After ousting Cyrus Mistry as chairman, Tata Sons has called a shareholders' meeting on February 16, to remove him as director of the holding company of the $103-billion Tata Group. After he was abruptly removed on October 24, 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.
After the board meeting of October 24, 2016, Tata Sons had resolved that Mistry shall, notwithstanding his ceasing to be the chairman, continue as a 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 ousted chairman's conduct, it said, "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." The notice said continuation of Mistry as a director of Tata Sons is "untenable" and therefore, he should be removed. The resolution, which has been moved for his removal, said: "The board of Tata Sons Ltd 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."
Sebi writes to Tata cos on corporate governance charges
Market regulator Sebi has sent letters to the audit committees of seven Tata companies, on which Mistry was the chairman till December 19, to individually clarify on his allegations that there were several instances that pointed towards lack of corporate governance at Tata Sons and also the group companies some of which are listed. Separately Sebi has also written to these Tata Group companies to clarify if they had violated any Prevention of Insider Trading (PIT) rules by sharing board agenda items and strategy documents with the Trustees of Tata Trusts. Mistry had also alleged that directors on the boards of some of the listed Tata companies failed “to discharge the fiduciary duty owed to stakeholders” of group companies.
Mistry was the executive chairman of Tata Sons, the group's holding company and non-executive chairman of Tata Consultancy Services (TCS), Tata Motors, Tata Steel, Tata Power, Tata Chemicals, Indian Hotels and Tata Global Beverages. After he was sacked as the chairman of Tata Sons on October 24, he had written to the board of directors of Tata Sons and also the shareholders of the seven Tata companies which are listed. All listed companies, including the directors on their boards, have to adhere to strict corporate governance rules.
