Govt. relaxes norms for issue of Shares with DVR

Ministry of Corporate Affairs vide notification dated 16 August, 2019 has amended the Companies (Share Capital and debenture) Rules, 2014. The key changes are as follows:

1. Issue of shares with Differential Voting Rights:

The requirement of track record of distributable profit for last three years for issuing shares with DVR is omitted; 

Company will now be able to issue shares with differential voting rights upto 74% of their paid up capital against 26% which is in line with amendments made by SEBI in LODR and other regulations

2. Signing of Share certificate:

Pursuant to the amendment, now Company Secretary (CS) can have facsimile signature on the share certificate

3. Issue of Employee Stock option Scheme (ESOP):

The time period within which ESOPs can be issued by Start-ups recognized by DPIIT to Promoters/Directors holding more than 10% of equity shares has been enhanced from 5 years to 10 years from the date of their incorporation 

4. Debenture Redemption Reserve (DRR):

The DRR is not required to be maintained in case of public issue of debentures by listed NBFCs, HFCs and by other listed Companies

The unlisted companies (other than All India Financial Institutions and Banking Companies) are required to maintain 10% DRR of the value of the outstanding debentures;