Fractional Share
A portion of a whole share of stock, arising from corporate actions such as stock splits, dividend reinvestment, or stock dividends that do not result in whole-number entitlements for all shareholders.
Full Definition
A fractional share results when a shareholder's entitlement from a corporate action — such as a stock split, reverse split, or stock dividend — does not yield a whole number of shares. Transfer agents typically handle fractional shares by aggregating them and selling the resulting whole shares on the open market, then distributing the cash proceeds proportionally to affected shareholders. Alternatively, fractional shares may be rounded up, rounded down, or retained in the shareholder's account depending on the company's policy. In editorial copy, 'fractional share' is two words, lowercase, and should be defined in any shareholder-facing document where it appears.
Usage
Usage note: Define at first use in shareholder-facing documents. Distinguish from 'odd lot,' which refers to a holding of fewer than 100 shares, not a partial share.
In Context
- "Shareholders entitled to a fractional share as a result of the merger exchange ratio received a cash payment instead." — Merger Prospectus
- "The document must explain how fractional shares will be treated before describing the payment timeline." — Editorial Checklist