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IndiaTech.org will lobby for differential voting rights to Indian company founders

IndiaTech.org, a non-profit organisation which lobbies for domestic e-commerce and internet firms, will push for Indian company founders getting Differential Voting Rights, reports the Economic Times, quoting the group’s CEO Rameesh Kailasam. This would allow companies, especially startups to raise capital without losing ownership control. DVR or differential voting rights shares are like ordinary equity shares but with differential voting rights. Shares can have higher or lower voting rights as compared to the ordinary equity shares. As in, while a normal shareholder of a company can vote as many times as the number of shares she holds, someone who holds DVR shares could either, cast 100 votes for every share they hold or, conversely, needs to hold 100 DVR shares to cast one vote. Companies issue DVR shares to raise investment without diluting voting rights or to prevent a hostile takeover. On the other hand, investors who do not seek voting rights can avail these shares at a lower price compared to regular shares. Typically, these shares also tend to offer higher dividend. To do this, Kailasam will constitute a lobby group that will include founding members of IndiaTech.org and other industry players, which will then hold consultations with the government and concerned regulators to implement the necessary legislations, the report says. This entire process will likely happen in about a year as the lobby group will require all concerned ministries, regulators (SEBI, RBI) and industry players to be on the same page for a commonly approved legal framework, the…

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