Investing in stocks is one of the most beautiful thing you could ever do with your stocks. There are lot of options available in stock market that help traders put their hard earned money in stocks. Mutual funds, equity stocks, options, ETF, DVR Shares etc. Differential Voting Rights shares are similar to equity shares but it has differential voting rights. DVR shares are suitable for retail investors who don’t intend to affect the decision making of the company.
For example an investor can vote as many times as the number of company shares the investor holds, someone who holds the company’s DVR shares will need to hold 100 Differential Voting Right shares to cast one vote. DVR Shares full form is differential voting rights and its the complete meaning.
Types of DVR shares
The issue of DVRs can result in two types of shares:
1) Shares with superior voting rights.
2) Shares with inferior voting rights but offer higher dividends or are offered at a discounted price.
Benefits of DVR Shares
With DVR shares both companies and investors would be in profits. Below are some of the benefits
- Companies can reduce the threat of hostile takeovers, by diluting the voting rights of investors.
- DVR shares being offered at lower price is the biggest advantage.
- DVR shares pay higher dividends than normal stocks.
Disadvantage of DVR Shares
- DVR shares lack liquidity when compare to normal stocks.
- DVR shares are traded very thinly.
DVR Share Issued in India
In India, the following companies have issued DVR shares so far:
DVR Shares Full Form
1. We consider the DVR shares of Tata Motors Ltd., which enjoys the highest liquidity among the listed DVR shares.
2. DVR share holders are entitled to attend all the class meeting, general meetings of all the stock holders and cast their vote to influence decision making.
The above are some of the positive sides of Differential voting right shares. Companies issues Differential voting right shares in order to prevent hostile take over and dilute the voting rights of the shareholders. DVR shares are traded very thinly at the stock market.