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What is a DVR Share?

DVR Share stands for share with Differential Voting Rights. These shares allow a company to raise funds without giving the same voting rights to all shareholders. So, what is DVR Share in simple terms? It’s a type of equity share that gives lower voting power compared to regular equity shares, while still offering the same economic rights, like dividends.

Indian companies can issue DVR shares under the Companies Act, 2013, and as per rules set by SEBI. However, in India, DVR shares cannot carry superior voting rights when offered to the public. Only shares with limited or lower voting rights are allowed.

DVR shares help promoters retain control of the company, even while raising capital. For you as an investor, this means owning part of a company, but with fewer rights to vote on key matters. Still, you receive dividends and participate in the company’s growth, just like with ordinary shares.

Understanding Differential Voting Rights (DVR)

DVR shares are like regular equity shares in most ways. You still own part of the company. You can still get dividends. You just have limited voting power compared to someone with ordinary shares.

Each company decides how many DVR shares it wants to issue, but by law, these can’t go over 25% of the total share capital. So, if you're buying shares in the stock market, and they’re labelled as DVR shares, know that your voice in company matters might be smaller. But your rights as a stakeholder still stand.

Why do companies issue DVR shares? Mainly to raise capital without losing too much control. It also helps them attract investors who want to earn from the business without getting into boardroom decisions.

For you, DVR shares can be a way to invest in a company without worrying too much about voting rights—especially if your focus is more on long-term ownership than daily management choices.

Key Differences Between DVR and Ordinary Shares

Here’s a quick breakdown of how DVR shares and ordinary shares differ:

Parameters

DVR Shares

Ordinary Shares

Voting Rights

Limited or reduced voting rights

One share equals one vote

Rate of Dividend

Can be higher or lower than regular shares

Usually fixed per class of equity shareholders

Suitability

Works well for small investors and promoters

More common among large stakeholders

Issuance Price

Often issued at a discount

Generally issued at fair market value (FMV)

Each share type serves a purpose. DVR shares might suit you if you're investing passively. If you're looking to take part in key decisions, ordinary equity shares could make more sense.

Advantages & Disadvantages of Investing in DVR Shares

Advantages:

  • Lower cost to invest: DVR shares often trade at a discount. That means you can buy into a company without spending as much as you would on regular equity shares.

  • Good for passive investors: If you're not too interested in voting on company matters, DVR shares might be a simpler choice.

  • Possible higher dividends: Some companies offer slightly better dividends on DVR shares to balance out the lower voting rights.

Disadvantages:

  • Fewer voting rights: You won’t have much say in how the company is run. If that matters to you, DVR shares might not be ideal.

  • Lower liquidity: Fewer people buy and sell DVR shares. This can make it harder to exit your position when you want to.

  • Risk of misuse: Because control stays with the promoters, there's a chance they might make decisions that don’t always benefit smaller stakeholders.

Regulatory Framework for DVR Shares in India

The regulatory rules for DVR Shares in India are defined by SEBI (Securities and Exchange Board of India) and the Companies Act, 2013. The concept of DVR shares—particularly those with superior voting rights (SVRs)—was formally recognised in July 2019, when SEBI allowed tech-driven companies to issue them under strict conditions.

Initially, only promoters with a net worth of ₹500 crore or less were eligible to issue superior voting rights. However, in 2021, SEBI increased this cap to ₹1,000 crore, allowing more entrepreneurs, especially in the startup ecosystem, to retain control while accessing capital.

SEBI also eased the listing rules. Earlier, companies had to wait six months after issuing DVR shares before filing for an IPO. This cooling-off period was reduced to three months, making it easier for startups to go public without losing momentum.

These updates show SEBI’s effort to support innovation-led businesses while protecting stakeholder interests. As someone considering DVR shares, understanding these rules is key. It helps you assess how voting rights, control, and timing influence your position as a stakeholder in a listed company.

Conclusion

DVR shares offer a different way to be part of a company. You still invest. You still share in its success. But your voting rights are limited. If your goal is long-term growth and not active participation in decisions, DVR shares might align with what you're looking for. Just be aware of the risks—less liquidity, fewer rights, and sometimes less influence.

Like any investment, it's important to match DVR shares with your goals, risk appetite, and knowledge of the market.

Disclaimer: Investments in securities market are subject to market risks. This content is for informational purposes only and does not constitute investment advice.

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The information provided on this website is for general informational purposes only and is subject to change without prior notice. BFSL shall not be responsible for any consequences arising from reliance on the information provided herein and shall not be held responsible for all or any actions that may subsequently result in any loss, damage and or liability. Interest rates, fees, and charges etc., are revised from time to time, for the latest details please refer to our Pricing page.

Neither the information, nor any opinion contained in this website constitutes a solicitation or offer by BFSL or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.

BFSL is acting as distributor for non-broking products/ services such as IPO, Mutual Fund, Insurance, PMS, and NPS. These are not Exchange Traded Products. For more details on risk factors, terms and conditions please read the sales brochure carefully before investing.

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