Framework for issuance of Differential Voting Rights (DVR) shares

New technology firms that have asset-light models (relatively fewer capital assets compared to the value of their operations) generally prefer equity over debt capital, as raising equity on a periodic basis leads to the dilution of founder/promoter stakes. For these promoter-led firms, retaining the founder’s interest & control in the business is of great value and Differential Voting Rights (DVR) shares as a mode of capital raising can effectively address the concerns. Based on the report of the DVR Group and the feedback received on the consultation paper floated by SEBI in March 2019, the issuance of shares with superior voting rights (SR shares) has been introduced under SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018