this, the Circulars of the Central Government referred to above in respect of issue of equity shares in standard denomination of Rs.10 or Rs.100, shall be modified as under:
1. The companies shall have the freedom to issue shares in any denomination to be determined by them in accordance with section 13(4) of the Companies Act, 1956. While doing so, the companies will have to ensure that shares are not issued in decimal of a rupee.
2. The companies, which seek to change the standard denomination, may do so after amending the Memorandum and Articles of Association, if required.
3. The existing companies, which have issued shares at Rs.10/- or Rs.100/-, may also change the standard denomination into any denomination other than decimal of a rupee by splitting or consolidating the existing shares after amending their Memorandum and Articles of Association. At any given time there shall be only one denomination for the shares of a company.
4. Only companies whose shares are dematerialised shall be eligible to alter the ‘standard denomination’.
5. The Stock Exchanges may also make necessary changes in their existing trading and settlement software to give effect to the above decision.
6. The companies desirous to avail of this facility would be required to adhere to disclosure and accounting norms as may be specified from time to time.
7. The consequential changes in SEBI (Disclosure and Investor Protection) Guidelines for the new public and rights issues are being issued separately.
This circular will come into force with immediate effect.
Yours faithfully,
M. D. PATEL
EXECUTIVE DIRECTOR
