The Securities and Exchange Board of India (Sebi) is
considering allowing domestic businesses to issue shares with
differentiated voting rights (DVRs). This is a much-needed move
for both startup companies at risk of hostile takeovers, and
businesses with founders who want to raise funds without losing
too much control.
India’s e-commerce revenues alone are expected
to grow from $39 billion in 2017 to $120 billion in 2020.
According to Rameesh Kailasam, CEO at Indiatech, the business
model of these companies – as seen in other
jurisdictions such as the US and China – is primarily
focused on growing revenue or gross merchandise value to
rapidly scale the business in the initial years, rather than
To achieve this, these companies undergo multiple rounds of
capital infusion in the early stages of their business, mainly
from foreign investors, that lead to significant dilution of
ownership. While these companies may attract equity...