DVR shares are listed like ordinary shares, but they trade at a discount because of fewer voting rights
23-Oct-2015 •Research Desk
What is the difference between a share and DVR share? For example, there are Tata Motor share and Tata Motor DVR share available in the market. What is the difference between them? Which one is more beneficial to investors?
- Spandan Soni
Compared to an ordinary share, a differential voting right (DVR) share provides fewer voting rights to an investor. For example, an investor with an ordinary share can can cast one vote, whereas a DVR shareholder will need hold a particular number of shares (for example, 10 or 100) to cast one vote. The number of DVR one has to hold will differ from company to company. DVR shares are listed like ordinary shares, but they trade at a discount because of fewer voting rights. The companies offer a slightly higher dividend to DVR shareholders to compensate them for the fewer voting rights. These shares are suited for investors who are not very particular about casting votes and looking to earn a higher dividend. However, one should keep in mind that DVR shares are thinly traded in the market.