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Tata Consultancy Services shareholders vote to remove Cyrus Mistry as director

Ouster was a foregone conclusion as Tata Sons has a 73.26 per cent stake in the firm.

By: ENS Economic Bureau | Mumbai |
December 14, 2016 4:02:39 am
cyrus mistry, tata sons, tcs, tcs director, cyrus mistry tcs, tcs director cyrus mistry, cyrus mistry removed, tcs news, tata news, business news Ratan Tata, Interim Chairman of Tata Sons arrives for the TCS EGM in Mumbai. (Express Photo: Prashant Nadkar)

Shareholders of Tata Consultancy Services (TCS), the most valued Indian company, on Tuesday voted out Cyrus Mistry as a director from its board at the much-awaited extraordinary general meeting (EGM). Out of 86 per cent of shareholders who voted, 93 per cent voted in favour of the removal of Mistry.

The ouster of Mistry from the board at the EGM, which witnessed high drama, was a foregone conclusion as Tata Sons, the principal shareholders, has a 73.26 per cent stake in the firm.

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TCS interim chairman Ishaat Hussain recused himself from chairing the meeting to remove any possible bias in the proceedings. Mistry, who earlier said he was “fighting to save the soul of the Tata Group”, did not attend the meeting.

“Whatever be the decibel level of the voice that will drown your vote, I call on you to vote with your conscience and send a signal that catalyses a larger discussion on governance reform, to save the very fabric of what we have all inherited — the Tata values that our founders handed us,” Mistry, who was replaced as chairman by Hussain, said in the letter to the shareholders sent an hour before the EGM.

A majority of shareholders were all praise for Tata Sons and Ratan Tata and blamed Mistry for what they claimed was washing of dirty linen in public. From invoking the philanthropy of the Tata Trusts to the leadership shown by the Tatas, including former chairmen Jamshetji Tata and JRD Tata, several minority shareholders openly called for only a “Tata” to be brought in place of Mistry. There were even very loud calls for bringing in Noel Tata, the chairman of Trent and half-brother of Ratan Tata as the 78-year-old Tata Sons interim chairman watched the proceedings in the audience.

As many as 38 shareholders spoke at the 150-minute long EGM. What caused all the drama at the EGM, however, was the loud voices of those shareholders who felt that the unceremonious removal of Mistry was in bad taste. Some of them kept asking for the specific reasons for Mistry’s removal.

“What are the ‘combination of factors’ because of which the board of directors of Tata Sons lost their confidence in Cyrus Mistry?” a question that remained unanswered even after being asked several times to the board of TCS at the EGM held at the YB Chavan Centre.

In fact, independent director Aman Mehta, who conducted the meeting, at times looked as if he was losing control amidst emotions running high. “Given the high remuneration that independent directors are earning from TCS, are their view really independent or are they just towing the line of the principal shareholders?” asked a shareholder.

Mehta, on his part, clarified the stance of independent directors, claiming that their decision was meant to ensure no breakdown in the trust between the board of TCS and its principal shareholder Tata Sons. “The real issue here is of trust and confidence of the promoter group in their nominated chairman. It goes far beyond any consideration or performance or competence or even personalities. Once that trust is lost, it is appropriate for the nominated chairman to resign in the best interest of the company,” Mehta said.

Dinesh Kotecha, a long-time shareholder in Tata group companies, said he has heard both the sides and felt that Mistry had aired some very valid and pertinent questions. “He is specific, he is humble. He has given at least 50 points and I think out of those at least 40 points require deliberations,” he said.

Earlier in the day, Mistry, who decided to not attend the EGM, said that his fight is a matter of principle rather than facing the foregone outcome. “The very future of TCS hinges on good governance and ethical practices. That can flow only from the promoter and needs to permeate into the Board and Management. In the past several weeks, we have seen good governance being thrown to the wind in every sense of the term, replaced by whims, fancies and personal agenda. We have witnessed an unmatched erosion of ethical values and the very foundation of the institution being put to grave risk by the conduct of a few,” Mistry said in his letter to the shareholders.

Meanwhile, a statement from Cyrus Mistry’s office said, “almost 20 per cent of shareholders of TCS that accounts for more than 70 per cent of non promoter shareholders supported Cyrus by voting against the resolution or abstained.”

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