Since December, 2000, Indian companies have been permitted to
issue 'dual class shares'. This was when the concept of
'shares with differential voting rights'1 was
introduced in the Companies Act, 1956. The Securities and Exchange
Board of India (SEBI) has, since July 21,
20092, disallowed listed companies to issue shares with
superior rights to voting or dividend. However, listed companies
were permitted to issue shares with inferior (or fractional) voting
rights.
In an apparent reversal of its policy position, SEBI in its
board meeting on June 27, 2019, approved a framework for the
listing of companies that have shares with superior voting rights,
while disallowing any further issuance of shares for those with
inferior voting rights.
