PRISM, the parent company of Oyo (formerly Oravel Stays), has withdrawn its controversial bonus share proposal after widespread investor criticism. The company has promised to introduce a new, simplified structure that treats all shareholders equally, ending a weeks-long debate over what many saw as one of the most complex corporate actions in recent memory.
The decision follows strong feedback from investors who said the earlier bonus plan was confusing, restrictive, and unfairly structured. Unlike conventional bonus issues that reward shareholders proportionally, PRISM’s earlier plan tied eligibility to two conditions, how quickly shareholders responded within a short election window and whether Oyo appointed merchant bankers for its long-awaited IPO before March 2026.
A proposal that raised eyebrows
Under the withdrawn Resolution No. 2, shareholders were to receive one Bonus Compulsorily Convertible Preference Share (CCPS) for every 6,000 equity shares held. The catch was that only those who opted in within a limited window could qualify for a far larger reward under what was called “Class B.” Those who didn’t respond in time automatically fell under “Class A,” receiving a far smaller benefit.
Class A investors would have seen each CCPS convert into one equity share, effectively a one-for-6,000 bonus. Class B, however, carried the potential for a massive upside, each CCPS could convert into 1,109 equity shares if the company appointed merchant bankers for its IPO before March 2026. If not, the conversion ratio would fall drastically to 0.10 share per CCPS.
This two-tier structure immediately drew attention for its complexity and perceived inequality. Governance experts argued that it gave larger, better-informed shareholders an advantage, while smaller investors might miss out simply due to procedural hurdles or lack of clarity.
Company’s intent vs investor concerns
According to people familiar with PRISM’s thinking, the company designed the plan as a goodwill gesture to reward long-term investors ahead of Oyo’s anticipated IPO. It was meant to align committed shareholders with the company’s growth journey, not to alter control or ownership.
But investors saw it differently. The proposal’s conditions, especially the requirement to opt in during a tight election window and provide documents like the Client Master List (CML), were seen as impractical. Smaller investors argued that the process was too complicated, while governance analysts questioned why the bonus distribution should depend on a future IPO milestone.
As criticism mounted, PRISM tried to calm nerves. It extended the election window, dropped the CML requirement, and set up a dedicated investor query channel. The company also clarified that only equity shareholders were eligible, excluding preference shareholders, a category that includes founder Ritesh Agarwal and SoftBank Vision Fund, both of whom hold large stakes through preference instruments.
Still, the controversy didn’t fade. Analysts pointed out that while the promoter group’s preference shares were excluded, their large equity holdings still meant they would benefit significantly, even under a modest bonus base. The optics, they said, were difficult to defend.
A rethink and a retreat
In a statement shared with Moneycontrol, PRISM confirmed that it is withdrawing the resolution and will soon announce a fresh bonus plan that is simple, inclusive, and automatic. The company said the new structure would not require any opt-in or election process and would cover both equity and preference shareholders.
“We are not proceeding with the current resolution and will shortly bring a fresh, unified proposal for shareholder approval,” a PRISM spokesperson said. “The revised structure will ensure equal participation for all shareholders and will not require any application process.”
The company added that this decision reflects its commitment to “governance-first growth, fairness, and long-term value creation.” By scrapping the old structure, PRISM hopes to turn a potential governance controversy into a moment of course correction.
What this means for Oyo and its investors
For Oyo, which has been preparing for a public listing after years of restructuring, investor trust is critical. The company has faced multiple delays in its IPO journey and has been working to improve transparency and corporate governance. By walking back the complex bonus plan, PRISM appears to be signaling a willingness to listen to shareholder concerns and avoid distractions as it plans its next steps.
The new proposal, once announced, will be tabled for shareholder approval in the coming days. It is expected to include all investors — large and small — with uniform rewards, eliminating the two-tier structure that had sparked criticism.
For now, the episode serves as a reminder that clarity and fairness matter as much as innovation in corporate decisions. A bonus issue meant to reward loyalty ended up testing it instead. With the revised plan, PRISM has a chance to restore confidence and refocus attention on Oyo’s much-anticipated IPO and future growth.
