MUMBAI: Tata Sons has finalised plans for a board meeting shortly, with the Supreme Court having stayed a tribunal order that had quashed the ouster of Cyrus Mistry, and deemed void the appointment of his successor N Chandrasekaran as chairman.
On the agenda of the board meeting will be a briefing on the National Company Law Appellate Tribunal order, including the challenge to the status of Tata Sons as a private company and reputational risks arising from the situation, said top executives with knowledge of the matter. The NCLAT decision of December 18 was stayed by the Supreme Court on January 10.
Tata Sons had refrained from holding a board meeting to comply with the legal requirements of the NCLAT order as advised by its legal team, said the people cited above. The board of the Tata Group holding company will discuss steps to safeguard its interests, they said. The board has sought external legal opinion from top lawyers, they said. Tata Sons didn’t respond to queries.
“There are residual risks since it is legally not a closed matter,” said one of the persons.
‘Legal Challenges Prevented Meeting’
“The legitimacy of the current chairman was challenged and that is certainly an issue requiring discussion. We could not meet earlier owing to the legal challenges and now it is binding on the board to meet formally as soon as possible. Every public company has to have a board meeting every quarter and although we are a private company, we will ensure that all corporate governance norms are duly followed,” said one of the persons.
Capstone Legal managing partner Ashish K Singh said there has been no change in the legal position of Tata Sons since the matter is sub judice.“It is only an interim stay,” he said. “So what the Tata Sons board can decide at its meeting will have limited options as of today. The board can discuss and deliberate on the best governance practice going forward, but it would not be right for them to take any other decision impacting the group.”
The NCLAT had directed that Mistry be reinstated as chairman and director of Tata Sons and on the boards of three group companies, notably Tata Consultancy Services (TCS). The tribunal said Mistry’s October 2016 ouster at the behest of chairman emeritus Ratan Tata was illegal and “oppressive” toward minority shareholders. It also restrained Tata and his representatives from taking any decision that would require a majority vote on the board of Tata Sons.
The Supreme Court said there were “basic errors” in NCLAT’s observations while staying the order.
The tribunal had also quashed the conversion of Tata Sons into a ‘private company’ from a public firm, calling it “illegal”. It said the decision by the Registrar of Companies (RoC) to allow the firm to become a private company was against the provisions of the Companies Act, 2013, and “prejudicial” and “oppressive” toward the minority shareholders — Mistry family-owned companies that hold 18% stake in Tata Sons.The tribunal had ordered a reversal in the status of Tata Sons.
“The company (Tata Sons) shall be recorded as ‘public company’. The RoC will make corrections in its record showing the company as public company,” NCLAT had said.The Ministry of Corporate Affairs told the tribunal on Friday that it hadn’t committed any illegality in granting permission for the conversion.“We are conscious of ensuring the highest corporate governance standards,” said one of the persons.
“Even as a private company, we ensure that all standard requirements as a deemed public company are met.”Tata Group executives said there had been no major business impact stemming from the order and that the holding company had been concluding transactions and business deals.
Source: Economic Times