New le­gal bat­tle brews be­tween Mis try, Tatas

Ousted chair­man to vote against Tat a Sons’ plan to be­come a pri­vate limited firm

Business Standard - - FRONT PAGE - DEV CHAT­TER­JEE & ABHINEET KU­MAR

Cyrus In­vest­ments, one of the Shapoorji Pal­lonji fam­ily’s hold­ing com­pa­nies, has ob­jected to Tata Sons’ at­tempt to con­vert the pri­mary hold­ing com­pany of the $104-bil­lion Tata Group into a pri­vate limited com­pany from a pub­lic limited one, say­ing it amounts to op­pres­sion of mi­nor­ity share­hold­ers.

Apart from vot­ing against it, ousted Tata Sons chair­man Cyrus Mistry will move the Na­tional Com­pany Law Tri­bunal (NCLT) against the res­o­lu­tion.

The Mistry fam­ily holds 18.4 per cent in Tata Sons.

In a no­tice to its an­nual gen­eral meet­ing (AGM) on Septem­ber 21, Tata Sons has sought ap­proval of its share­hold­ers to amend its me­moran­dum of as­so­ci­a­tion and ar­ti­cles of as­so­ci­a­tion for the pur­pose of con­vert­ing it­self from a pub­lic limited com­pany into a pri­vate limited one, and to change its name from Tata Sons Limited to Tata Sons Pri­vate Limited.

“The re­in­state­ment of Tata Sons as a pri­vate com­pany was con­sid­ered by the board to be in the best in­ter­est of the com­pany,” said a Tata Sons spokesper­son on Fri­day.

Cyrus In­vest­ments, in its let­ter to Tata Sons’ board of di­rec­tors, said, “The pro­posal to con­vert Tata Sons from a pub­lic com­pany to a pri­vate com­pany con­sti­tutes yet an­other act of op­pres­sion of the mi­nor­ity share­hold­ers of Tata Sons at the hands of the ma­jor­ity share­hold­ers.”

“The real mo­tive be­hind con­ven­ing the pro­posed AGM is mala fide and for an ul­te­rior pur­pose and the pro­posed res­o­lu­tions are not in the in­ter­ests of Tata Sons,” says the let­ter.

Cyrus In­vest­ments’ let­ter says that the AGM no­tice and ex­plana­tory state­ment, which sug­gest that the con­ver­sion of Tata Sons from a pub­lic limited com­pany to a pri­vate limited one is merely a for­mal­ity, are mis­lead­ing. Tata Sons was in­cor­po­rated un­der the Com­pa­nies Act, 1913, at which time, its ar­ti­cles of as­so­ci­a­tion had the fea­tures of a pri­vate limited com­pany. In 1975, it be­came a “deemed pub­lic com­pany” un­der the Com­pa­nies Act, 1956. How­ever, its ar­ti­cles of as­so­ci­a­tion re­mained un­changed and it con­tin­ued to con­tain the fea­tures of a pri­vate limited com­pany.

The Mistry firm said that af­ter amend­ments in the Com­pa­nies Act in 2000, Tata Sons was re­quired to in­form the Regis­trar of Com­pa­nies if it had be­come a pri­vate com­pany, which it didn’t. De­spite be­ing a pub­lic com­pany, its ar­ti­cles of as­so­ci­a­tion re­mained un­changed and it con­tin­ued to con­tain fea­tures of a pri­vate limited com­pany. The con­cept of a “deemed pub­lic com­pany” is not statu­to­rily recog­nised un­der the Com­pa­nies Act, 2013.

Cyrus Mistry will move the NCLT against the res­o­lu­tion

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