MUMBAI: Cyrus Mistry’s family firms cited mismanagement at Tata Group and the public interest tied to the $100 billion conglomerate on Tuesday as reasons to grant them a waiver on the minimum shareholding requirement to legally challenge the Group at the National Company Law Tribunal (NCLT).
The hearing came a day after NCLT ruled that Mistry family’s firms aren’t qualified to file a petition alleging mismanagement of Tata Sons and oppression of minority shareholders as they do not meet requirement of owning at least 10% of Tata Sons’ total share capital.
Cyrus Investments Pvt Ltd and Sterling Investments Pvt Ltd hold only 2.17% of the total share capital in the form of equity and preference shares of Tata Sons even though their equity shareholding stands at 18.4% in the holding company.
Mistry’s Counsel C. Aryama Sundaram argued that nature of grievances should be taken into account for waiver as Tata Trusts, comprising charitable organisations controlled by Ratan Tata, continue to influence decision making at the Group and its publically-listed companies.
Tata Trusts are the biggest shareholders of Tata Sons with 66% equity stake. The remaining stakes are owned by Tata group companies and some Tata family members, including Ratan Tata.
Sundaram added that Mistry’s family firms Cyrus Investments Pvt Ltd and Sterling Investments Pvt Ltd are not “fly by night” shareholders in the Group and their voting has been rendered useless because of the changes to Tata Sons’ Articles of Association in 2014.
The National Company Law Tribunal (NCLT) adjourned the hearing on waiver application by Cyrus Mistry’s family firms until March 17 as Tata Sons’ legal counsel Abhishek Manu Singhvi sought more time to argue his case.
Mistry was removed as chairman of Tata Sons after the board said it had lost confidence in his leadership. The unexpected ouster led to a public spat between Mistry and the Tata group in which both sides accused the each other of poor corporate governance practices and business decisions.