I thought to do a small study in order to understand this better.
In Sept 2008, Tata Motors announced capital raising plan by way of ordinary shares on rights basis @ Rs. 340/- per share and through “A” ordinary shares @ Rs. 305/- per share. The rights on ordinary shares were at a 22% discount to the closing price of Tata Motors on the NSE; the same magnified to 30% for “A” ordinary shares.
As per the announcement made, the “A” shares would carry differential rights as to voting and dividend – one vote for every ten shares held and a 5% higher dividend than ordinary shares.
However, the Tata Motors DVR failed to generate investor interest and devolved on the promoters and the underwriter.
The only other publicly listed company that offered shares with differential voting rights in India is Pantaloon Retail. The Class B shares offered by Pantaloon Retail closed at a 31% discount yesterday; same as that for Tata Motors.
Berkshire Hathaway Inc. has two classes of common stock designated Class A and Class B. Class B has rights of 1/1500th of a share of Class A common stock but 1/10000th of the voting rights of a Class A share
ReplyDeleteWarren Buffett had introduced the B shares in 1996 to enable small investors to buy Berkshire's shares.
As of April 16 2010 close, the Class A shares were available @ $118,400 each while Class B shares were available @ $78.72 each.