Sebi mulls dual-class structure to prevent hostile takeovers

Start-up firms will be allowed to issue shares with superior, fractional voting rights

The Securities and Exchange Board of India (Sebi) on Wednesday issued a draft framework to allow domestic companies to issue shares with differential voting rights (DVRs).

If approved, companies will be allowed to issue shares with either fractional or superior voting rights.

The move will particularly help new-age companies and promoters as they will be able to retain decision-making powers without diluting too much control. It will also act as a mechanism to stave off hostile takeovers, which have become a concern among companies with low-promoter holding.

The current regulatory framework doesn’t permit DVRs with higher or superior voting