 "EGM battle: Tata Industries removes Cyrus Mistry as director")
Cyrus Mistry has been removed as the director of Tata Industries, a move that will escalate the boardroom battle that erupted after Mistry’s sacking as head of the $103-billion business empire.
Mistry, who was earlier removed from the post of chairman of Tata Sons, was on Monday removed as a director of Tata Industries after an Extraordinary General Meeting, or EGM. With this, he also ceases to be the chairman of Tata Industries.
Six other companies -- Tata Consultancy Services, Indian Hotels, Tata Motors, Tata Chemicals, Tata Power and Tata Steel -- have called EGMs.
Last week Tata Group interim chairman Ratan Tata wrote to shareholders, asking their support in removing Mistry as chairman.
Tata Consultancy Services (TCS), Tata Group’s crown jewel, with its EGM slated for December 13 will seek the ouster of Mistry as a director. In fact, electronic voting for TCS EGM is already underway.
Tata Sons, which had, in a board meeting on October 24, removed Mistry as chairman and is now sponsoring the EGMs, is learnt to have consulted a battery of top lawyers, including Mohan Parasaran and Harish Salve and has done a series of roadshows with investors within the country and abroad, and is busy doing the last-minute appeals to shareholders to ensure nothing goes wrong. But, lawyers and advisory firms told Business Standard that the Tatas are weighing all the possible outcomes at these EGMs, and how they could move from there.
At least two proxy advisory firms – ISS and InGovern – have asked small shareholders to vote against the Tata Sons resolution to oust Mistry as director from group firms. Two other prominent advisory firms — SES and IiAS — have asked shareholders to vote in favour of the resolution to oust Mistry. An analyst pointed out that many foreign investors have, in the recent past, raised concerns over removing Mistry, citing corporate governance issues.
Shriram Subramanian, founder and managing director, InGovern, the proxy firm which advised shareholders to vote against the resolution to oust Mistry, said: “There’s always the option of calling an EGM by the Tatas after a few months, if they need to.” While pointing out that Mistry has an uphill task to remain a director, he maintained that the Tatas have failed to give a logical or specific reason as to why Mistry was removed as Tata Sons chairman. “That’s the reason we asked shareholders to vote against the resolution.” According to Subramanian, tenable reasons for such an ouster would include financial impropriety, fraud, sexual harassment etc. “Personal vendetta or enmity cannot be a reason to remove a chairman.”
At least two proxy advisory firms – ISS and InGovern – have asked small shareholders to vote against the Tata Sons resolution to oust Mistry as director from group firms. Two other prominent advisory firms — SES and IiAS — have asked shareholders to vote in favour of the resolution to oust Mistry. An analyst pointed out that many foreign investors have, in the recent past, raised concerns over removing Mistry, citing corporate governance issues.
Shriram Subramanian, founder and managing director, InGovern, the proxy firm which advised shareholders to vote against the resolution to oust Mistry, said: “There’s always the option of calling an EGM by the Tatas after a few months, if they need to.” While pointing out that Mistry has an uphill task to remain a director, he maintained that the Tatas have failed to give a logical or specific reason as to why Mistry was removed as Tata Sons chairman. “That’s the reason we asked shareholders to vote against the resolution.” According to Subramanian, tenable reasons for such an ouster would include financial impropriety, fraud, sexual harassment etc. “Personal vendetta or enmity cannot be a reason to remove a chairman.”