What are non-voting shares?

Mythili Parthasarathy, Musiri

These are a variant of equity. They get all economic benefits sans voting rights or reduced voting rights. For example, Tata Motors has shares with differential voting rights — 10 shares carry one right as against 1:1 for the other category of shares. As compensation for the sacrifice, an extra five percentage points dividend is payable to them.

Since only two companies have resorted to shares with differential voting rights coupled with the fact that dual-quotations inevitable in such a scheme of things cause avoidable confusion, the Companies Bill, 2009 proposes to stop shares with differential voting rights or non-voting shares.

S. MURLIDHARAN

ASK! Send in your queries to ask@thehindu.co.in


http://MentorQA.blogspot.com

(This article was published in the Business Line print edition dated November 15, 2010)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.