Ahead of the annual general meeting scheduled for September 21, Tata Sons have proposed the idea of converting itself into a private limited firm from a public limited one. The plan has been suggested solely because the company feels that its status as the ‘deemed public company’ is not statutorily recognized under the Companies Act, 2013.
However, the Mistry family, who have been at loggerheads with the Tata’s from quite some time, have objected this move. A letter from Cyrus Investments said, ” The proposal to convert Tata Sons from a public company to a private company constitutes yet another act of oppression of the minority shareholders of Tata Sons at the hands of the majority shareholders.”
The Mistry family holds 18.4 percent stake in Tata Sons, while Tata Trusts holds 66 percent stake. Moreover, the disagreement by Mistry family has come after months of legal battle between the two groups following Cyrus Mistry’s removal as Chairman of salt-to-steel business.
Meanwhile, the special resolution will only be passed if 75 percent of the votes are in favor to bring about a change in Tata Sons’ corporate system.
The Tata Sons Board, which came together for an unscheduled meeting on Thursday evening, has finally selected a new Chairman for Tata Sons. Natarajan Chandrasekaran is the man to have been brought in for the job, filling Cyrus Mistry’s shoes. The appointment comes almost three months after Mistry was removed from the top job in what has become an extremely public and controversial decision, spawning multiple boardroom and courtroom battles.
But with Chandrasekaran’s appointment, it seems that the matter can now be laid to rest. The new top honcho has been the Chief Executive Officer and Managing Director of the ‘crown jewel’ of Tata Sons, Tata Consultancy Services since 2009 and has also served on the board of Tata Sons since October 2016. Under his leadership, TCS has become the largest private sector employer in India and the second largest among listed entities, behind Coal India. This has caused him to be described as one of the most successful professional CEOs in India.
‘Chandra’, as he is popularly known, also has international exposure and familiarity with global economic conditions. What certainly helped his case is that he is a ‘lifer’, beginning his career at Tata and rising through the ranks. This proves his loyalty and his capability has already been proven for all to see.
The decision however, did come as a surprise, with Tata insiders having placed their bets on Tata veteran Noel Tata. But the marathoner and classical music aficionado Chandrasekaran has won the race, beating out other probables like Ishaat Hussain, S Ramadorai. Chandrasekaran seemed overwhelmed by the opportunity and said that he hoped to “grow into the role over a period of time”.
The Air Asia India’s Chief Financial Officer (CFO), Ankur Khanna was questioned this week by the Enforcement Directorate (ED) under the provisions of the Foreign Exchange Management Act (FEMA). The ousted Tata Group Chairman Cyrus Mistry has alleged that fraudulent transactions of Rs 22 crore with non-existent entities in India and Singapore were carried out by the airlines.
The Enforcement Directorate (ED) probe is also looking at a specific transaction of Rs 12 crore, out of Rs 22 crore transactions made to a firm in Singapore. The claim of forensic investigation into this transaction was made by Mistry in October, indicating the ethical concerns in the joint venture of Tata Group and Air Asia.
It was only at the insistence of the independent directors, one of whom immediately submitted his resignation that the board decided to belatedly file a FIR, Mistry had said in the letter. In the ongoing bitter war between Mistry and Ratan Tata, Mistry told Indian Express that the Tata Sons Board had increased the capital in the initial levels of commitment into the aviation sector due to Mr. Tata’s passion for aviation.
In 2013, AirAsia India was started as a low-cost carrier when Tata Sons had joined hands with Malaysian carrier AirAsia and Arun Bhatia’s Telestra Tradeplace.
90% of the shareholders of Tata Steel Limited unanimously voted to remove Nusli Wadia as the independent director from the board of companies with immediate effect. An ordinary resolution was passed at the Extra Ordinary General meeting (EGM) on Wednesday and was thrown open to public for voting.
Early on Thursday, the company declared the results and sent out a statement to the Stock Exchanges, publicizing details of the six-hour long EGM held on Wednesday. The statement revealed that 56.79 crore votes were in favour of Wadia and 5.7 crore against the motion. On reckoning it appears that 90.80 per cent shareholders supported the resolution.
Wadia who had addressed the group’s company shareholders had revealed to them his concerns about the lack of corporate governance and violation of insider trading norms by Tata Sons Ltd and trustees of Tata Trusts. As per reports Wadia stayed away from the EGM yesterday on the grounds of it being state-managed. Further, he also filed a Rs.3000-crore defamation suit against Ratan Tata, Tata Sons and a few other directors from the company.
All this comes amid Ratan Tata’s impending legal battle with Cyrus Mistry, who was removed as the chairman of Tata Sons in October.
In the controversial battle between Tata’s and Cyrus Mistry, finally, Mistry has resigned from all the Tata Group Companies at the start of the week. He took the decision when four of the firms were to vote against him, and to remove him as the director in extraordinary general meetings or EGM’s. In his letter to the Board of Tata Sons and shareholders today, he had written, “It is time to shift gears, up the momentum and be more incisive in securing the best interests of the Tata group”.
According to the Times of India, he has stated in his letters “better served by moving away from the forum for extraordinary general meetings”, he said: “It is with this thought in mind that I have decided to shift this campaign to a larger platform, one where the rule of law and equity is upheld.”
Further, he added that he never thought that he would go to an “external forum” to solve the trivial issues, which should not have arisen in the first place.
After the sudden sacking of Mr. Mistry as the chairman of Tata industries in October followed a series of board meetings, specifically called to remove Mistry. The appointed interim chairman, Ratan Tata, appealed to the shareholders to assist him in removing Mistry from various boards. Mr. Tata said to NDTV that “Deliberated action” was taken to oust Mistry. In Ratan Tata’s letter, he has mentioned that Mistry’s continued presence can make company “dysfunctional”
The bitter boardroom fight within the $100 billion agglomerate went on becoming worse, months after months.
On Monday, a shareholder’s poll at the extraordinary general meeting of the TATA Industries ensued in the removal of Cyrus Mistry as the director of the renowned conglomerate. This development also implies that his position as the Chairman of Tata industries stands revoked.
While the Tata’s have not yet cited any reasons for his removal, it is believed that several managerial issues between Ratan Tata and Cyrus Mistry over the years, has led to this decision.
On October 24, Mistry was abruptly sacked as the Chairman of Tata Sons, the holding company of all Tata enterprises.
This, in turn, brought back Ratan Tata as the interim Chairman of the company. However, Mistry continues to hold positions on the board of various Tata companies.
EGMs with various listed companies on the board of the Tata Sons are lined up throughout this month, to seek their approval on the removal of Cyrus Mistry as their director. The decision is most likely to favor the Tata Sons.
Currently, the Tata group is valued at over USD 100 billion, which includes Tata Steel, Tata Motors, Tata Salt and many other companies under their wing. Apparently, Mistry was the only the second outsider after Nowroji Saklatvala in 1932 to spearhead one of the country’s largest business empires.
Ratan Tata stepped down as the chairman of Tata Global Beverages on Tuesday making way for his successor, Cyrus Mistry. Mistry, who is the director of Tata Sons and the deputy chairman of Tata Steel and Tata Chemicals, has also been inducted in the board of Indian Hotels Company.