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Sunset clause on differential voting rights should be extended to 20 years: Indiatech 

According to Indiatech, the first 15 to 20 years after an IPO is significant for the growth of a company in terms of operations, maintaining profitability, best serving its investors, and ensuring stability in management.

May 07, 2019 / 05:35 PM IST

Indiatech, which consists of members such as MakeMyTrip, Quikr and Softbank-backed Ola, has recommended to the Securities and Exchange Board of India (SEBI) that the founders of Indian companies should have the rights to retain control over their companies for potentially two decades after listing as against the existing five years.

The recommendation was made during the last week in response to a Consultation Paper titled -- Issuance of share with differential voting rights issued on March 22 by SEBI, Rameesh Kailasam, CEO, IndiaTech.Org told Moneycontrol.com.

The non-profit, which is dedicated to advancing the Indian internet commerce ecosystem, has recommended that the sunset clause should be abolished altogether, or else introduce a sunset period of atleast 15 years that could be extended for another five years with the approval of shareholders.

According to Indiatech, the first 15 to 20 years after an IPO is significant for the growth of a company in terms of operations, maintaining profitability, best serving its investors, and ensuring stability in management.

Therefore, a sunset period of 5 years would be not be appropriate, especially for high growth tech companies.

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first published: May 7, 2019 05:34 pm
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