Cyrus Mistry’s office on Sunday evening issued a strong rebuttal to Tata Sons questioning the role of independent directors, who supported the ousted Tata Sons Chairman to continue as Chairman of operating companies like Indian Hotels and Tata Chemicals.
To question the independence of the Directors by Tata Sons, is truly unfortunate given that the country acknowledges them as stalwarts of India Inc., said the statement from Mistry’s office, adding that to suggest that “ulterior objectives” and “clever strategy” can sway these eminent names in undertaking their fiduciary duties and in discharging the duties mandated by statute as independent directors is absolutely astonishing and really speaks to how low Tata Sons has unfortunately stooped in their public statements.
Indian Hotels Independent Directors, comprising of Deepak Parekh, Gautam Banerjee, Ireena Vital, Vibha Paul Rishi, Nadir Godrej and Keki Dadiseth and Tata Chemicals independent directors comprising of Nasser Munjee, Nusli Wadia, Vibha Paul Rishi and Yashwant Thorat, were unanimous in their support of Cyrus Mistry as Chairman.
The statement from Mr. Mistry’s office came ahead of crucial Tata Motors board meeting on Monday, likely to be attended by Independent Directors comprising of Nusli Wadia R.A. Mashelkar, Subodh Bhargava, Nasser Munjee, V.K. Jairath and Falguni Nayar.
Mr. Nusli Wadia supported Mr. Mistry to continue as Chairman of the operating companies Tata Chemicals and Tata Steel, but the other three Independent Directors of Tata Steel opposed the move. Mr. Nasser Munjee, also a trustee of Tata Trusts, too backed Mr. Mistry to continue as chairman of Tata Chemicals. It will be interesting to see if Mr. Mistry get the support of other Independent Directors like R.A. Mashelkar, Subodh Bhargava, V.K. Jairath and Falguni Nayar.
“It is imperative to highlight that out of the above list of nine Independent Directors, six were appointed during Ratan Tata’s tenure and two of these Directors also serve as Trustees on Tata Trusts,” said statement from Mr. Mistry’s office.
The Independent Directors on the Tata Chemicals Board, in their statement, “also reaffirmed that all the decisions taken with regard to the operations and business of the Company had been taken by the board unanimously and executed by the Chairman and management, as per directions of the board.”
The endorsement is a reflection of Mr. Mistry’s conduct as Chairman in upholding the highest standards of corporate governance and in taking the Board along in all decisions that impact the company.
“It is important to note in this context the role and functions of independent directors under the 2013 Act. They are required, among other things, to bring to bear an independent judgment on issues of strategy, performance, risk management, resources, key appointments and standards of conduct,” said Mr. Mistry’s office statement, adding that they are further required to safeguard the interests of all stakeholders, particularly the minority shareholders.
On the allegation that operating companies were drifting away, Mr. Mistry’s office said, “Tata Sons statement alludes to Mistry having creating a new structure where operating companies were “drifting away”. This is furthest from the truth.”
On corporate governance, the framework that was developed under Mr. Mistry’s leadership attempted to ensure that the Group companies would adhere to the Group values, share best practices, enable movement of talent, exploit win-win synergies, and do all of this without impinging on the independence of the operating companies and the boards that they are ultimately responsible to, said the statement.
“On becoming Chairman, having been a minority shareholder of Tata Sons, Cyrus Mistry uniquely understood that Tata Group needs a strong corporate governance framework that balanced the interest of the promoter with minority shareholders’ rights,” said the statement, adding that between Tata Trusts, Tata Sons, and the Tata operating companies, there was a need to be compliant with the law relating to insider trading by ensuring communication of unpublished price sensitive information strictly on a need to know basis.
“In the spirit of protecting the interests of all stakeholders, employees, and minority shareholders, the strategy of individual operating companies Mistry believed should be created by their management and approved by their own board of directors,” said the statement, adding that by placing the responsibility where it should lie, with the Board of Directors of the operating companies, allowed the Independent Directors to ensure that the interests of minority shareholders were aligned with the operating company’s strategy as well as the overall direction of the Tata Group.
