Equity Share With Differential Rights In Collin
Description
Form popularity
FAQ
In 2008, Tata Motors became the first Indian Company to make a rights issue of DVRs. Pantaloon Retail India is the 2nd company, which issued DVRs in February 2009.
Differential Voting Rights or DVR shares offer shareholders low or no voting rights. DVR shares are listed at discounted prices to attract more investors. Dividend yields are usually higher on DVR shares.
It proves useful in raising capital without the ownership structure being diluted. Helps prevent hostile takeovers. Provide control in the process of decision making. DVR shares also come in handy for financing large projects.
Shares issued with differential rights shall not exceed 74% of the total voting power, including voting power in respect of equity shares with differential rights issued at any point of time.
Tata Motors announced that trading of its DVR shares would stop due to their conversion into ordinary shares. For every 10 DVR shares, investors receive seven ordinary shares. Tata Motors DVR shares have provided substantial returns over the past two years.
“Each CCPS shall convert into 10 equity shares of ₹10 each upon completion of 3 years or a qualified Series A funding round.” It means that each CCPS would convert into 10 equity shares either after the expiry of three years or upon the occurrence of a significant Series A round.
Tata Motors' DVR shares will be delisted on August 30, 2024, increasing its FTSE index weightage, simplifying capital structure, and reducing promoter shareholding by 3.16%.
Tata Motors, Gujarat NRE Coke, Pantaloon Retail, Jain Irrigation are some of the Indian companies that have issued DVR shares. E.g.: Tata Motors' DVR shares carry voting rights which are one-tenth of the ordinary equity shares.
How to Apply for a Rights Issue? The company will send a form to every shareholder entitled to receive the rights issue. The process is completed either in online or offline modes. Investors may receive a Rights Entitlement (RE) intimation in their email that is a temporary form of Demat securities.
Disadvantages Of DVR Shares are as follows: Lower voting rights, reducing influence in company decisions. Potentially less liquid, making them harder to sell. May be viewed as less attractive to certain investors who value voting power.
