In a major boost to tech startups keen on listing themselves on Indian bourses, the SEBI approved a framework for issuance of shares with differential voting rights.

The major takeaways are:

• The company has to comply with the SEBI (ICDR) Regulations, 2018.
• Restricted only to new technology firms that are yet to get listed and are in the areas of IT, IPR, data analytics, bio-technology or nano-technology.
• Superior rights shares to have voting rights in the ratio of minimum 2:1 and a maximum of 10:1 compared to ordinary shares.
• Shareholders with superior rights should be a part of promoter groups having collective net worth of not more than Rs 500 crore.
• The total voting rights of the superior shareholders (including ordinary shareholders), post listing shall not exceed 74%.
• Companies having superior shareholders shall be subjected to enhanced corporate governance.
• Coat-tail provisions
• Time based sunset clauses where the shares with superior voting rights shall be converted to ordinary shares on the fifth anniversary of listing and can be extended once by five years, after passing a resolution. Event based sunset clauses where shares with superior voting rights on the occurrence of certain events.
• Existing listed companies shall not be allowed to issue fractional rights shares. 

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