Differential Voting Right (DVR)

SEBI has given nod for issue of Differential voting Rights, synonymn to different classes of shares in many developed countries.

Internationally such DVR trade at a discount to share price, but the dicount is not very steep. The discount is arount 5 % to 10 % in European countries & not more than 20 % in US.

These products if the voting rights are less , than the dividend is little higher or the returns are more sweetened than normal equity.

There are 2 companies listed companies who have issues shares with differential voting rights. They are TELCO & Pantaloon retail.

Both DVR has not performed in tandem with its share price, hence Investors who are bullish on underlying can bet on DVR as it will have lower downside.

It is not advisable to do arbitrage between DVR and underlying ie buy DVR & sell the stock futures, because the price discovery between CASH & DVR may take a longer time.

Guj NRE Coke has also decided to issue right DVR & Bonus DVR , but the dates are not fixed.