Mistry to continue fight for corporate governance say experts

Updated - December 20, 2016 12:57 am IST

Published - December 19, 2016 10:46 pm IST - MUMBAI

Cyrus Mistry. File photo

Cyrus Mistry. File photo

Former Tata Sons Chairman Cyrus Mistry’s decision to step down from the boards of Tata group operating companies has been welcomed by analysts and proxy advisory firms who said that Mr. Mistry would now fully focus on ensuring corporate governance at the Tata group.

“Mr. Mistry has taken a high moral ground,” said Shailesh Haribhakti, CEO & MD, Haribhakti Group. “Now he has decided to opt for the democratic rights followed by every Indian to deal with the situation and bring in the best practices of corporate governance at the Tata Group.”

“Resigning from the operating companies is very good way to defuse the ongoing situation. It will lead to restoration of shareholder value that was eroded in the last few quarters,” Mr. Haribhakti said.

‘No truce’

According to some corporate governance analyst, Mr. Mistry's resignation does not indicate any truce and he is in for a long fight.

“Mr. Mistry’s decision is not the end of the story. There will be long-term activism by him to ensure that the best governance practices are put in place at the Tata group,” said Shriram Subramanian, Founder & MD, InGovern, a proxy advisory and corporate governance firm.

“Expect more intervention from him in January and in the coming months. He is not going to sit silent as he is a minority shareholder in Tata Sons with 18.4 per cent stake. The battle may take the form of court (battles) and arbitration,” he added.

J.N. Gupta, MD, Stakeholders Empowerment Services (SES), a proxy advisory firm said, “After Tata Consultancy Services’ Extraordinary General Meeting, Mr. Mistry might have seen the writing on the wall. Rather than face the same defeat at the subsequent EGMs, he seems to have decided to quit on his own and salvage some respect.”

“Now one has to see what happens to the resolutions for removal of Independent Director Nusli Wadia from the boards of Tata Steel, Tata Motors and Tata Chemicals,” he added.

Now that Mr Mistry has resigned from operating companies, the resolution seeking his removal will not be put to vote at the EGM venues. Since e voting has already started, the results will not be announced as the resolution to remove him has become null and void.

Amit Tandon, MD, Institutional Investors Advisory Services (IIAS) said, "It looks it is time for them (Mr Ratan Tata and Mr Mistry) to sit down together and narrow down their differences for the benefit of the group. The contentious issues must be sorted out in the best interest of all stakeholders. Mr Mistry was at the helm for four years and if he says something it should be beneficial for the group.”

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