DVR Shares Are a Valuer's Job. The Standards Go Quiet on the Number.

Section 43 of the Companies Act, 2013 recognises exactly two kinds of share capital, equity and preference, and equity is itself split in two: "(i) with voting rights; or (ii) with differential rights as to dividend, voting or otherwise in accordance with such rules as may be prescribed." That second limb is the statutory basis for a differential voting rights (DVR) share. The rules it points to, Rule 4 of the Companies (Share Capital and Debentures) Rules, 2014, set the operating conditions: the articles must specifically authorise it, the company needs an ordinary resolution, and it cannot have defaulted on filed financial statements, dividend payments, deposit repayment, or debenture or preference share redemption in the preceding three years.

Two caps sit at the centre of the rule: DVR shares cannot carry more than 74% of total voting power, and cannot exceed 26% of total post-issue paid-up equity share capital. A company also cannot convert existing ordinary voting shares into DVR shares after the fact; DVR has to be issued as DVR from the start.

This is where a DVR share and a SAFE part ways completely. A SAFE fits no category the Companies Act recognises, neither equity nor debt. A DVR share is named directly inside Section 43 as a form of equity share capital. Every trigger that already applies to an ordinary equity share applies to it identically: a registered valuer's report under Rule 13(2)(g) before a preferential allotment, the same disclosure mechanics on a buy-back, the same role in a merger exchange ratio. There is no separate eligibility question here the way there was for FEMA pricing or a SAFE. A DVR share is equity, full stop, and valuing it is exactly as much a registered valuer's job as valuing any other share class.

Checked directly against the complete text of the ICAI Valuation Standards 2018, every standard from VS 101 through VS 303, including VS 301 Business Valuation and VS 303 Financial Instruments: the phrase "differential voting rights" does not appear anywhere in it, and neither does "DVR" or "voting right" as a defined concept. The same three approaches covered in Valuation Approach vs. Valuation Method: What the Words Actually Mean apply, but none of them is written with a named adjustment for a voting differential the way Control Premium and DLOC get their own named treatment.

This is not because the concept is obscure. A "voting premium," the price gap between superior-voting and inferior-voting shares of the same company, is a genuinely well-studied academic finance concept, with empirical estimates ranging widely across jurisdictions, from roughly 5% in the United States to over 40% in markets with weaker minority protections, according to the cross-country literature on dual-class share structures. It is real, and it is measurable where both classes actually trade. It has simply never been written into ICAI's or IVS's own named list of approaches and methods.

Absent a named method, the answer splits on whether the two classes actually trade separately.

• Listed, with both classes quoted. Where a DVR class and an ordinary class both trade on an exchange, the Market Approach does the work directly: the traded price of each class already reflects whatever premium or discount the market assigns to the voting differential. No separate adjustment is needed because the comparable is the instrument itself.
• Unlisted, the more common registered-valuer engagement. There is no separate market price for either class to observe. The valuer is instead solving the same problem covered in Startup Valuation Methods: Deal Heuristics vs. Fair Value Reporting: a single enterprise value has to be allocated across share classes with different rights, using an option-pricing or waterfall allocation rather than a flat per-share split. Where the DVR share and the ordinary share carry identical dividend and economic rights and differ only in voting, that allocation, run purely on cash flow rights, lands both classes at the same per-share number. The voting differential only starts to carry its own separate value where it amounts to an effective control block, at which point the question stops being about DVR at all and becomes the control premium question covered in Control Premium: Explicit Duty Under IBC, Implicit Duty Everywhere Else.

Permitted, named, and squarely the valuer's job. What to actually do with the number is professional judgement, built out of two techniques this series has already covered elsewhere, not a third one written specifically for this instrument.