Date: 27th August 2026

Scheme of Arrangement Overview

TVS Holdings Limited received the certified copy of the Order dated 18th August 2026 passed by the National Company Law Tribunal (NCLT), Chennai Bench, sanctioning the Scheme of Arrangement between the company and its shareholders.

Rationale of the Scheme

  • The Company has accumulated substantial surplus reserves from its retained profits over the years, which are in excess of its current and foreseeable future business requirements.
  • The Company considers that these excess funds can be put to optimal use by rewarding its shareholders through distribution.
  • The Scheme proposes to distribute surplus funds by issuing fully paid-up Preference Shares by way of bonus, providing shareholders with a near-cash (traded, encashable) instrument.
  • The Preference Shares will be listed on Stock Exchanges, providing liquidity to shareholders and flexibility to the Company in managing its liquidity until redemption.

Key Terms of the Scheme

  • Issuance Ratio: 46 Preference Shares of face value INR 10 each fully paid up for every 1 equity share of INR 5 each fully paid up.
  • Shareholder Eligibility: Equity shareholders whose names are recorded in the register of members and/or depository records on the Record Date.
  • Source of Funds: Utilization of general reserves/retained earnings.
  • Preference Share Type: 6% cumulative non-convertible redeemable preference shares.

Preference Share Terms (Schedule I)

  • Face Value: INR 10
  • Coupon Rate: 6% per annum
  • Redemption: The Company shall redeem Preference Shares at INR 10 of nominal value. The Board has discretion to redeem after 12 months from allotment date, with mandatory redemption upon expiry of 15 months.
  • Credit Rating: To be obtained from a credit rating agency after Effective Date
  • Market Lot: One Preference Share or as required by Stock Exchanges
  • Listing: To be listed on BSE and NSE where equity shares are listed
  • Lock-in Period: No lock-in for the Preference Shares
  • Taxation: Allotment, dividend, and redemption amount are subject to applicable Taxes including withholding/deduction as per Income Tax Act

Implementation Timeline

  • Appointed Date: Means the Effective Date of the Scheme
  • Effective Date: The date on which the last conditions precedent specified in Clause 11 are complied with or waived
  • Record Date: To be fixed by the Board after Effective Date to determine eligible shareholders
  • Issuance Timeline: Preference Shares shall be issued within 30 days from the Record Date

Conditions Precedent

The Scheme was conditional upon:

  • Obtaining no-objection from Stock Exchanges under Regulation 37 and 59A of SEBI LODR Regulations
  • Company compliance with SEBI Circular provisions including shareholder approval through e-voting
  • Sanction and order of the Tribunal under Sections 230-232 of Companies Act, 2013
  • Filing certified copies of Tribunal orders with Registrar of Companies

Regulatory Approvals and Observations

Regional Director (Southern Region), Chennai:

  • Raised observations regarding appointed date compliance with Section 232(6) and Section 63(3) regarding bonus shares not in lieu of dividend
  • Company responded that appointed date is event-based as permitted by MCA General Circular, and bonus issuance is not in lieu of dividend (interim dividend of Rs. 86 per equity share already declared for FY 2025-26)

Income Tax Department:

  • No objection to the Scheme
  • Noted that redemption payouts from accumulated profit may be taxable as deemed dividend under Section 2(40) of Income Tax Act, 2025
  • Company directed to deduct tax at source as per applicable law

BSE/NSE/SEBI:

  • BSE conveyed no adverse observations via letter dated 22.01.2026
  • NSE conveyed no adverse observations via letter dated 21.01.2026
  • Company obtained No Objection Certificates from both exchanges

Voting Results

  • 272 out of 273 equity shareholders (99%) who attended the meeting voted in favor of the Scheme

NCLT Directions

The Tribunal sanctioned the Scheme with the following directions:

  • Company shall issue and allot 46 Preference shares of INR 10 each for every 1 equity share of INR 5 each
  • Company shall file revised Memorandum and Articles of Association with ROC
  • Company shall make requisite payments of differential fee for enhancement of Authorized Capital
  • Company shall deliver certified copy of the order to Registrar of Companies within 30 days
  • Company shall deliver certified copy of the order to RBI within 30 days (as registered Core Investment Company)
  • All authorities concerned to act on production of certified copy of this order

Financial Capital Structure

As on date of Board approval of Scheme:

  • Authorized share capital: INR 2546,10,00,000
  • 9,22,00,000 equity shares of INR 5 each: INR 46,10,00,000
  • 2,50,00,00,000 preference shares of INR 10 each: INR 2500,00,00,000
  • Issued, subscribed and paid-up capital: INR 10,11,60,520
  • 2,02,32,104 equity shares of INR 5 each: INR 10,11,60,520

NCD Holdings (Schedule II)

The Scheme specifically addresses impact on Non-Convertible Debenture holders:

  • ISIN INE105A08022: 65,000 NCDs of INR 1,00,000 face value each (INR 650 crore), 8.65% coupon, redemption date 7th June 2029, CARE AA (Stable) rating
  • ISIN INE105A08030: 30,000 NCDs of INR 1,00,000 face value each (INR 300 crore), 8.75% coupon, redemption date 22nd January 2030, CARE AA+ (Stable) rating
  • The Scheme will have no adverse impact on NCD holders as terms and conditions remain unchanged

Foreign Shareholder Compliance

  • Regulation 6 of FEMA Debt Regulations, 2019 permits issuance to non-resident shareholders by way of bonus from general reserves under scheme of arrangement
  • No specific RBI approval required for allotment to non-resident shareholders
  • Non-resident shareholders responsible for complying with applicable laws of their country of residence

Accounting Treatment

  • Company shall credit share capital account with aggregate face value of Preference Shares issued
  • Company shall debit general reserves/retained earnings with aggregate face value of Preference Shares issued
  • Statutory Auditors have certified that accounting treatment is in accordance with Section 133 of Companies Act, 2013 and applicable accounting principles