What are Differential Voting Rights (DVR) shares?
Learn what Differential Voting Rights (DVR) shares are, how they differ from ordinary shares, their key features, and a real-world example from Tata Motors.
Differential Voting Rights (DVR) shares are a type of equity share that provides different voting rights compared to ordinary equity shares. Usually, DVR shares have lower voting rights but may offer higher dividends as compensation.
Key Features of DVR Shares
- Different Voting Power
DVR shareholders have less voting power than regular equity shareholders.
Example: A DVR share may carry 1/10th of the voting rights of a normal share. - Higher Dividend Benefit
To compensate for lower voting rights, companies may provide higher dividends to DVR shareholders. - Same Ownership Rights
DVR shareholders still have ownership in the company, including rights to dividends, bonus shares, and rights issues. - Lower Market Price
DVR shares are usually traded at a discount compared to ordinary shares because they offer limited voting rights. - Issued Under Company Law
In India, companies can issue DVR shares as permitted under the Companies Act, 2013 and related SEBI regulations.
Example:-
One well-known example is Tata Motors DVR shares, which were issued with reduced voting rights but slightly higher dividend potential.
In simple terms:-
DVR shares = less voting power + possible extra dividend benefit.
