Eligibility requirements related to Superior Voting Rights Shares Framework relaxed by SEBI

1. The Securities and Exchange Board of India (SEBI) met in Mumbai on Tuesday under the Chairmanship of Mr.Ajay Tyagi. The Part-Time Members joined the meeting through video conferencing. The Board, inter-alia decided to relax the eligibility requirements related to the Superior Voting Rights Shares framework.

2. Earlier, in 2019, SEBI had introduced a superior voting rights (SR) framework specifically for issuer companies intensive in the use of technology. The framework allows issuance of SR shares to promoters/ founders holding an executive position in the company desirous of listing on the Main Board.

3. The framework also has checks and balances such as coattail provisions i.e. matters in which SR shares shall have the same rights as that of ordinary shares and sunset clause i.e. time period until which such an SR shareholder shall enjoy superior voting rights.

4. As per the existing provisions, an SR shareholder should not be part of a promoter group having a net worth of more than INR 500 crs. This has been changed to require that the SR shareholder, as an individual, should not have a net worth of more than INR 1000 crs. The minimum gap between issuance of SR shares and filing of Red Herring Prospectus is reduced to 3 months from the existing requirement of 6 months.

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