OYO’s parent company PRISM has withdrawn its controversial 6,000:1 bonus share scheme after strong opposition from investors. The company has said that now it will come up with a new and simpler bonus share scheme involving all the shareholders.
What was the old bonus share scheme?
PRISM’s previous plan was extremely complex and was linked to the company’s Initial Public Offering (IPO). Under this scheme, shareholders were to be given 1 Bonus Compulsory Convertible Preference Share (CCPS) for every 6,000 equity shares. Investors who held less than 6,000 shares do not get any bonus. This scheme was divided into two classes – Class A and Class B.
For investors who did not apply, each CCPS would have been converted into 1 equity share. That means only 1 bonus share for every 6,000 shares.
Investors who applied within the stipulated time frame could get up to 1,109 equity shares at 1 CCPS, depending on the terms and conditions of the IPO. Provided that the company appoints the merchant banker before March 2026. If this target was not met, the price of each CCPS would have remained only 0.10 share.
What was the company’s intention?
The company said that this plan was to reward long-term invested shareholders before the IPO. According to OYO, its purpose was not to change the ownership structure, but rather as a goodwill gesture for loyal investors.
Why did investors protest?
Investors strongly objected to the scheme’s complex process, limited timelines and eligibility conditions. Earlier a window of only three days was given, which was later extended by the company till 7 November 2025, till 6 pm. The company also removed the requirement of submitting Client Master List (CML) and opened support channels for investors.
However, only equity shareholders were eligible for the scheme, which would have left out big investors like Ritesh Agarwal and SoftBank Vision Fund, who are preference shareholders, from this bonus.
Why did the controversy arise?
Corporate governance and minority investors said the plan is inequitable and confusing. Large investors could easily participate in Class B, while the process was extremely difficult for small investors.
This would create an access-based value gap, meaning those with resources were likely to benefit more and smaller investors were likely to suffer losses. For example, if an investor holds 3 lakh shares, he would get only 50 new shares (worth approximately Rs 1,300) in Class A.
Whereas, the same investor in Class B could have earned 55,450 shares (about Rs 14.4 lakh) if the IPO conditions were met.
impact on promoters
Oyo founder Ritesh Agarwal’s direct stake is 29.65%, while his personal investment arm RA Hospitality Holdings (Cayman) holds 34.9%. Earlier, after the announcement of this scheme, it was believed that if the conditions of IPO were met, the promoter group would have made huge profits. But the company later clarified that preference shareholders are not eligible under the scheme, limiting the potential gains for the promoter group.
PRISM’s new decision
“We are withdrawing the existing proposal and will soon come up with a new, simpler and integrated bonus share structure that will cover all shareholders, equity and preference,” PRISM said in a statement shared with Moneycontrol. The company said that the new proposal will not require any application process, and all investors will automatically get the benefits.
“This decision reflects our governance-first approach and our commitment to fairness for all shareholders. Every investor deserves an equal opportunity to participate in OYO’s next growth story,” a PRISM spokesperson said.
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