Oyo withdraws controversial 6,000:1 bonus share proposal after investor backlash: Report

PRISM, the parent company of Oyo (formerly Oravel Stays), has withdrawn its controversial bonus share plan following strong criticism from investors over its complexity and eligibility conditions, according to a report by Moneycontrol on Monday.

The company stated that it will replace the earlier proposal with a new, simplified bonus issue that will cover all shareholders equally, without any opt-in process.

Under the withdrawn plan -- listed as Resolution No. 2 in Oyo's postal ballot -- investors were to receive one bonus Compulsorily Convertible Preference Share (CCPS) for every 6,000 equity shares held. The structure was highly unusual, linking rewards to both shareholder action during a narrow election window and the progress of Oyo's long-pending IPO.

Those who did not act within the set timeframe would have automatically fallen under "Class A," where each CCPS would convert into one equity share, equating to one bonus share per 6,000 shares held. In contrast, those who actively opted in within the election window could choose "Class B," offering potentially greater rewards -- one CCPS could convert into 1,109 equity shares if Oyo appointed merchant bankers for its IPO before March 2026, or just 0.10 share if the milestone was not met.

The proposal sparked criticism from shareholders who called the structure restrictive and difficult to execute, given the tight timelines and procedural requirements. In response, Oyo extended the election window to 6 pm on November 7, 2025, dropped the requirement to submit a Client Master List (CML), and opened a dedicated investor query channel.

Despite these adjustments, investor concerns persisted. In its latest statement, PRISM reportedly confirmed that it is "not proceeding with the current resolution" and will "shortly bring a fresh, unified proposal for shareholder approval in accordance with the Companies Act, 2013."

With this move, PRISM has effectively scrapped the earlier two-tier bonus structure and aims to replace it with a universal scheme ensuring equal participation for all investors. The revised proposal is expected to be tabled for shareholder approval in the coming days.