Tata Motors - DVR shares jump 14% in trade
Tata Motors - DVR shares jump 14 percent in trade on July 26 after the Board approved a Scheme of Arrangement for a capital reduction of the ‘A’ Ordinary shares and issue Ordinary shares as a consideration for the reduction.
Post completion of delisting of the American Depository Shares from the New York Stock Exchange as of 23rd January 2023, Tata Motors Ltd has currently two types of listed equity securities, namely Ordinary Shares and ‘A’ Ordinary
Shares. The company said in a press release to the stock exchanges on July 25.
The ‘A’ Ordinary Shares carry one-tenth of voting rights of Ordinary Shares and are entitled to five percentage points higher dividend. To further simplify the capital structure, the Board of Directors of Tata Motors, have approved a Scheme of Arrangement for cancellation of ‘A’ Ordinary Shares, and issue of 7 Ordinary Shares for every 10 ‘A’ Ordinary Shares as consideration.
Further, the cancellation will also reduce the company’s outstanding shares by 4.2 percent. While the cancellation process is expected to take 12-15 months, the process will also witness a 3.2 percent dilution in promoters voting rights.
Tata Motors remains the only large listed entity with differential voting rights (DVR) in India. The company first issued its DVR in 2008 and subsequently expanded its equity base through QIP in 2010 and another rights issue in 2015. However, the regulatory changes have since then restricted the issuance of such instruments that carry differential voting rights.
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