At 3.30pm on Monday, 6 February, Tata Sons interim chairman Ratan Tata, chairman-designate N. Chandrasekaran, director Ronen Sen, Tata Trusts trustee N.A. Soonawala, a few other directors of the company and the nominees of some shareholders trooped into a conference room on the fourth floor of Bombay House, the headquarters of the Tata Group.
There was just one item on the agenda of the extraordinary general meeting (EGM) of shareholders called by the Tata Trusts, which control 66.67% of Tata Sons: the removal of the company’s former chairman Cyrus Mistry from the board of Tata Sons.
After about 45 minutes, it was over: Mistry, whose family owns 18.4% in the company, and who did not attend the meeting, was out.
It was always clear that Mistry, who was ousted as chairman of the holding company on 24 October would have to go: only a simple majority is required to oust a director. As it turned out, shareholders accounting for around 80% ownership in the company voted in favour of his removal, said a person familiar with the matter who asked not to be identified.
The Mistry family investment firms—Cyrus Investments Pvt. Ltd and Sterling Investments Pvt. Ltd—voted against the resolution, said a person aware of what transpired at the meeting. Noel Tata, who holds 0.51% stake in Tata Sons, also did not attend the meet but voted through a nominee, said a second person. Both asked not to be identified.
Mistry’s office declined comment. Tata Sons also declined comment.
“The meeting had appropriate quorum. There was no discussion,” said one director who attended the meet and asked not to be identified.
With Mistry’s removal, the Shapoorji Pallonji family loses representation on the board for the first time in a decade. The family has been a stakeholder in Tata Sons since 1965. Pallonji Shapoorji Mistry, Cyrus Mistry’s father, was on the board of the company since 1980. He stepped down from the board in 2004. Cyrus Mistry joined the board in 2006. He took over as chairman in 2012 and remained in the position till he was replaced in a boardroom putsch on 24 October.
Amit Tandon, managing director at Institutional Investor Advisory Services, a proxy advisory firm, said ousting Mistry from the board is not a solution and not in the interest of either faction.
Considering that the Mistry family is such a significant minority shareholder, the paths of the two opposing sides would cross at some point, he warned. “They should end the hostilities and learn to work together,” Tandon added.
Mistry’s family investment firms have moved the National Company Law Tribunal (NCLT) citing mismanagement of Tata Sons and oppression of minority shareholders, but so far have failed to get any relief from the tribunal and its appellate authority.
The firms also tried to get a stay on the EGM but their plea to the effect was dismissed by NCLT and the appellate tribunal.