The Bombay Stock Exchange saw a roughly 17% increase in DVR (Differential Voting Rights) shares of Tata Motors on Wednesday, setting a new 52-week high.
In-depth details about shares of Tata Motors DVR surge 17% after cancellation: implication for shareholders
The company’s decision to cancel DVR shares and convert them into ordinary shares, which resulted in positive feeling among shareholders and investors, caused this huge increase.
In this post, we go into greater detail about the idea of DVR shares, the motivations behind Tata Motors’ choice to convert them, and the advantages this will have for both the business and its shareholders.
DVR shares are a special class of shares that give their stockholders different voting rights from ordinary equity shares.
Tata Motors debuted DVR shares in 2008 for the first time. Depending on how the firm is set up, these shares may have more or less voting rights than conventional shares.
High-differential voting rights (HDVRs) provide shareholders greater voting power than standard shares, whilst low-differential voting rights (DVRs) give owners fewer voting rights.
Recently, Tata Motors declared that it would convert its DVR shares into common shares. The action is a part of a plan to issue 7 newly issued, fully paid-up ordinary shares with a face value of Rs. 2 for every 10 ordinary shares class ‘A’ having a Rs. 2 face value.
This issuance will reduce the number of outstanding equity shares by 4.2% in exchange for the cancellation and reduction of the “A” ordinary shares.
Months after Tata Motors chose to delist American Depository Shares (ADS), the company opted to convert DVR shares. The capital structure will probably become even more straightforward.
