January 7, 2017 2:32:31 am
Tata Sons has called a shareholders’ meeting on February 6 to remove Cyrus Mistry, the ousted chairman of the holding company of the Tata group, as Director of the company.
“Subsequent to his replacement, Mistry has made certain unsubstantiated allegations, which cast aspersions not only on Tata Sons Limited and its board of directors, but also on the Tata group as a whole. Internal communications, including confidential, were made public. Mistry’s conduct has caused enormous harm to the Tata group and its stakeholders, including employees and shareholders,” Tata Sons said in a note for extraordinary general meeting (EGM).
The Mistry family, which holds over 18 per cent stake in Tata Sons, is the largest individual shareholder in the company. With Tata Trusts holding around 66 per cent and other Tata companies the remaining stake, the outcome of the shareholders meeting is a foregone conclusion.
Tata Sons had removed Mistry as its chairman on October 24 and sought his ouster from operating companies like Tata Motors, Tata Steel and TCS. Mistry subsequently resigned from the board of six companies, but dragged Tata Sons and his interim successor Ratan Tata to the National Company Law Tribunal (NCLT).
According to the resolution, which has been moved for his removal, the board of Tata Sons is of the view that the integrity of the board proceedings is being jeopardised by Mistry’s continuation as a director and the confidentiality of the board decisions and proceedings cannot be ensured as the documents presented to the board have been leaked and made public in a distorted and untruthful manner. Mistry’s conduct “resulted in significant erosion of the market value of the Tata group companies, which has consequently resulted in harm to Tata Sons Limited and indirectly losses to its shareholders”.
On December 29, Tata Sons asked Mistry to return all classified papers and sign an undertaking within 48 hours that he would not disclose such information in future. In a second legal notice, Tata Sons alleged that Mistry had “wrongfully and dishonestly” taken confidential information out of the company premises without consent. It asked Mistry to “immediately return to the company all confidential information” in his possession and “not retain copies” of the same.
Tata Sons also asked Mistry to sign an undertaking within 48 hours that he “shall preserve the confidentiality of all the confidential information and not use or disclose” to anyone, including affiliates, relatives and family members.
Earlier, Mistry’s family-owned companies had moved the National Company Law Tribunal (NCLT) under sections 241 and 242 of the Companies Act which deal with relief in case of oppression and powers of the tribunal to act in such cases, respectively. The petition urged the tribunal to direct Tata Sons and its interim chairman Ratan Tata not to remove Cyrus Mistry from the board of the holding company and other Tata Group companies until the petition is finally heard and disposed of.
Alleging oppression in the holding company, the petition alleged that Tata Sons had made a veiled threat in a special notice under section 169 of Companies Act (to remove directors) to the extent that if Tata operating companies and non-promoting directors do not support the removal of Mistry as director, these companies would no longer have the right to use ‘Tata’ brand name.
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