SEBI to review superior voting rights framework

Source: Livemint

What is the News?

Securities and Exchange Board of India(SEBI) has put out a consultation paper seeking comments on its superior voting rights(SR) framework.

What is the Superior Voting Rights(SR) Framework?

• The Securities and Exchange Board of India(SEBI) has introduced the Superior Voting Rights(SR) Framework in 2019.
• Aim of the framework: to allow the founders of technology startups to retain control of their companies after they started trading publicly.
• Need: Promoters or founders of tech companies who are instrumental in starting up a company often lose control of the firm when they dilute their stakes to raise multiple rounds of funding.

Why is this framework being reviewed?

• The framework is being reviewed to give more flexibility to the founders of technology startups when it comes to raising capital and taking their company public.