MUMBAI:Tata Sons removed former chairman Cyrus Mistry from its board on Monday, bringing to a close another chapter in the battle for control at India’s oldest and largest conglomerate that erupted with his dramatic ouster as chairman on October 24 last year.
“The shareholders of Tata Sons, at the extraordinary general meeting (EGM) held today, passed, with the requisite majority, a resolution to remove Cyrus Mistry as a director of Tata Sons,” the company said in a press release.
The 80 per cent vote in favour of the decision put the seal on the founding Tata family’s control of the group holding company after Mistry had rebelled against his ouster.
The result was never in doubt, despite the Mistry family’s 18.4 per cent stake in Tata Sons as that’s trumped by the two-thirds holding of the Tata Trusts run by Ratan Tata.
At the EGM on Monday, the Tata family put up a united front, said people aware of the matter. Tata matriarch Simone (wife of the late Naval Tata) and her son Noel Tata issued proxies in favour of Ratan Tata.
There had been some speculation about his vote as Noel Tata is married to Cyrus Mistry’s sister. “It was a foregone conclusion,” a source close to Mistry said. Vera Farhad Choksey and her brother Jimmy Tata abstained.
They are the children of Minocher Tata, a descendent from the Saklatvala family line. Tata Sons declined to comment on voting pattern of individual shareholders.
Cyrus Mistry and his brother Shapoor decided to skip the meeting. Instead, they sent a team of three people led by Roshan Lentin as their representatives for the meeting held at Bombay House, the Tata headquarters.
ET had first reported about the plan to hold an EGM to remove Mistry from the board on January 4. Mistry had been unable to persuade the National Company Law Tribunal (NCLT) in Mumbai and its appellate tribunal in Delhi to stay the EGM.
Apart from the Tata Trusts — a group of eight charity organisations — and the Mistry family, the rest of the Tata Sons shares are held by Tata Group companies, Ratan Tata, Noel Tata, Simone Tata, Jimmy Naval Tata, Vera Choksey and her brother.
After Mistry was sacked, a search panel appointed by Tata Sons selected N Chandrasekaran, chief executive of the group’s most profitable company, Tata Consultancy Services, to take over.
He will do so on February 21, replacing interim chairman Ratan Tata. The battle will now shift to NCLT with hearings scheduled for February 13 and 14. Cyrus Investments Pvt Ltd and Sterling Investment Corporation Pvt Ltd, both Mistry family firms, have alleged oppression of minority shareholder rights and mismanagement at the Tata Group.
“Mistry appears to have exhausted all his remedies and further appeal to the Supreme Court does not appear to be practically viable. He just has to now wait for NCLT to give its decision on the main petition,” said Ranjit Prakash, chief executive partner at Archeus Law.
“He can, of course, file an additional affidavit challenging today’s EGM on new grounds (of his removal today) but it is highly unlikely that NCLT will entertain or afford any separate hearing.”
The 344-page petition filed in December by the Mistry family firms was served on 23 people that include industrialists Ajay Piramal and Venu Srinivasan, Harvard Business School dean Nitin Nohria, country head of private equity fund Bain Capital Amit Chandra, retired bureaucrat Vijay Singh and former Tata veteran NA Soonawala.
They include trustees and Tata Sons board members. After his removal, Mistry had blamed Ratan Tata for poor business decisions and lax corporate governance standards.
He alleged that the Tata Trusts unduly interfered with the daily business decisions of the group, making him a “lame duck” chairman. Tata Sons has denied any such interference on the part of Tata in the past four years after he took over as chairman of Tata Trusts.
Tata Sons said Mistry did not stick to his promise of becoming an Indian citizen and parking his stake in Tata Sons in a “blind trust” as part of insulating the ownership from management.
It said Mistry also failed to present a strategic vision for the group. A day before launching his legal battle in December, Mistry stepped down from the chairmanship and directorship of listed Tata companies after failing to win over enough votes from institutional and retail shareholders.