 "Mistry quits, shareholders of Tata Steel vote on Nusli Wadia ouster")
The shareholders of Tata Steel on Wednesday voted on the proposal to oust Nusli Wadia, an independent director on its board, following a request from Tata Sons, the company’s principal shareholder.
The result of the voting is not known yet. Tata Sons owns 31.35% stake in the company, while the rest is owned by institutional and minority shareholders.
As Cyrus Mistry had already quit the board of Tata Steel, the resolution to remove him had become pointless. Hence, the resolution was not to put to vote, O P Bhatt, an independent director and interim chairman of the company, informed shareholders.
Like other Tata group company’s extraordinary shareholders meetings, there was heavy security at the venue with the company allowing only shareholders to attend the meeting after matching the names with their records. Many employee-shareholders travelled from Tata Steel’s plant in Jamshedpur to speak at the meeting. Tata Sons Interim Chairman Ratan Tata attended the meeting, along with other top Tata trustees, R K Krishna Kumar and Noshir Soonawala.
The presence of Noel Tata, sitting next to Tata Trusts trustee, Soonawala, just a few rows behind Tata, was greeted with enthusiasm by a few shareholders. Both Tata and Soonawala were at the receiving end of Mistry’s complaints to the regulators for trying to interfere in the workings of listed Tata companies.
Wadia skipped the meeting saying that it was “stage-managed.”
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“I have chosen not to attend the meeting as I understand that recently held meetings of other Tata companies have been inappropriately and shamefully stage-managed by the requisitionist controlling the entry into the hall as also in the selection and choice of speakers as never before seen in Indian corporate history,” Wadia said in a prepared speech that was read out at the meeting by the company secretary. All directors including independent directors attended the meeting.
“The ability of a promoter to remove an independent director through the brute force of its holding in an ordinary resolution on which it can vote is a serious and major dichotomy and the contradiction needs to be and must be addressed urgently. Two respected jurists have opined accordingly. I have provided their opinions to the government, department of company affairs and to the Sebi for consideration,” Wadia said.
“What is at stake is not whether I am removed or not, but the fate of the very institution of independent director that has been created in law and by Sebi to safeguard the interests of all stakeholders. If independent directors can be removed at the whim and fancy of a promoter, then their role will be reduced to that of ‘yes men’,” Wadia said asking the shareholders to vote against the proposal. “I have outlined events relating to various decisions of the board. Most important of all to Tata Steel investment in Corus and events that have led to the impairment of approximately Rs 35,000 crore and a capital employed in the region of Rs 75,000 crore in which it is highly unlikely that shareholders will ever see any return,” he said.
Wadia said Tata Steel Europe would invest another billion pounds in the United Kingdom just to protect 11,000 British jobs which is a matter of concern that needs to be addressed by all shareholders as such support has now become unaffordable and is detrimental to the interest of the shareholders.
“Equally important is the fact that the capital employed in Tata Steel Europe today could have been invested in three steel plants across India with substantial returns making Tata Steel the number one steel company of the country while providing employment to a million Indians.”
Soon after Wadia’s letter was read out, Ishaat Hussain, director of Tata Sons, countered the allegations by Wadia by recalling the Tata Steel’s board meeting that took a decision on Corus acquisition. “Tata flew in from New York at two in the morning and I met him at the hotel lobby at 5.30 in the morning. The first thing Tata asked me whether all directors of Tata Steel would be joining the meeting. I confirmed him that all directors would attend the meeting in London. Few directors would be available on video link and we had full board meeting. At the meeting, Tata said this is possibly the most important decision of my life and indeed the most decision of Tata Steel and I want the support of all directors. Tata said if any director has any objection to the transaction, then they should speak now and I would not go ahead with the deal. The board unanimously authorised Tata to proceed with the transaction,” Hussain said.
Hussain restated the rationale of removing Wadia and said Wadia was acting in concert with Mistry against the interest of the Tata group and was conducting himself as an interested party and to harm the Tata group. Hussain said Wadia was galvanising other independent directors and acting prejudicially. “It’s important to note that the principal shareholders of your company have lost confidence in independence, suitability of Wadia and therefore his removal has been sought by Tata Sons,” Hussain said.
Bhatt had earlier said the outcome of the meeting is subject to the Bombay High Court order as few shareholders had moved the court against the resolution. The court had given a go ahead to the EGM but had asked one seat on the board to be kept vacant till it decides on the suit.