 "Ousted Tata Sons Chairman, Cyrus Mistry arrives for the Tata Chemicals board meeting at Bombay House in Mumbai")
The Tata Steel board met on Friday, the second time since Cyrus Mistry was removed as Tata Sons chairman on October 24, and moved a resolution to remove him from the helm of the company. He was replaced by independent director O P Bhatt.
Six directors supported the resolution while three, including independent director Nusli Wadia, opposed the move. O P Bhatt was elected as the chairman of the company till the extraordinary general meeting (EGM) of shareholders on December 21.
“The board appointed the independent director as the chairman, keeping in mind principles of good corporate governance and to provide impartial leadership to the company in its preparation and conduct of the EGM. This decision was taken to also ensure stability to the company and in the larger interest of Tata Steel’s stakeholders, including but not limited to employees, trading partners, financial stakeholders and local community around its operations,” a Tata Steel statement to the stock exchanges said.
“O P Bhatt was appointed as an independent director of the company on June 10, 2013. He has served as the chairman of State Bank of India, India’s largest commercial bank. He serves as an independent director on several board including Standard Chartered Bank, Tata Consultancy Services and Hindustan Unilever,” the statement said.
Sources close to Mistry said "this unprecedented erosion of core Tata values is seriously damaging Brand Tata". "Each time one thinks the current standard of corporate governance in a listed group company under the leadership of the Interim Chairman cannot hit a newer low, one has been belied," they added.
Sources from the Mistry camp said that minutes before the pre-scheduled board meeting, a resolution replacing the chairman for the meeting had been initiated. Sources from the Mistry camp said, "Those involved are representatives of Tata Sons, those drawing large remuneration from other Tata Trustee-controlled companies, and an "independent" director, who is the wife of a newly-inducted Tata trustee, who is also recently nominated director of Tata Sons."
A source in the board said Wadia, Mistry and independent director Subodh Bhargava were not given the advance copy of the resolution and were given the notice of removing Mistry only 45 minutes before the meeting began at the Bombay House on Friday.
The resolution was proposed by Ishaat Hussain, a Tata group old timer, Kaushik Chatterjee , independent directors Mallika Srinivansan, Bhatt, Andrew Robb. The other members of Tata Steel board who signed on the resolution was Jacobus Schraven. LIC nominee director D Mehrotra abstained thus indicating that the government is not taking any side for now.
"Its shocking that there are signatures of the directors of Tata Steel on the same page. This is next to impossible because one director is London, one in Netherlands, one in Chennai and the rest them in Mumbai. So there was a plan to get all the signatures first from the complaint directors and then send it Wadia, Bhargava and Cyrus," said a source close to the development.
The reason given for Mistry removal as "conflict of interest", said the source. " This is shocking and Sebi must investigate the conflict of interest of some of the directors," the source said.
In the evening, the Tata Steel website had changed Cyrus Mistry's position on the board of directors page from chairman to not-independent, non-executive director.
The board has also called the EGM of shareholders in Mumbai to remove both Mistry and Wadia as director, following a request from Tata Sons to convene the meeting, a Tata Steel statement to the stock exchanges said. The Tatas own 31.35% stake in the company while the rest is owned institutional shareholders like LIC, mutual funds and minority shareholders.
A source said the Mistry camp was looking at legal options to challenge the resolution, considering that the independence of few “independent directors” would be questioned as some of them were earning from other Tata group companies. “We are studying all legal options and a clear picture would emerge by next week,” the source said.
The war between former Tata Steel chairman Cyrus Mistry and Ratan Tata erupted after the Tata Sons board ousted Mistry as chairman in a surprise move on October 24.
The board installed 78-year old Tata in his place as interim chairma. Soon after he was removed, Mistry had said Tata Steel is staring at $10 billion (Rs 67,000 crore) of write-downs because of the wrong acquisition decision made by Tata in 2007.
Tata Steel board on Mistry’s resolution:
In favour:
Ishaat Hussain
OP Bhatt
Mallika Srinivasan
Andrew Robb
DK Malhotra
Jacobus Shravan
Against:
Cyrus Mistry
Nusli Wadia
Subodh Bhargava
