With Tata Trusts holding a majority 66 per cent stake in Tata Sons, the outcome of the extraordinary general meeting (EGM) convened on February 6 to remove Cyrus Mistry as a director of the company is another “foregone conclusion”.
On Friday, the board of Tata Sons, the holding company of all Tata group companies, has called for an EGM following requisitions from a number of shareholders.
Tata Sons’ resolution seeks removal of Mistry as director from its board, a position he had held since 2006. “The resolution will be passed. Mistry can always move the relevant authorities stating he is the sole representative of minority shareholders and had been removed without any relevant reasons,” said JN Gupta, co-Founder and Managing Director at proxy advisory firm Stakeholders Empowerment Services (SES).
Mistry can move courts under protection of minority stakeholders’ rights, and then the law will ake its course, Gupta added.
Through his family firm Shapoorji Pallonji Group, Mistry is the single largest shareholder with an 18.5 per cent stake that is held mainly through two group companies, Cyrus Investments and Sterling Investment Corp.
However, with Tata Trusts holding majority stake in Tata Sons, Mistry’s ouster is almost certain, another source said. The remaining stake is held by various Tata group companies such as Tata Power, Tata Tea, Indian Hotels Company Ltd, Tata Chemicals and Tata Motors. “The board, with the shareholders approval, has the right to remove a director and that is what this resolution is all about. The Pallonji family's representation on Tata Sons' board was out of convention. Tata Sons' Articles do not provide a board seat to the Pallonjis,” said Hetal Dalal, Chief Operating Officer at proxy advisory firm Institutional Investor Advisory Services (IiAS).
IiAS had earlier advised Tata Consultancy Services’ shareholders to remove Mistry as Chairman, and also suggested ouster of Nusli Wadia as independent director from Tata Group companies.
When contacted Cyrus Mistry’s office declined to comment, while a Tata Sons’ spokesman also declined to comment.
On December 13, hours before TCS EGM, Mistry said in a letter to shareholders that the result of the EGM was a “foregone” conclusion as Tata Sons was the majority shareholder. This was the same for Tata Teleservices board meeting, which is an unlisted company.
On October 24, Mistry was removed as Tata Sons’ Chairman, and an eight-week boardroom battle later, he resigned from boards of all listed Tata Group companies.
He had also filed a suit before the National Company Law Tribunal (NCLT), with the next hearing of the tribunal slated for January 31.
“Mistry can always move the relevant authorities stating he is the sole representative of minority shareholders and had been removed without any relevant reasons.”