Tata Motors board proposes to convert DVR shares to ordinary shares

Tata Motors on July 25 said its board of directors approved a Scheme of Arrangement for the cancellation of ‘A’ Ordinary Shares, and issue of seven Ordinary Shares for every 10 ‘A’ Ordinary shares held by shareholders.

The ‘A’ Ordinary Shares carry 1/10th of voting rights of ordinary shares and are entitled to five percentage points higher dividend. They are listed as Tata Motors DVR on BSE and NSE. After the conversion, it will be delisted from exchanges.

The ‘A’ Ordinary shares were first issued by TML in 2008 and subsequently in a further QIP in 2010 and rights issue in 2015. Regulatory changes have since restricted the issuance of such instruments with differential voting rights and TML remains the only large listed corporate with such an instrument.

The ‘A’ Ordinary Shares currently trade at 43 percent discount to Ordinary Shares. The Capital Reduction Consideration implies a 23 percent premium on the previous day’s closing share price of ‘A’ Ordinary shares, translating to 30 percent discount over Ordinary Share price and significantly below its historical averages, the company said.