Ousted Tata Sons chairman Cyrus Mistry on Thursday was also removed as the chairman of Tata Consultancy Services (TCS), with immediate effect and has been replaced by Ishaat Hussain as the chairman of the Board of Directors of the company.
A source close to Mr. Mistry termed the move as displaying poor corporate governance as Mr. Mistry was replaced without any board resolution being passed.
Interim chairman
In a statement on Thursday, TCS said, “The company has received a letter dated November 09, 2016 from Tata Sons Limited nominating Mr. Ishaat Hussain as the Chairman of the Board of Directors of the company in place of Mr. Mistry with immediate effect.
In view of this, Mr. Mistry has ceased to be the chairman of the Board of Directors of the Company and Mr. Hussain is the new chairman of the Company.”
The statement added that the company had been further informed that Mr. Hussain will remain chairman until a new person is appointed in his place.
Significantly, Mr. Hussain was one of the two board members to have abstained from the meeting of the Tata Sons board, late last month, which decided to sack Mr. Mistry.
“The culture of poor governance in the Tata-Mistry saga continues,” said a source close to Mr. Mistry adding that TCS had quoted Article 90 of its Articles of Association to do so. This, the source said, only enabled Tata Sons to nominate a Chairman.” TCS has sent a notice to all stock exchanges stating that Mr. Mistry ‘stands replaced’ as Chairman by Ishaat Hussain without even a board resolution being passed.”
‘No board resolution’
Tata Sons had sent the nomination of Mr. Hussain, to the chairman’s post, to TCS on Wednesday.
“TCS had to then convene a board meeting to table the nomination or for a circular resolution. Nothing of this nature was done. In pre-mediated haste, by a letter of the same date, TCS has directly gone on to announce that Mr. Mistry stands replaced,” said a statement from Mr. Mistry’s PR agency.
TCS’ statement on the removal of Mr. Mistry said that Tata Sons had issued a special notice under Section 169 read with Section 115 of the Companies Act, 2013 and a requisition for convening an extraordinary general meeting of shareholders to consider a resolution for the removal of Mr. Mistry as Director of the Company.
“The hasty actions appear to have been done at night as the stock exchange announcement was made at 8 a.m. on Thursday,” said the source, adding that “cloak and dagger machinations with little regard to due process of law have come to define the angry strategy of the Ratan Tata camp.”
Other companies?
A legal consultant requesting anonymity said that Tata Sons, being the largest shareholder of TCS with close to 74 per cent holdings, could remove Mr. Mistry as chairman but would find it difficult to remove him from the boards of other companies where Tata Sons’ holdings ranges from 30 per cent to 39 per cent.
