The National Company Law Tribunal (NCLT), Chennai Bench, has sanctioned a scheme of arrangement between TVS Holdings and its shareholders under Sections 230 to 232 of the Companies Act, 2013. The order, pronounced on August 18, 2026, allows the company to distribute accumulated surplus reserves by issuing fully paid-up preference shares by way of bonus.

The tribunal’s approval follows a unanimous vote from equity shareholders, with 272 out of 273 attendees voting in favor. The scheme aims to optimize excess funds that exceed the company’s current and foreseeable business requirements, providing shareholders with a near-cash instrument while maintaining liquidity flexibility for the company.

Scheme Details

Under the approved terms, TVS Holdings will issue 46 preference shares of face value ₹10 each for every one equity share of face value ₹5 held on the record date. The issuance will be funded from general reserves and retained earnings.

The preference shares will be listed on stock exchanges where the company’s equity shares are traded. The board retains discretion to redeem the shares at any time after 12 months from the date of allotment, with mandatory redemption upon expiry of 15 months.

Regulatory Compliance

The NCLT addressed observations from statutory authorities, including the Regional Director and the Income Tax Department. The tribunal confirmed that the event-based appointed date linked to the effective date is compliant with Section 232(6) of the Companies Act, 2013, as per MCA General Circular No. 9 of 2019.

Regarding Section 63(3) of the Companies Act, which prohibits issuing bonus shares in lieu of dividends, the tribunal noted that the company had already declared an interim dividend of ₹86 per equity share for FY26. Consequently, the bonus preference share issuance is not considered a substitute for dividend distribution.

What the Numbers Show

The structure of the payout reveals a strategic shift in capital return mechanics. By issuing redeemable preference shares rather than cash, TVS Holdings preserves its cash position for operational needs or future investments while still rewarding shareholders. The 6% coupon rate provides a defined income stream to investors, who can trade the listed instruments without lock-in restrictions. This approach allows the company to manage liquidity timing through its discretionary redemption rights after 12 months, aligning shareholder returns with the company’s free cash flow generation from instrument redemptions.

Next Steps

TVS Holdings must file a certified copy of the NCLT order with the Registrar of Companies and the Reserve Bank of India within 30 days of receipt. As a Core Investment Company (CIC) registered with the RBI, the company is required to comply with relevant regulatory notifications. The company will also file revised Memorandum and Articles of Association to reflect the enhanced authorized capital.

The boards of directors of four entities within the tvs holdings group have approved a Composite Scheme of Amalgamation aimed at simplifying the corporate structure and consolidating assets. The scheme involves STPL Trading and Services Private Limited (Transferor Company 1), Home Credit India Finance Private Limited (Transferee Company 1 or Transferor Company 2), TVS Housing Finance Private Limited (Transferor Company 3), and TVS Credit Services Limited (Transferee Company 2). This restructuring is designed to reduce regulatory compliances, achieve operational synergies, and consolidate Non-Banking Financial Companies (NBFCs) in accordance with Reserve Bank of India directions.

TVS Holdings Limited received intimation of the board approvals on August 5, 2026, at 2:57 PM IST from its subsidiary, Home Credit India Finance Private Limited. The disclosure was made pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, read with SEBI Master Circular No. HO/49/14/14(7)2025-CFD-POD2/I/3762/2026 dated January 30, 2026. The scheme is governed by Sections 230 to 232 of the Companies Act, 2013.

The amalgamation requires several statutory and regulatory approvals before implementation. These include clearances from the Reserve Bank of India, the Competition Commission of India, the National Stock Exchange of India Limited, the Securities and Exchange Board of India, and the jurisdictional National Company Law Tribunal. Additionally, approval from the shareholders and creditors of the involved companies is required as applicable.

Financial details of the entities involved as on June 30, 2026, are outlined below:

The consideration for the amalgamation has been determined by independent registered valuer M/s. Bansi S Mehta Valuers LLP (Registration No. IBBI/RV – E /06/2022/172) and will be discharged on an arm's length basis. Although the transaction falls within related party transactions, it does not attract the requirements of Section 188 of the Companies Act, 2013, as per General Circular No. 30/2014 issued by the Ministry of Corporate Affairs.

Share Exchange Ratios

The share exchange ratios are based on estimated values as of March 31, 2027, and may be revised by the registered valuer based on fair values determined at the end of the financial quarter immediately preceding the Effective Date. JM Financial Services Limited, an Independent SEBI Registered Merchant Banker, has issued a fairness opinion on these ratios.

• STPL Trading and Services to Home Credit India: Shareholders of STPL Trading and Services will receive 155.79 equity shares of ₹10 each fully paid up of Home Credit India Finance for every 200 equity shares of ₹10 each fully paid up held.
• Home Credit India to TVS Credit Services: Shareholders of Home Credit India Finance will receive 9.94 equity shares of ₹10 each fully paid up of TVS Credit Services for every 180 equity shares of ₹10 each fully paid up held.
• TVS Housing Finance to TVS Credit Services: As TVS Housing Finance is a wholly owned subsidiary of TVS Credit Services, no consideration will be issued upon its amalgamation.

What the Numbers Show

The consolidation significantly centralizes the group's financial assets. TVS Credit Services Limited, the primary transferee in one leg of the scheme, holds total assets of ₹35,683.36 crore, dwarfing the asset base of STPL Trading and Services (₹387.26 crore) and TVS Housing Finance (₹0.02 crore). Home Credit India Finance, which acts as both a transferee and transferor, holds substantial assets at ₹8,367.07 crore. This structural rationalization aims to eliminate duplicate expenses and enhance capital efficiency across the NBFC verticals, aligning with RBI directives for consolidation within the group.