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Monday, October 24, is a day former Tata Sons chairman Cyrus Mistry is unlikely to forget. The minutes of that day’s board meeting, which were included in Cyrus Mistry’s petition submitted to the National Company Law Tribunal, throw light on Mistry’s ouster.
The meeting, which was held at Bombay House to remove Cyrus Mistry, was chaired by the Tata Trusts’ nominee director on the Tata Sons board, Vijay Singh, and two other Trusts’ nominee directors on the Tata Sons board, Amit Chandra and Nitin Nohria. Ratan Tata attended the meeting as chairman emeritus.
The sacking
According to the minutes of the meeting, before the commencement of consideration of items in the agenda that was circulated to the directors on October 15, 2016, Nohria mentioned that the Trusts had asked its nominees on the board to bring a motion to the board of Tata Sons. “Chandra mentioned that that at a meeting of the Trust’s directors held earlier in the day, it was agreed to move a motion to request Mistry to step down from the position of Executive Chairman of Tata Sons as the Trusts had lost confidence in him for variety of reasons,” the minutes of the meetings said.
Chandra said Tata had just met Mistry and requested him to step down. Then, Chandra requested Mistry to re-consider his decision not to step down before the board commenced the formal process. Mistry, then, asked Tata to say a few words but Tata refused, stating that at this juncture he would remain an observer.
Chandra, who is managing director of Bain Capital, sought Mistry’s views on the motion. To this, Mistry sought 15 days’ notice for taking up such an item for consideration and said that such an action was illegal. To this, Chandra responded by saying that legal opinion on the same had been taken. Mistry responded that even he would like to take legal opinion since the legal opinions obtained by the Trusts were not made available to them.
Since Mistry was an interested party, Chandra then asked Singh, former defence secretary, to act as chairman. At this point, Ishaat Hussain and Farida Khambata said they would abstain from voting on this proposal. The rest of the directors — Singh, Nohria, Chandra, Ronen Sen, Venu Srinivasan, and Ajay Piramal — voted for the proposal.
Chandra then proposed that Singh be elected chairman of the meeting and Srinivasan seconded the proposal. Mistry objected to the motion while Khambata abstained from voting. All others supported the motion.
New agenda
Singh, as chairman of the meeting, proposed including additional matters that were not on the agenda but were circulated to the board of directors. His resolution was seconded by Sen. The additional agenda included the removal of Mistry from each board committee, removing the age criteria for directors’ retirement, reconstituting the Nomination and Remuneration Committee consisting of Sen, Piramal and Khambata, Singh and Srinivasan, appointing Tata as additional director and electing Tata as interim chairman until the selection of new chairman.
The selection committee was to consist of Tata, Srinivasan, Chandra, Sen and Kumar Bhattacharyya as an independent outsider. Mistry objected to this resolution during the voting while Khambata abstained while others supported the motion.
Nohria proposed removing Mistry as executive chairman, which was seconded by Piramal, who was attending his second meeting as an independent director. The resolution clarified that Mistry would continue to remain a director on the Tata Sons board. The fourth resolution to end the retirement policy was proposed by Chandra and supported by Nohria. Similar resolutions on the appointment of Tata were, then, proposed and approved by the board.
Recognise Mistry’s contribution: Tata
After the resolutions were approved, Tata said there was a need to recognise what Mistry had done in the last four years and the group needed to move forward as seamlessly as it could. Tata said it was Mistry’s choice whether he would continue to remain on the board as non-executive director after having been removed from its executive role. Mistry answered that he would.
Chandra, thereafter, asked whether the meeting should be adjourned to consider this. Mistry then asked whether a press statement will be issued on what happened at the meeting. Hussain asked whether Mistry would remain as chairman of other listed companies since, if not, it had to be reported to the stock exchanges. As far as directorship of Tata Sons was concerned, Tata said to a great extent it would be Mistry’s prerogative. As far as directorships of other companies are concerned, Mistry said he would revert.
Khambata asked whether the decisions taken at the meeting could be announced as Mistry was not given the advance copy legal opinions. Chandra said he was not carrying the opinions and said it was given by eminent lawyers and former Supreme Court judges. Mistry asked for the copies and wondered how the board can take a decision without these opinions made available to them. Mistry, then, sought the opinions to be given and it was agreed to share these opinions after checking with lawyers.
Tata then said the entire proceedings of the board meeting would be reported by way of a press conference as far as the company was concerned. The board, then, decided to move ahead with the announcement as the development was material.
Metlife deal
The board was informed by Hussain that Tata Sons and AIA planned to buy a 70 per cent stake in PNB Metlife, except the 30 per cent held by Punjab National Bank. Hussain is also chairman of Tata AIA Life Insurance Company. PNB Metlife current shareholding included, Elpro (21 per cent), M Pallonji and Company Private Limited (18 per cent) J&K Bank 5 per cent and Metlife 26 per cent. M Pallonji and Company is owned by Tata’s friend and Mistry’s relative Mehli Mistry. The deal was expected to cost Tata Sons Rs 1,500-2,700 crore. A decision was taken to go ahead with the deal.
As the end of the meeting, Chandra provided company secretary, F N Subedar, the names of the persons who gave the legal opinions. They included names of judge R P Ravindran, P Chidambaram, and Mohan Parasaran. Mistry asked the press statement to be discussed prior to its release which was agreed by the board. The meeting, which started at 2 pm concluded by 3 pm.
The press statement was issued in the evening. And thus started a bitter battle between Mistry and Tata.
