In yet another setback for the Mistry camp, capital market regulator SEBI has decided to accept the explanations given by Tata Group companies on corporate governance issues raised by ousted Chairman Cyrus Mistry.
SEBI, in its email dated October 28, had advised stock exchanges to take up the allegations made by Mistry with the respective Tata companies and seek comments on specific violations. The companies responded denying the allegations.
Wadia’s removalSEBI has also decided to go by the rule book on Nusli Wadia’s removal as independent director through an ordinary resolution.
The regulator discussed various allegations made in the corporate battle between Ratan Tata and Cyrus Mistry at its board meeting held on January 14.
In one of his letters to SEBI, Wadia had alleged that Tata Sons levelled false charges against him to the shareholders of Tata companies in which he served as an independent director. He has also filed a ₹3,000-crore defamation suit and criminal defamation case against Ratan Tata, Tata Sons and its board of directors.
The SEBI board felt there is a lacuna in the law, making a special resolution necessary for the reappointment of independent directors, while allowing the company to remove them through an ordinary resolution.
The board observed that the present provisions make the removal process less stringent than the appointment. Since a special resolution is required for reappointment of independent directors, the same principle should be applied for removal, it said. “There is a need to make the provision more stringent but this will not affect the Nusli Wadia removal as the decision cannot be made with retrospective effect,” the regulator observed.
A case has been filed in the Bombay High Court by some minority shareholders questioning the ouster of Wadia as an independent director. SEBI, which has been made a party in this case, has referred the matter to the Ministry of Corporate Affairs and will report the same to Court at its next hearing on February 6.