Company law
Aashish
(Querist) 18 January 2012
This query is : Resolved
what is the meaning of shares with differential voting rights....?????
can this be example:
ordinary equity shares having one share one vote
and
equity shares with differential voting rights may have one vote for two shares...
Raj Kumar Makkad
(Expert) 18 January 2012
This section is not meant for the academic queries so you are advised to move to 'forum' section of this site.
Shonee Kapoor
(Expert) 18 January 2012
A DVR share is like an ordinary equity share, but it provides fewer voting rights to the shareholder.
So, for instance, while a normal Gujarat NRE Coke [ Get Quote ] shareholder can vote as many times as the number of company shares he\she holds, someone who holds the company's DVR shares will need to hold 100 DVR shares to cast one vote.
The number of DVR shares required to be held will differ from one company to another.
Companies issue DVR shares for prevention of a hostile takeover and dilution of voting rights.
It also helps strategic investors who do not want control, but are looking at a reasonably big investment in a company.
At times, companies issue DVR shares to fund new large projects, due to fewer voting rights, even a big issue does not trigger an open offer.
The Companies Act permits a company to issue DVR shares when, among other conditions, the company has distributable profits and has not defaulted in filing annual accounts and returns for at least three financial years.
However, the issue of such shares cannot exceed 25 per cent of the total issued share capital.
Regards,
Shonee Kapoor
harassed.by.498a@gmail.com