Tata Sons won backing to become a private limited company and will be rechristened as Tata Sons Private Limited as a majority of shareholders of the Tata group’s holding company voted in favour of the resolution at the 99th annual general meeting (AGM) held at Bombay House on Thursday, people with knowledge of the development said.
The resolutions to amend Tata Sons’ Articles of Association (AoA) and Memorandum of Association (MoA) were passed by the requisite majority, notwithstanding the opposition from Cyrus Mistry, the ousted chairman of Tata Sons, whose family’s investment firms hold 18.4% stake in the company.
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‘Requisite majority’
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“The resolution to convert Tata Sons into a private limited company and its change of name has been passed with requisite majority as a majority of the shareholders voted in favour of the resolution,” said a person familiar with the development, who did not wish to be identified.
Ratan Tata, chairman of Tata Trusts that hold 66% stake in Tata Sons, attended the AGM.
Mr. Mistry may file an amended petition in the Mumbai bench of the National Company Law Tribunal (NCLT) after the National Company Law Appellate Tribunal (NCLAT) granted a waiver over maintainability of his original plea. Tata Sons needs the approval of NCLT for going private.
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The amended petition is also likely to oppose Tata’s move to make Tata Sons private citing oppression of minority shareholders in the hands of majority shareholders, said sources.
When asked to comment on the developments, C. Aryama Sundaram, counsel for Mr. Mistry’s investment firms told The Hindu , “We are happy with the NCLAT order as the order vindicates our stand on the maintainability of the plea. Now, we will have to file an amended petition incorporating new developments. We have not yet decided if the amended petition will have the Tata Sons going private.”
‘Not ruled out’
“Let the actual order come,” said Somasekhar Sundaresan, another lawyer representing Mr. Mistry. “The option of incorporating new developments including Tata Sons’ move to take the company private cannot be ruled out.”
J. N. Gupta, co-founder and MD at Stakeholder and Empowerment Services (SES), a proxy advisory firm, said Mr. Mistry’s opposition to the Tata Sons move to go private lacked merit.
“I think after the NCLAT order, Mistry will bring this issue in his revised petition in front of the Mumbai bench of NCLT and the court will decide,” Mr. Gupta said. “I however find no merit in Mistry opposing the move citing it to be oppression and mismanagement in the change of Tata Sons from public limited company to a private limited company. When Mistrys bought a stake in Tata Sons, it was a pure private limited company. Tatas move to make Tata Sons private is purely to avoid any future legal uncertainty,” he added.
‘Minority oppressed’
Earlier, Cyrus Investments Pvt. Ltd., one of the investment firms, wrote to the Tata Sons board opposing the proposal to convert Tata Sons from a public company to a private company. It contended that the move constituted yet another “act of oppression of the minority shareholders of Tata Sons.”