Since December, 2000, Indian companies have been permitted to issue ‘dual class shares’. This was when the concept of ‘shares with differential voting rights’ was introduced in the Companies Act, 1956. The Securities and Exchange Board of India (SEBI) has, since July 21, 2009, 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.