Oyo Drops Complex Bonus Plan: Key Investor Update

Oyo Drops Complex Bonus Plan following criticism from shareholders over its previous 6,000:1 bonus share proposal. PRISM, the parent company of Oyo, has officially withdrawn the earlier scheme and announced plans to introduce a simpler, more inclusive bonus structure. This course correction aims to enhance transparency and ensure equitable participation for all shareholders ahead of Oyo’s anticipated market debut.

The earlier bonus plan linked shareholder rewards to both a time-bound election process and milestones related to Oyo’s IPO. Shareholders holding fewer than 6,000 equity shares were excluded, and the conversion of Bonus Compulsorily Convertible Preference Shares (CCPS) depended on whether they opted into the election process.

Under the previous system, shareholders who did not act during the election window were categorized as Class A, receiving one equity share per CCPS. Shareholders who submitted the required documents within the window were assigned Class B, which carried a significantly higher potential reward: one CCPS could convert into 1,109 equity shares if Oyo appointed merchant bankers before March 2026. If the milestone was not met, the conversion rate would drop to 0.10 share per CCPS.

The company’s stated objective was to reward long-term investors who had supported Oyo ahead of its IPO, aligning shareholder interests with the company’s next growth phase. However, investors raised concerns over the short election timeline, procedural hurdles such as obtaining a Client Master List (CML) from banks, and the complex two-tier system.

In response, Oyo extended the election window to November 7, 2025, removed the CML requirement, and created a dedicated channel for investor queries. Despite these adjustments, governance experts and minority shareholders noted that the two-tiered structure disproportionately favored well-resourced investors while potentially excluding smaller shareholders.

The disparity between Class A and Class B outcomes was substantial. For example, a shareholder with 300,000 equity shares would have received 50 CCPS under Class A, converting to 50 equity shares valued around Rs 1,300 at implied prices. Under Class B, the same CCPS could convert into 55,450 shares worth approximately Rs 14.4 lakh, contingent on IPO milestones. While founder Ritesh Agarwal and promoter entities were not eligible under preference share rules, the scale of their equity holdings could still yield meaningful incremental value.

PRISM Withdraws Resolution, Announces Simplified Structure

PRISM has now officially withdrawn the controversial resolution and confirmed that a new bonus structure will be introduced. This simplified approach will include all shareholders, equity and preference alike, and will eliminate the opt-in process. According to a company spokesperson, “The revised structure will be announced in the coming days and will not require any application process. Every shareholder will have equal participation in the bonus issue.”

The move effectively replaces the two-class system with a universal, automatic bonus share distribution. The revision aims to restore confidence among investors by ensuring fairness, transparency, and equal treatment for all shareholder categories. The proposal will comply with the Companies Act, 2013, and is expected to be tabled for approval shortly.

Implications for Investors

Oyo Drops Complex Bonus Plan in a manner that demonstrates governance-first thinking. By introducing an inclusive bonus share structure, the company addresses prior criticisms, enhances equity in shareholder benefits, and sets a positive precedent ahead of its IPO. Investors, both large and small, can anticipate participation in a system designed to maximize fairness and transparency.

The revised bonus plan also signals Oyo’s commitment to long-term shareholder value creation. This course correction is an important step toward rebuilding investor confidence and aligning the company’s corporate governance practices with market expectations.

The move effectively scraps the controversial two-class system, replacing it with a universal bonus issue that covers all investors automatically. The new proposal is expected to be tabled for shareholder approval in the coming days.

At KuberGrow, we bring real, verified pre-IPO insights — so you don’t just invest, you invest smart.

For more IPO updates, valuation breakdowns, and unlisted share investment opportunities: Follow KuberGrow.

 Want to invest in upcoming listings?
Connect with KuberGrow.