Issue of shares with differential voting rights (dvrs)

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dwitichopra (Querist)

02 December 2015 Dear Experts,

From what i read regarding issue of shares with differential voting rights as per Companies Act, 2013, I learnt that even pvt ltd companies can issue shares with DVRs after following certain provisions

However i wanted to get a few of my concerns resolved
1. Can a pvt ltd company issue shares with DVRs with superior rights as to voting like 1000 votes per share?

2. Can a pvt. ltd company issue shares with DVRs of face value Rs. 10 at 1200 per share (At the same value at which it is offering its ordinary share capital)

3. If it is allowed to offer shares with DVRs at above mentioned value of INR 1200. Will any tax liability arise in the hands of the company?

As per my understanding, provisions of Sec 56(2)(viib) of Companies Act will become eligible which states that aggregate consideration received in excess of FMV of the shares will be chargeable to income tax as Income from other sources in the hands of the company.

Please reply asap.

Thanking You.
Dwiti Chopra

Amol S Joglekar

Amol S Joglekar (Expert)

02 December 2015 sec 56(2)(viib) of INCOME TAX ACT will come into play.

01. pvt ltd co can issue shares with differential voting rights. (Subject to, of course, empowered to do so by memorandum of association.

02. Yes. It may do so.

03. Yes. as per sec 56(2)(viib) as said above

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dwitichopra

dwitichopra (Querist)

02 December 2015 Thank you Mr. Amol, just one more question are pvt ltd companies allowed to issue DVRs at discount?