• Deccan Chronicle
  • Andhra Bhoomi
  • Asian Age
  • ePaper
  •  Auto Refresh
Home

ePaper
Last Updated:07:21 PM IST | Sunday, Feb 05, 2023
  • Home
  • Politics, Plan And Policy
  • Markets
  • Companies
  • Economy
  • In Other News
  • Autos
  • Just In
Menu
  • Home
  • Politics, Plan And Policy
  • Markets
  • Companies
  • Economy
  • In Other News
  • Autos
  • Just In
Home > In Other News > Govt relaxes norms for shares with differential voting rights; to boost start-ups
In Other News
Govt relaxes norms for shares with differential voting rights; to boost start-ups
By  
PTI   , Published : Aug 17, 2019, 10:49 am IST | Updated : Aug 17, 2019, 10:49 am IST

According to the ministry, the initiatives have been taken in response to requests from innovative technology companies and startups.

The limit has been revised from 26 per cent.
The limit has been revised from 26 per cent.

New Delhi: In a fillip to startups, the government has relaxed norms for shares with differential voting rights that will help such companies to retain control while raising equity capital.

With the amended rules, companies can now have up to 74 per cent Differential Voting Rights (DVR) shares of the total post issue paid up share capital.

The limit has been revised from 26 per cent.

The corporate affairs ministry has amended the Companies (Share Capital & Debentures) Rules under the Companies Act.

"Another Key change brought about is the removal of the earlier requirement of distributable profits for 3 years for a company to be eligible to issue shares with DVRs," the ministry said in a release on Friday.

According to the ministry, the initiatives have been taken in response to requests from innovative technology companies and startups.

It would also "strengthen the hands of Indian companies and their promoters who have lately been identified by deep pocketed investors worldwide for acquisition of controlling stake in them to gain access to the cutting edge innovation and technology development being undertaken by them,"  the ministry said.

Further, the ministry noted such Indian promoters have had to cede control of companies that have prospects of becoming Unicorns due to the requirements of raising capital through issuance of equity to foreign investors.

Generally, unicorns are startups that have a market valuation of at least USD 1 billion.

With respect to shares with DVRs, the existing cap of 26 per cent of the total post issue paid up equity share capital has been enhanced to 74 per cent.

Besides, Employee Stock Options (ESOPs) can now be issued by startups to promoters or directors holding more than 10 per cent of equity shares for 10 years from the date of their incorporation.

The time period for such ESOPs was five years earlier.

The norms for shares with DVRs have been amended to enable promoters of Indian companies to retain control "in their pursuit for growth and creation of long term value for shareholders, even as they raise equity capital from global investors", the release said.

end-of
Tags: 
government, startup, shares
Location: 
India, Delhi, New Delhi
Latest From In Other News
Kaleshwaram Irrigation Project. Picture credits : ANI

NGT says environmental clearance for Kaleshwaram violates law

Internet and Mobile Association of India too had sought clarification on the issue. (Photo: PTI)

DPIIT to soon issue clarification on 26 pc FDI in digital media sector

In financial year 2018-19 the proportion of gross non-performing assets (NPAs) to total loans decreased to 9.1 per cent compared to 11.2 per cent in 2017-18.

RBI sees corporate governance 'fault lines' at some lenders

Most Popular

Mukesh Ambani 9th richest on Forbes' real-time billionaires list
Top credit card myths harmful for your financial well-being
Microsoft CEO Satya Nadella tops Fortune's Businessperson of the Year 2019
Employment growth slowed down in last two years: report
GST structure: key challenges and its solutions

Editor's Picks

Income tax e-filers drop by over 6.6 lakh in FY19: Official data
Swiping on your smartphone reveals a lot about you to your social media company
  • Read Financial Chronicle as it appears in print.
  • Subscribe, and get it delivered in the inbox everyday.
  • Politics, Plan And Policy
  • Markets
  • Companies
  • Economy
  • In Other News
  • Autos
  • Just In
  • Home
  • About Us
  • Contact Us
  • Terms of Service
  • Privacy Guidelines
  • Copyright © 2019 Financial Chronicle, All rights reserved
Developed & Maintained By Daksham