Ministry of Corporate Affairs changed DVRs Limit

Published on August 17, 2019
Current context: The Ministry of Corporate Affairs has relaxed norms with respect to shares with Differential Voting Rights (DVRs) provisions under the Companies Act.
Ministry of Corporate Affairs changed DVRs Limit 
  • The ministry has amended the Companies (Share Capital & Debentures) Rules under the Companies Act 2013 for making changes to the DVRs.
  • The limit of issuing Differential Voting Rights (DVR) shares has been revised from 26% to 74%.
  • The step has been taken to provide relief to Start-ups for raising capital from abroad while retaining control over their company’s decision-making process.
  • The change will allow Indian companies to issue majority shares with differential voting rights (DVRs).
  • The earlier requirement of distributable profits for 3 years for a company to be eligible to issue shares with DVRs is also removed.
  • The DVRs norms have been amended to enable promoters of Indian companies to retain control.
  • The GOI has taken the step in response to requests from startups and innovative tech companies to strengthen them.

Question: 

Q.1 The Differential Voting Rights (DVRs) shares for Start-ups have been recently revised to?
a. 26%
b. 74%
c. 68%
d. 80%

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