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Differential Voting Rights (DVR)

A DVR is just like a normal share of a company, except that it carries less than 1 voting right per share unlike a common share. Such an instrument is useful for issuers who wish to raise capital without diluting voting rights. Investors who wish to invest only for dividends and capital appreciation and are not really bothered about voting rights find these shares attractive. The number of voting rights for a DVR differs from company to company. DVRs typically trade as a separate category of instrument and are available at a discount to the common shares of a company. The Companies Act, 2013 defines the eligibility of a company to issue such shares. This includes a dividend of at least 10% over the preceding 3 years and such shares shall not exceed 25% of the total post-issue paid up capital of the company. Several companies in India including Tata Motors and Pantaloons have issued DVRs.

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