Question

I would like to know the pros and cons about allowing the listing of shares with different voting rights which can solve 'Should stock exchanges allow listing of shares with different voting rights?'.And the answer should contain the expert's ideas. Thank you so much!

Answer 1

The shares that are listed with differential voting rights ie they generally come up with nil voting right or higher voting rights. These shares generally come up with nil voting rights and usually are listed with a heavy discount. There are a number of benefits in this regard-

1. The decision entails no dilution of control for the company in most cases. The company has a great opportunity to raise money as well as not loose control.
2. The issue protects the company from hostile takeovers without the voting rights.
3. The company also has the liberty in regards with the issue with control or without it.

The issue has a dual benefit as the people who dont want to have a say in the functioning can subscribe the shares at a discount.

Still there are a few demerits in this regard that the companies may find it difficult to find such people who want to subscribe to the issue. For a private company, wont prefer resorting to the rights if they want to have a control.

There are a number of pros and cons the company could resort to the DVR. Thus, depending upon the company the stock exchange should allow the listing of such shares.