Tata Motors announced on July 25, 2023 that it would be cancelling its 'A' ordinary shares. This is a move to simplify the company's capital structure and make it more efficient.
They have voting rights at 10% of ordinary shares but get a 5% higher dividend. However, they have been trading at a steep discount to the ordinary shares, which has made them less attractive to investors.
Under the cancellation scheme, Tata Motors will issue seven ordinary shares for every 10 'A' ordinary shares. This will imply a 23% premium on the previous day's closing level of 'A' ordinary shares. The scheme will be subject to approval from the National Company Law Tribunal (NCLT).
The cancellation of the 'A' ordinary shares will reduce Tata Motors' overall share count by 4.2%. This will make the company's capital structure simpler and more efficient. It will also make the company's shares more attractive to investors.
The cancellation of the 'A' ordinary shares is the latest in a series of moves by Tata Motors to simplify its capital structure. In January 2023, the company delisted its American Depositary Shares (ADS) from the New York Stock Exchange. This move was also aimed at simplifying the company's capital structure and making it more efficient.
Tata Motors is the only major listed company in India with 'A' ordinary shares. The cancellation of these shares will make the company's capital structure more aligned with those of other listed companies. This will make it easier for Tata Motors to attract investors and raise capital.
The cancellation of the 'A' ordinary shares is a positive move for Tata Motors. It will make the company's capital structure simpler and more efficient, and it will make the company's shares more attractive to investors. This is likely to benefit the company in the long term.