Business

Tata Sons plans to go ‘private’; Mistry’s family firms object

more-in

Cyrus Investments alleges ‘malafide’ motive in calling AGM

Close to a year after Tata Sons ousted Cyrus Mistry as chairman, the group’s holding company will seek shareholders’ approval at the AGM on September 21 to amend the Articles of Association (AoA) to transform from a public limited company to a private one.

The move has drawn strong opposition from the Shapoorji Pallonji Group investment firms of Mr. Mistry’s family, which together own 18.4% in Tata Sons and have already filed a lawsuit at the National Company Law Tribunal (NCLT) alleging oppression of ‘minority shareholders’.

“The proposal to convert Tata Sons from a public company to a private company constitutes yet another act of oppression of the minority shareholders of Tata Sons at the hands of the majority shareholders; the real motive behind convening the proposed AGM is malafide and for an ulterior purpose and the proposed resolutions are not in the interests of Tata Sons as a whole or at all,” Cyrus Investments Pvt. Ltd., one of the investment firms, wrote in a letter addressed to the Tata Sons board and made available to The Hindu. “The contents of the AGM Notice and Explanatory Statement — suggesting that the conversion of Tata Sons from a public limited company to a private limited company is merely a formality — are misleading.”

Taking a public company private requires the approval of the NCLT, according to the Companies Act, 2013. The Mistry family firms will vote against the proposal and also appeal against it.

“A public limited company is more transparent and is subjected to more scrutiny compared to private company. I don’t think the resolution will sail through because they (Tatas) need approval of the majority of the minority shareholders for this resolution to pass through,” said Anil Singhvi, chairman of proxy advisory firm I-Can Investments. “Mistrys hold a majority of the minority shares with over 18% stake. Tatas being an interested party, will not be able to vote for the resolution.”

Cyrus Investments also alleged that the Explanatory Statement fails to disclose that the true effect of converting the status of Tata Sons into a private company is to introduce/re-introduce restrictions on transferability of shares which, otherwise today, are void and unenforceable under law and norms applicable to public companies; and which ought to have never been included in the Articles of Association of a public company in the first place.

The Mistry family firm contended that given the nature of grievances already raised and reliefs sought in the NCLT petition, the timing and issuance of the AGM notice was a “subversion of the judicial process.”

Why you should pay for quality journalism - Click to know more

Related Topics Business
Recommended for you
This article is closed for comments.
Please Email the Editor

Printable version | Jan 23, 2020 1:23:42 PM | https://www.thehindu.com/business/tata-sons-plans-to-go-private-mistrys-family-firms-object/article19694250.ece

Next Story