A Differential Voting Rights (DVR) share is a class of equity share that carries different voting rights from an ordinary share — most commonly fewer votes per share. To make up for the weaker say in company decisions, a DVR share often pays a slightly higher dividend and tends to trade at a discount to the ordinary share. Your economic ownership is otherwise the same.
Why do companies issue DVR shares?
Mainly to raise capital without diluting control. By issuing shares that carry fewer votes, a company's founders or promoters can bring in more equity money while keeping a larger share of the voting power over big decisions taken at shareholder meetings.
What does a DVR share mean for me as an investor?
- Fewer votes. For example, a DVR share might carry one vote for every ten shares, where an ordinary share carries one vote each. This matters mostly for large or activist investors, less so for a typical retail investor.
- Often a higher dividend. DVRs are frequently sweetened with a marginally higher dividend to compensate for the reduced voting power.
- Usually a lower price. They tend to trade at a discount to the ordinary share, even though both represent a stake in the same company, so their prices broadly move together.
- You trade them the same way. A listed DVR share is bought and sold on the exchange like any other share. DVRs are relatively uncommon in the Indian market, so most listed companies won't have one.