Variation of Shareholders Right



Shareholders are the Owners of a company and shares are the deed of ownership. It is a cliché that, in democracy common man controls the Government through this right to vote, but in reality a simple majority of 51% is controlling a sizeable minority of 49%. Likewise in case of a company many of the policy decisions are being taken by shareholders at their general meetings and decisions supported by majority of the votes will be treated as passed. As per the provisions of the Companies Act 2013 all shares are equal in its rights , privileges and characteristics. One share carries one vote and every shareholder has the right to use the said votes in his discretion. Having said that, there are provisions under the Act to create shares with differential voting rights (DVR). Companies issue DVR for preventing back door acquisitions and also to accept investments without diluting the control over the affairs of the company. DVR shares are ideal for the investors who are interested in higher returns rather than taking control over the affairs of the company. Investors can also take advantage of the price difference of DVR with normal shares.