The board of the Securities and Exchange Board of India (SEBI), which will meet at Jaipur on Saturday, will discuss the ongoing tussle between Tata Group and its ousted chairman Cyrus Mistry.
This comes close on the heels of the regulator seeking an explanation from the salt-to-software conglomerate on the allegations related to corporate governance and insider trading raised by Mr. Mistry and also industrialist Nusli Wadia.
The tussle, which began on October 24, with the abrupt sacking of Mr Mistry as chairman of Tata Sons, has since then snowballed into a major boardroom and courtroom battle with both sides levelling serious allegations and cross-allegations.
The matter would be discussed at the board-level but that does not mean that the regulator will necessarily act against the companies. The intent is that since the SEBI board has representatives of government and the Reserve Bank of India (RBI) they can give their views on the matter as well, said a person familiar with the development.
“It is there on the agenda, but it may or may not lead to further action in the matter. The objective is that all the board members are appraised of the developments and they may give their suggestions to the SEBI for its consideration while dealing with the case,” the source said.
Apart from the SEBI chairman and whole-time members, the board of the regulatory body has government-appointed nominees that include Shaktikanta Das, secretary, Department of Economic Affairs; Tapan Ray, Secretary, Ministry of Corporate Affairs and N.S. Vishwanathan, Deputy Governor, Reserve Bank of India (RBI) among others.
Incidentally, the regulator has just sought a procedural explanation — and has not issued any notice — from the Tata Group based on the complaints it has received. A show-cause notice, on the other hand, is sent after the regulator completes a preliminary probe and is convinced that there is a case for further investigation.
Letters written by Mr. Wadia, who was removed as an independent director from the boards of Tata Steel, Tata Chemicals and Tata Motors, contain allegations related to insider trading and corporate governance, which falls under the purview of the capital market regulator.
Mr. Mistry has filed a petition in the National Company Law Tribunal (NCLT) seeking the dissolution of the board of Tata Sons and a forensic audit into its transactions, among other demands. He has alleged that Mr. Tata along with the board members of Tata Sons interfered in the workings of the group companies even as they did not hold any positions within the operating companies.
The Tata Group, on its part, has maintained that Mr. Mistry is making these allegations since he has been sacked from Tata Sons. The board of Tata Sons did not find Mr. Mistry's way of functioning in line with the ethos and values of the Tata Group, the sources added.
Apart from the corporate matter, the SEBI board also has on its agenda issues related to mutual funds, specifically looking into the norms for investments in alternative securities, cross holding of sponsors of the fund houses along with the review of their advertisement guidelines.
The regulator will also deliberate on the matter of enabling digital payments in the capital market, in line with the government's thrust on encouraging a cashless economy. An email query sent to SEBI didn’t elicit a response.
