The Securities and Exchange Board of India (SEBI) has issued an informal guidance for Tata Motors' differential voting rights (DVRs) shares according to CNBC-TV18's Priyal Guliani. The company had sought a guidance on DVRs on 17 September, 2009.
As per SEBI guidelines, existing DVR holders can enjoy superior dividend rights along with their existing rights. SEBI allowed Tata Motors to issue fresh DVR via bonus / rights on same terms. Also, the company has been allowed to issue fresh DVRs via follow on public issue (FPO) and preferential issue route.
The market regulator said Tata Motors could convert its 'convertible alternative reference securities' (CARS) and employee stock ownership plan (ESOPs) into DVRs under existing terms.
SEBI said that shareholders of Tata Motors who had been allotted equity with higher dividend but lower voting rights in 2008 would continue to enjoy the same privileges.
The regulator said the restrictions imposed by changes in the listing agreement would not alter the rights of those shareholders of the company that were allotted equity under DVR rules.
In September 2008 Tata Motors issue 6.42 crore 'A' ordinary shares with higher dividend of Rs0.5 per share but lower voting entitlement (10 'A' shares to one ordinary share).