Differential voting right (DVR) shares are the same as ordinary
equity shares
Common stock is a form of corporate equity ownership, a type of security. The terms voting share and ordinary share are also used frequently outside of the United States. They are known as equity shares or ordinary shares in the UK and other Comm ...
except such stock does not dilute the promoters voting rights and makes it difficult for
hostile takeover
In business, a takeover is the purchase of one company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to ...
s.
On the other hand, DVR shares have been described as an instrument that is more beneficial to the issuers than to investors, and it often leads to problems of low liquidity.
Several jurisdictions around the world allow the issue of shares with differential voting rights, with the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...
,
Canada
Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by tot ...
,
United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and North ...
,
Australia
Australia, officially the Commonwealth of Australia, is a Sovereign state, sovereign country comprising the mainland of the Australia (continent), Australian continent, the island of Tasmania, and numerous List of islands of Australia, sma ...
and
India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
all allowing some form of DVR shares. The financial legislation in countries where DVR are allowed usually carries specific regulations that prevent the practice from being abused. Restrictions usually include limiting the percentage of DVR out of the total issued
share capital
A corporation's share capital, commonly referred to as capital stock in the United States, is the portion of a corporation's equity that has been derived by the issue of shares in the corporation to a shareholder, usually for cash. "Share capita ...
and only allowing DVR shared for companies with distributable profits who have not defaulted in filing annual accounts and returns for at least three financial years.
See also
*
One share, one vote
One share, one vote is a standard found in corporate law and corporate governance, which suggests that each person who invests money in a company has one vote per share of the company they own, equally with other shareholders. Often, shares with o ...
References
Equity securities
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