PPT On DVR
PPT On DVR
PPT On DVR
GROUP MEMBERS:-
1) PRADEEP JADHAV
2) RAHUL SINGH
3) PRANITA KUMARI
4) NATARAJ V.
5) NAMAN SANGARI
COMPANY PROFILE
• Ashok Leyland’s shares are currently listed on the Bombay
Stock Exchange & National Stock Exchange of India
• It is the 2nd largest commercial vehicle manufacturer in India
• 4th largest manufacturer of buses in the world and 16th largest
manufacturer of trucks globally
Introduction
• DVRs means shares that give the holder differential rights as to
voting (either more or less voting right) as against the Ordinary
shareholders of the company.
• Trading similar to Equity Shares.
• The issue of DVRs can result in two types of shares
Shares that have superior voting rights.
Shares that have inferior voting rights but offer higher
dividends or are offered at a discount.
Indian Scenario
The Issue of DVRs in India was allowed only since 2001. There was an
amendment made to Companies Act 1956 through an amendment in provisions
of Section 86. This Section stated that:
The share capital of a company limited by shares shall be of two kinds only,
namely:
• Equity share capital
– With voting rights; or
– With differential rights as to dividend, voting or otherwise in accordance with such rules
and subject to such conditions as may be prescribed .
• Preference share capital
Conditions for Eligibility
Every company limited by shares may issue shares with differential rights as to dividend,
voting or otherwise, if-
• The company has distributable profits in terms of Section 205 of the Companies Act,
1956 for three financial years preceding the year in which it was decided to issue such
shares.
• The company has not defaulted in filing annual accounts and annual returns for three
financial years immediately preceding the financial year in which it was decided to issue
such share.
• The company has not failed to repay its deposits or interest thereon on due date or
redeem its debentures on due date or pay dividend.
• The Articles of Association of the company authorizes the issue of shares with
differential voting rights.
• The company has not been convicted of any offence arising under, Securities Exchange
Board of India Act, 1992, Securities Contracts (Regulation) Act, 1956, Foreign
Exchange Management Act, 1999.
Changes made by SEBI
If all these four elements are taken good care of from the onset, a stock market can easily exhibit
sound growth and perform exponentially.
The Road Ahead
1) Need to review the pre conditions (on the issue of DVR)& to add more
relevant and stricter qualifying norms on such issues.
2) Companies issuing DVRs need to clearly specify their intend for such an issue in
the offer document.
3) A separate committee of Directors, consisting of only Independent Directors
should be involved .
4) The pricing mechanism used for arriving at the issue price of DVRs needs to be
disclosed.
5) Ensure better investor awareness on DVRs.
6) The rights of the DVR holders need to be clearly defined.
Conclusion
• For an investor, who wants to be in the company’s decision
processes, DVR shares is not an attractive proposition due to
limited voting rights.
• But if an investor isn’t concerned much with voting rights, then
investing in the DVR would certainly be an attractive option.
Thank You.