Tata Sons, the holding company of the $103 billion salt-to-software conglomerate, is planning to remove Cyrus Mistry, its ousted chairman, from the company’s board even as Mr. Mistry, through his investment firms, has petitioned the National Company Law Tribunal (NCLT) seeking dissolution of the board.
The move is aimed at divesting all executive and non-executive roles of Mr. Mistry in the Tata Sons board and Mr. Mistry’s family may only remain as a passive investor in Tata Sons.
“It’s happening and (is) just a matter of time. We are likely to issue the notice seeking his (Mr. Mistry’s) removal from the Tata Sons board soon,” a confidant of interim chairman Ratan Tata told
Tata Sons is likely to take the shareholder route seeking Mr. Mistry’s removal as a director from the company’s board even as the company had the option to remove Mr. Mistry from its board by way of passing a board resolution, said sources in the know of the development.
“It’s a private limited company so it will take 21 days from the day of issuing a notice seeking his removal,” said the source.
‘No decision yet’
However, in an e-mail reply to queries, a Tata Sons spokesperson said: “No such decision has been taken by the Tata Sons Board.”
Since Tata Trusts hold a majority stake (66 per cent) in Tata Sons, the proposal to oust Mr. Mistry from its board is expected to sail through. Mr. Mistry’s family holds 18.4 per cent stake in Tata Sons through its investment arms and is likely to vote against the resolution. However, the resolution would still be passed, according to legal experts.
Tata Sons is likely to cite breach of confidentiality as one of the reasons for Mr. Mistry’s removal as director. On December 27, Tata Sons served a legal notice to Mr. Mistry for violating confidentiality undertakings given by him as director to Tata Sons. “By passing confidential and price-sensitive information accessed by you in your capacity as a director of Tata Sons to companies owned and controlled by your family, you have acted in complete violation of your confidentiality undertakings to Tata Sons and your obligations under the Tata Code of Conduct,” said the December 27 legal notice adding, “please note that not only have you breached your legal duties as a director, but you have acted recklessly with the sole intent to cause harm and loss to our client.”
On December 29, Tata Sons issued another notice demanding Mr. Mistry return all confidential information to Tata Sons.