OYO Withdraws Controversial 6,000:1 Bonus Share Plan Following Investor Backlash

Oyo's parent company, PRISM (previously Oravel Stays), withdrew its intricate bonus share plan after investors questioned its peculiar eligibility requirements and structure. The strategy, which tied shareholder compensation to Oyo's IPO success and a time-bound election process, will now be replaced by a more straightforward bonus programme that would benefit all shareholders.

In contrast to the straightforward, broad-based bonus issues commonly observed in corporate actions, Resolution No. 2 in the company's postal ballot suggested a bonus share issue that was exceptionally complex in structure. Rather than offering a uniform bonus distribution, the plan depended on the reaction of shareholders during a short election period and, most importantly, on the status of Oyo's eagerly anticipated listing.

What was the Scheme?

Several reports with knowledge of the company's plans claim that the original plan was not to change the ownership structure but rather to provide a reward to current shareholders who had remained invested before Oyo's anticipated IPO.

The business saw it as an act of goodwill intended to match its next stage of expansion with long-term investors. For every 6,000 equity shares held, investors were to earn one Bonus Compulsorily Convertible Preference Share (CCPS). Less than six thousand shares? No bonus.

Whether or not the shareholder acted during the election window determined what transpired next. Class A, where each CCPS was transformed into one equity share (essentially one bonus share for every 6,000 held), was automatically assigned to those who did nothing. Class B, which offered a significantly larger potential payout, was available to anyone who actively opted in and submitted paperwork within the allotted window. If Oyo hired merchant bankers for its IPO before March 2026, each CCPS would convert into 1,109 equity shares. However, the conversion would decrease to 0.10 shares per CCPS if that milestone wasn't reached.

PRISM to Come-Up with New Structure Plan

According to a statement provided to Moneycontrol, PRISM is rescinding the current resolution and will soon implement a new, streamlined bonus plan that covers all shareholders, preference and equity, and guarantees equal participation without the need for an opt-in procedure. According to a PRISM spokesperson, the company is not moving further with the current resolution and will soon present a new, cohesive proposal for shareholder approval in compliance with the 2013 Companies Act.

There won't be an application process for the updated structure, which will be revealed in the next several days. The business also stated that the new plan, which would involve both CCPS holders and smaller shareholders, is in response to investor input and seeks to improve transparency and equity. The spokesperson added that this choice demonstrates the company's ongoing dedication to expansion that prioritises governance, equity, and long-term value generation for all shareholder classes.

The brand's belief that each shareholder should have equal opportunities in PRISM's next phase of growth will be reflected in the updated structure. By doing this, the contentious two-class structure is essentially abandoned in favour of a universal bonus issue that automatically benefits all investors. In the upcoming days, the revised proposal is anticipated to be presented for shareholder approval.