Tata Motors Sets Record Date for DVR Conversion, Share Capital Reduction Scheme
Tata Motors has fixed September 1, 2024 as the record date for the conversion of shares with differential voting rights (DVR) (also known as A-ordinary shares) into ordinary shares.
Under the plan, first proposed in July 2023, 7 ordinary shares of Tata Motors will be issued for every 10 A-shares (DVR shares) held and its outstanding A-shares will stand cancelled.
The company’s DVR conversion plan was approved by the shareholders in May, with 99.8% votes in favour. The DVR conversion plan is a step towards simplifying the company’s capital structure and providing equal voting rights to all shareholders.
What are DVR shares ?
Differential Voting Rights (DVRs) shares provide shareholders with either higher or lower voting rights in comparison to ordinary shareholders of the company. When a shareholder has higher voting rights in a ratio of 10:1, it means they have 10 votes per share held. Conversely, lower voting rights in a ratio of 1:10 means having 1 vote for every 10 shares held.
However, Indian regulations prohibit companies from issuing equity shares with higher voting rights. As a result, the DVR shares available in the market typically have limited voting rights. These shares are traded on the stock exchange similar to ordinary shares but often at a discounted price and with a higher dividend.
Tata Motors’ Stock Performance and Market Reaction
Despite the announcement of the share capital reduction scheme, Tata Motors’ shares experienced a slight decline in the market. On the day of the announcement, the company’s shares closed 0.97% lower at Rs 1,087.70 per share. This was in contrast to a 0.13% decline in the NSE Nifty 50, indicating that the broader market also faced some downward pressure.
However, it’s important to put this short-term dip into perspective. Tata Motors’ stock has had a remarkable performance over the year, with a 75.29% increase year-to-date and a 39.89% rise over the past 12 months. This impressive growth reflects the market’s confidence in the company’s long-term prospects and its ability to navigate challenges effectively
You might also be interested in – Tata Motors has secured a position among the top 10 global automobile companies, boasting a market capitalization of $51 billion.
