OYO’s Bonus Share Reboot: A Lesson in Listening to Investors

In a move that has caught the attention of India’s startup and investment community, PRISM (formerly Oravel Stays and parent of OYO) has withdrawn its complex bonus share proposal after investors raised eyebrows over its confusing structure and restrictive eligibility rules.

The original plan was anything but ordinary. It aimed to reward long-term shareholders ahead of OYO’s much-awaited IPO but tied the benefit to multiple conditions. Only those holding at least 6,000 shares would qualify for one Bonus Compulsorily Convertible Preference Share (CCPS). What made it more complicated was the conversion criteria—shareholders had to make an active choice within a limited window. Passive holders received a modest conversion ratio, while those who opted in could potentially gain much more, but only if OYO hired merchant bankers for its IPO before March 2026.

The intention behind this design was to appreciate investor loyalty and align rewards with the company’s future growth. However, the layered structure ultimately alienated smaller shareholders and raised questions about fairness and transparency. Many investors saw it as favouring a select few rather than recognising the collective support that has helped OYO grow into one of India’s most recognised hospitality brands.

Sensing the discontent, PRISM decided to scrap the old resolution and promised a simpler, more inclusive plan. The company now plans to roll out a uniform bonus issue covering all shareholders—both equity and preference—without any opt-in requirement or time-bound election process.

This decision marks a refreshing shift in how Indian startups are handling corporate governance. Instead of doubling down on a complex proposal, PRISM chose to listen, adapt, and reinforce trust. It sends a strong signal to the market that growth and governance can go hand in hand.

For investors, this episode serves as a reminder that transparency and equitable treatment are just as important as valuation or expansion. For PRISM and OYO, it could be the reset they need before their next big chapter on the public stage.