Business law
This query is : Resolved
HanimiReddy
(Querist)
29 October 2013
difference between voting rights and differential voting rights
Nikhil Kaushik
(Expert)
29 October 2013
the companies act provide for issue of shares with differential boting rights (eg Tata motors)
the basic difference is the in normal case each shareholder has voting rights in proportion to his shareholding ie if I hold 50% of the shares of a company, my vote has 50% value.
However, in differential voting rights, the voting rights are in difference to the shareholding. it could be more or it could be less. For eg the shareholder holding Differential voting rights may have 2 votes for each share held whereas normal shareholder will have 1 vote for each share.
Such shares are often issued to give control benefits to certain class of shares wherein they have more voting rights despite lesser shareholding.
the basic difference is the in normal case each shareholder has voting rights in proportion to his shareholding ie if I hold 50% of the shares of a company, my vote has 50% value.
However, in differential voting rights, the voting rights are in difference to the shareholding. it could be more or it could be less. For eg the shareholder holding Differential voting rights may have 2 votes for each share held whereas normal shareholder will have 1 vote for each share.
Such shares are often issued to give control benefits to certain class of shares wherein they have more voting rights despite lesser shareholding.
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