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Sebi’s DVR framework shields startup founders, but fuels corporate-governance concerns

Through superior voting rights shares, tech-startup founders can now control companies even after diluting their shareholding in multiple rounds of funding and listing. But the inability to change promoters for years can deter potential investors from taking the plunge.
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muskan-khan
25 Jul 2019 11 Mins Read 0 comment
Yashish Dahiya, co-founder and CEO, Policybazaar.com (left), and Bhavish Aggarwal, co-founder and CEO, Ola Getty Images
Yashish Dahiya, co-founder and CEO, Policybazaar.com (left), and Bhavish Aggarwal, co-founder and CEO, Ola
Earlier this month, three co-founders of Bengaluru-based IT services firm Mindtree – Krishnakumar Natarajan, Rostow Ravanan, and NS Parthasarathy – exited the company they helped form 20 years ago. Few days ago, another co-founder Subroto Bagchi declined to seek reappointment to the board. A hostile takeover by infrastructure giant Larsen & Toubro (L&T) unceremoniously pushed them out. Ironically, the
norms need to be clearly defined. In India, these structures will not be without challenges but we are sure that the regulator is cognisant of these.” Sebi will have to monitor the DVR framework closely and plug any visible gaps swiftly to ensure its success. ( With inputs from N. Sundaresha Subramanian) ( Graphics by Abdul Shafiq)
Earlier this month, three co-founders of Bengaluru-based IT services firm Mindtree – Krishnakumar Natarajan, Rostow Ravanan, and NS Parthasarathy – exited the company they helped form 20 years ago. Few days ago, another co-founder Subroto Bagchi declined to seek reappointment to the board. A hostile takeover by infrastructure giant Larsen & Toubro (L&T) unceremoniously pushed them out. Ironically, the norms need to be clearly defined. In India, these structures will not be without challenges but we are sure that the regulator is cognisant of these.” Sebi will have to monitor the DVR framework closely and plug any visible gaps swiftly to ensure its success. ( With inputs from N. Sundaresha Subramanian) ( Graphics by Abdul Shafiq)

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