Friday, February 13, 2009
Proposal for Uniform Par Value on Shares
In a previous post, we discussed the difficulties posed by the current system of par value of shares whereby companies are free to determine the par value of their shares. Some of these difficulties will be addressed in SEBI’s proposal to create a uniform par value system for all listed companies. However, the current proposal falls short on two counts: (i) unlisted companies can still have differing par values on their shares (as SEBI is only concerned with listed companies’ shares), and (ii) it does not go as far as abolishing the par value system altogether as we have previously considered. Perhaps these are matters to be viewed from a larger perspective by Parliament while amending the Companies Act.