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What Is The Difference Between Equity Shares and DVR Shares?
DVR stands for shares that have Differential Voting Rights. In India we have equity shares that are issued with voting rights. These voting rights allow investors to vote over various issues, the notice of which is normally sent to shareholders in advance.
The concept of DVR has hardly caught on in India. Except Tata Motors which issued DVRs way back in 2008, we have not had any DVRs being issued thus far. A few of the companies that have issued DVRs include Gujarat NRE Coke and Jain Irrigation.
DVRs tend to quote lower than equity shares. Take the example of the Tata Motors. While the DVRs are quoted at Rs 322, the shares are quoted at Rs 556.
Generally, both of them tend to move in tandem. When the equity shares move up, the DVRs also move higher. The difference in the price largely comes on account of the fewer voting rights that the latter enjoys.
DVRs can help prevent a takeover of the company, though that may not be the only reason for issuing a these type of securities. Therefore, it is suitable for those who wish to buy shares as a good long term bet, rather then a takeover of the company per se.
These days the price differential between the equity shares and the DVRs, especially in the case of Tata Motors is fast diminishing.
Can Attend Meetings
DVR holders can attend meetings of the company, including the annual general body meeting. If A DVR holder has a very small number of shares like 10 he may not be entitled to vote.
Should You Buy These Shares?
The rise and fall in the shares would depend on how the company performs and would move in line with the listed company shares, after considering the usual discount for the share that already exists. So, if you feel there is a growth potential for the company go ahead and buy the DVR. At least you may end up getting a higher dividend.
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