Habits are soft on shares with different voting rights to promote a startup


As a starting point, the government has a flexible system of shared voting rights that will help such companies maintain control while raising equity capital.

Under the amended rules, companies can now own up to 74 percent of the Multi-Voting Rights (DVR) for the total amount of money raised up to the share price.

The limit was revised 26 percent.

The Ministry of Corporate Affairs has changed the Companies Act (Intellectual Property & Debt) Rules under the Companies Act.

"Another important change that has been brought about is the abolition of the pre-requisites for a distribution of 3 years for the company to be eligible to share with DVRs," the ministry said in a press release. issued on Friday.

According to the ministry, efforts have been made in response to requests from tech companies and startups.

It will also "strengthen the hands of Indian companies and lobbyists that these days recognize pocket investors around the world for a share they can manage to get a chance to innovate and develop the technology they are implementing. " .

In addition, the ministry noted that such promoters of Indian affairs are obliged to regulate companies in the hopes of becoming Unicorns because of the conditions of boosting investment by providing equity to foreign investors.

Generally, unicorns are a startup with a market value of at least $ 1 billion.

With respect to shares shared with DVRs, the existing rate of 26 per cent of the total issued interest on the share capital has been adjusted to 74 per cent.

Besides, Employment Equity Options (ESOPs) can now be issued to start-ups or directors holding more than 10 percent of the stock in 10 years from the merger date.

The time frame for such ESOPs was five years ago.

Shares of shares held by DVRs have been amended to enable Indian corporate promoters to control their "growth efforts and create long-term value for shareholders, even while maximizing the capital investment of international investors," the statement said.

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