With an attempt to revive startup listings, the SEBI has been continuously simplifying norms.
In July this year, the SEBI-appointed committee observed that with differential voting rights, startup founders will be able to retain the control in the company even after selling shares at various stages. Besides, they will be able to avoid greater shareholder scrutiny even after the listing.
After the Securities and Exchange Board of India (SEBI)-appointed committee discussed the proposal of allowing companies to sell shares with different voting rights, it has received the backing of startup lobby group Indiatech.org.
The startup lobby group is planning to push the agenda of differential voting rights for Indian founders.
It plans to approach the government and then take the matter to SEBI. According to Indiatech, dual voting rights would enable a greater say to founders over strategic decisions even when they have a relatively smaller stake in the company compared to the other investors.
The lobby group aims to create a level playing field for domestic startups.
According to the group, there are examples in the US — with companies like Facebook and many others — where the founders have relatively smaller stakes after years of dilution, but get stronger voting rights in the company’s strategic decision-making process.
In March last year, Snapchat launched IPO and raised $3.4 billion with its sale of 200 million shares valuing the company at $24 billion. The company offered shares in the IPO without giving any voting rights to public investors. Besides, founders held super-voting rights (around 70 per cent of the voting rights in the company) with themselves, offering lesser voting rights to the pre-IPO investors.
MakeMyTrip’s Deep Kalra believed that introducing differential voting rights are required for new economy companies.
Launched in October last year, Indiatech is a non-profit entity which aims to companies to lobby for policy support with the government and other stakeholders.
Rameesh Kailasam is the new CEO of Indiatech. Besides, Ola’s Bhavish Aggarwal and MakeMyTrip’s Deep Kalra are the other founding members of the group, along with Ravi Mehta of Steadview Capital.
Surprisingly, Kailasam also confirmed that Flipkart is no longer a member of the group. The reason behind Flipkart ouster could be Sachin Bansal’s (who earlier headed Indiatech group) exit after Flipkart-Walmart deal.
The development was first reported by TOI.