Trading of Tata Motors DVR shares suspended. Here's why

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Trading of Tata Motors DVR shares will stop today as Tata Motors on Tuesday announced that trading of its differential voting rights (DVR) shares will cease due to their conversion into ordinary shares.
The company had planned to cancel the DVR shares, which have been listed since 2008, and replace them with ordinary shares. For every 10 DVR shares, investors will receive seven ordinary shares.The company had earlier set September 1 as the record date for this share swap.

“In pursuance of Regulation 3.1.2 of the National Stock Exchange Trading Regulations Part A, it is hereby notified that the following security will be suspended from trading w.e.f. August 30, 2024 (i.e., closing hours of trading on August 29, 2024),” said the company in a filing to the exchanges.

Tata Motors informed that the company has received approvals from the National Company Law Tribunal (NCLT), Mumbai Bench. The Tribunal approved Tata Motors' plan to reorganize its share structure by canceling its 'A' Ordinary Shares and issuing new Ordinary Shares in exchange.

Also read: Sebi issues warning against SME stocks as IPOs leave investors dumbfounded

In the last 2 years, the shares of Tata Motors DVR have given whopping returns of 223.6% while in the last one year, the stock has gained 86.6%. In the last 6 and 3 months period also, the stock has given returns of 17% each to its investors.Tata Motors DVR shares are a unique type of equity that offers differential voting rights. These shares were introduced to enable the company to raise capital while preserving the voting power of existing shareholders.DVR shares offer fewer voting rights compared to ordinary shares—typically, each DVR share carries one-tenth the voting power of an ordinary share. To compensate for this reduced voting power, DVR shares generally offer a higher dividend than ordinary shares, making them an attractive option for investors seeking income rather than control over the company.

Shares of Tata Motors DVR closed 2.5% higher at Rs 765.15 on BSE on Thursday.

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