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You are Here : Moneycontrol Forum Forum Topics Stocks

Tata Motors (D)

hushaam1
Platinum Member

3777 Messages

@rajmodi3394 ~ The major notable difference is that DVR shares are like ordinary shares, but with fewer voting rights. These allow a company to dilute equity without a matching reduction in promoters stake. The aim of limiting voting rights is preventing hostile takeovers by separating economic interests & voting rights. DVR shares are ideal for small shareholders as they rarely exercise their voting rights. This is because only a few understand the company`s affairs in such detail that they can influence its actions. They buy shares only to make money & so happily give away voting rights in favour of those who have management control. DVR shares are priced lower at issuance as it offers higher dividends, in return, the voting rights are limited. For instance, the holders of Tata Motors DVR shares can cast one vote for every 10 shares held. However, they get 5% more dividend than ordinary shareholders. At times, companies issue DVR shares to fund large projects. This is of special help to those who do not want control of the company but are looking to take part in its growth by making a big investment. With Kind Regards :)

11.19 PM Sep 17th
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