Market regulator Sebi has said that the shareholders of Tata Motors who were allotted equity with higher dividend but lower voting rights in 2008 will continue to enjoy the same privileges.
According to the Securities and Exchange Board of India (Sebi), the restrictions imposed by changes in the listing agreement will not alter the rights of those shareholders of Tata Motors who were allotted equity under the Differential Voting Right (DVR) Rules.
"The existing listed 'A' Ordinary Shares will continue to have all their existing rights," Sebi said in a guidance sought by Tata Motors.
Tata Motors in September 2008 had issued 6.42 crore 'A' Ordinary Shares with higher dividend of Rs 0.5 per share but lower voting entitlement (10 'A' shares to one ordinary share).
Over 84 per cent of these shares with higher dividend and lower voting rights were subscribed by the promoter group entities, followed by banks and institutional investors (12.77 per cent).
In July 2009, Sebi amended clause 28 A of equity listing agreement following which the companies were barred from issuing shares "which may confer on any person superior rights as to voting or dividend vis-a-vis the rights on equity shares that are already listed".
Following the changes in the listing agreement, Tata Motors sought a clarification from Sebi as to the rights of category 'A' ordinary shareholders with regard to dividend, bonus, voting rights and among others.
Sebi in a detailed letter said that existing rights of the 'A' ordinary shareholders would continue and the company could also make fresh issue by way of follow-on public issue, preferential allotment or institutional placement.
Tata Motors, further said, that shares issued as part of the Employee Stock Option can be converted into 'A' shares on the same terms as the existing 'A' Ordinary Shares.