OYO’s Bonus Share Ballot Sparks Outrage: Expert Calls It “A Masterclass in Deception”

OYO's recent move to issue Bonus Compulsorily Convertible Preference Shares (CCPS) has sparked significant controversy and criticism, being labeled by expert Jayant Mundhra as "a masterclass in deception"

The criticism centers around a postal ballot that offered shareholders two options, both perceived to be disadvantageous to small and retail investors, with a complex and brief 3-day response window

The default option grants just one bonus share for every 6,000 shares held, while a more beneficial option, obscured by complex procedures, offers 1,109 bonus shares for the same amount

Mundhra alleges that this design is intentional, expecting 99% of retail investors to miss the better option, while insiders like Ritesh Agarwal and SoftBank can easily secure substantial bonuses

This move is seen as a significant wealth transfer from retail investors to the promoter group, with drastic equity implications that dilute the holdings of small shareholders

Mundhra warns that this sets a dangerous precedent in India's corporate and startup landscape, potentially eroding trust and promoting unethical governance practices

The expert questions the role of regulators like SEBI, criticizing their silence and the lack of oversight on such corporate maneuvers

OYO's efforts to rebuild its public image over the past two years are seen as undermined by this controversial move, casting doubt on the company's commitment to good governance

The allegations have sparked widespread discussions on corporate governance, transparency, and shareholder rights within the Indian startup ecosystem

If these claims hold true, it could represent one of the most egregious examples of founder-driven control consolidation, urging the need for regulatory intervention to uphold investor trust