The government has introduced new amendments for the listing of equity shares of a company, allowing promoters of companies including founders and VC investors who hold superior voting shares to list on stock exchanges in the same way as ordinary shares.
SEBI, in a notification, brought two new provisions into Securities Contract Regulation Rules related to shares with superior voting rights.
“The applicant company, who has issued equity shares having superior voting rights to its promoters or founders and is seeking listing of its ordinary shares for offering to the public under this rule and the regulations made by the Securities and Exchange Board of India in this regard, shall mandatorily list its equity shares having superior voting rights at the same recognized stock exchange along with the ordinary shares being offered to the public,” said a Techportal report quoting the notification, that was released on Thursday.
Further, it added that the minimum offer and allotment requirements shall not be applicable to the listing of such equity shares having superior voting rights.
Entrackr spoke to multiple analysts dealing with tax and regulatory issues who said that the amendment will broadly help promoters and PE/VC investors having superior voting shares retain control in the companies.
“This might be new regulation in India but global firms like Google and Facebook have been allowing their promoters to raise investment without losing any control or giving away their superior voting rights,” said a partner in MNC consulting firm, who did not wish to be named.
The government will notify the amendments in the official gazette after which the new rule will come into force. The government did not share details regarding the date of implementation.