Published: Fri, September 22, 2017
Sports | By Nelson Rowe

Tata Sons shareholders give 'preference' to Ratan Tata

Tata Sons shareholders give 'preference' to Ratan Tata

Mumbai: Tata Sons, the holding company of $103 billion Tata Group on Thursday received the approval of majority of its shareholders to convert it into a private limited company from public limited company, a move that would bring restriction on the free transferability of shares.

A spokesman for Mistry declined to immediately comment, while an email sent to the Tata Sons' press office went unanswered.

In February, the shareholders at Tata Sons Ltd passed a motion against Mistry at a general meeting, which was approved by a clear majority, thereby facilitating his removal as a director of Tata Sons Ltd.

As much as 66 per cent of Tata Sons is owned by Tata Trusts. The chairmanship of the group shifted seamlessly from JRD Tata to Ratan Tata in 1991 when the former abdicated his position after holding on to the post for 53 years.

The appellate tribunal has granted waiver in the filing criteria of having 10 per cent shares of the company.

Some corporate governance experts said the proposal to become a private limited company is not oppression of minority shareholders as alleged by Mistry.

Apart from dilution of transparency and initiation of opaque governance standards, Tata Sons Private Limited is absolved from various legal and regulatory aspects which they had to abide by had they been a public limited company.

Tata Sons' investors agree change from public to private limited company. What's the difference?
NCLT will now have to look into merits of the case: Mistry Counsel

A bench headed by chairperson Justice S.J. Mukhopadhaya directed the Mumbai bench of the National Company Law Tribunal (NCLT) to issue a notice to the respondents and proceed in the matter.

The waiver was sought after Tata Sons alleged that the Mistry camp had no locus standi to move the NCLT, as the Shapoorji Pallonji group owns only 2.17 per cent of Tata Sons' share capital.

The tribunal had added: "Their equity shareholding of 18.37 per cent in the company on its own can not become a ground for waiver (of the minimum shareholding rule for pursuing such a suit)".

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. The tribunal had concluded its hearing on July 24 and reserved its judgment. The switch, according to Tata Sons, is chiefly because its status of "deemed public company" is not statutorily recognised under the Companies Act, 2013.

The appellate tribunal upheld the waiver of the minimum shareholding rule but dismissed another petition on maintainability. The two firms had argued for a waiver of the eligibility criteria, which the NCLT denied in April, 2017.

"The ruling of the National Company Law Appellate Tribunal is a welcome vindication of what we have stood for and the values for which we are pursuing the petition against oppression and mismanagement of Tata Sons Ltd", a statement from Cyrus Mistry's office said. "These are proceedings to protect and reinforce the values for which the Founders of the Tata Group have given us the legacy that we should strive never to lose", a statement noted.

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