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PMAC to hold meeting on differential voting rights issue this week: Experts discuss

Updated : May 15, 2019 11:20 PM IST

The Primary Markets Advisory Committee (PMAC) will hold a meeting on differential voting rights (DVR) issue this week, sources privy to the developments told CNBC-TV18.

DVRs are a way for companies to raise equity capital without dilution of promoter shareholding. Earlier, the Securities and Exchange Board of India (Sebi) had made a sub-committee under the PMAC for re-introducing DVRs for listed companies.

To discuss the issue, CNBC-TV18's Manisha Gupta spoke with Sandeep Parekh, founder of Finsec Law Advisors and Khushbu Jain, a lawyer in Supreme Court.

Parekh said, "The big picture point is whether we should have DVRs at all. The Companies Act does allow it and Sebi has allowed it for some time. The issue is now more granular in terms of whether there should be superior voting rights as opposed to inferior voting rights."

Jain said, "DVRs are prevalent in many countries like Denmark, USA, Canada, Singapore and Hong Kong. But they have very specific provisions and those are west countries where there are class suit actions prevalent there for minority right shareholders. In Asian countries including India, we do not have any such things. Sebi has been very proactive with regards to taking care of the rights of minority shareholders."
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