WADIA SET TO FIGHT IT OUT AT TATA FIRMS’ EGMS
Even as shareholders of Tata Steel meet on Wednesday to take a call to oust Nusli Wadia
as an independent director, the latter is planning a legal attack on the Tatas, charging them of undermining the fiduciary role of an independent director and seeking insider information from the operating companies. Wadia, who has promised to speak on Wednesday at the shareholders meeting, would face Ratan Tata for the first time since the Cyrus MistryTata war broke out on October 24. DEV CHATTERJEE writes
Even as shareholders of Tata Steel meet on Wednesday to take a call to oust Nusli Wadia (pictured )as an independent director, the latter is planning a legal attack on the Tatas, charging them with undermining the fiduciary role of an independent director and seeking insider information from the operating companies.
Wadia, 72, who has promised to speak on Wednesday at the shareholders meeting, would face his former friend Ratan Tata, 78, for the first time since the Cyrus Mistry-Ratan Tata war broke out on October 24. With Wadia firing from all cylinders, the Tata Steel extraordinary general meeting (EGM) is expected to be stormy as many Tata supporters would also speak at the meeting. The resolution to remove Mistry as a director will be dropped as he has already resigned from the Tata Steel board on Monday but the resolution to remove Wadia will be proposed at the meeting.
A source close to the development said the battle by Wadia would be targeted at alleged corporate governance lapses by the Tatas and seeking of insider information by the Tata Trusts. In a communication sent to the Securities and Exchange Board of India (Sebi) on December 2, Wadia had suggested Tata firms appoint an independent, retired judge to probe all the reasons given by the Tatas to remove him from the board of Tata Motors, Tata Steel and Tata Chemicals. “The special notice was issued with the sole intent to harm my reputation, and defame me and instigate my removal as an independent director is sought on the false grounds for ulterior and mala fide motives by Tata Sons to garner votes by stating defamatory falsehoods,” Wadia said in a communication to market regulator Sebi.
But, as the Tata firms did not respond to his suggestions, Wadia said Sebi should instead institute an independent enquiry or ask the companies to do so and inform the shareholders of the outcome of the investigation before the e-voting so that shareholders are aware of the truth prior to casting their vote in the EGM.
Giving details on how independent directors were undermined, Wadia said when independent directors of Tata Motors met on November 14, just one hour before the scheduled meeting, they received an e-mail from company secretary Hoshang Sethna who forwarded an e-mail from Bharat Vasani, Tata Sons’ General Counsel, that contained two legal opinions from Shardul Amarchand Mangaldas.
“The opinion was sought to influence the conduct as independent directors in determining whether Mistry should continue as chairman and seeking to inform independent directors that Tata Sons may disassociate itself from the company if they support Mistry. The second opinion stated if independent directors were to express their support to Mistry, it could not be considered ‘material’ and should not be disclosed to the stock exchanges,” Wadia said. It sought to advise the independent directors and board of directors on the manner in which they need to conduct themselves, he added. “After the independent directors discussed the matter, they concluded that it would be best to ignore and treat the unlawful and inappropriate opinion with the contempt it deserves,” Wadia said in his letter to the Sebi. Wadia instead got an opinion from senior counsel K K Venugopal who said the conduct of the Tata Sons general counsel was to subvert the entire structure of the catena of provisions of Companies Act, dealing with independent directors.
Wadia also alleged Tata used to get the agenda and board papers of the three companies and by oversight, the companies used to provide the information to Tata even after the introduction of the insider trading norms in 2015. “Independent of this, Tata and Noshir Soonawala and the board of Tata Sons even after the 2015 notification of the insider trading regulations, sought access to information and documents of Tata Steel, Tata Motors, and other Tata firms. They have also sought financial information, strategic presentations, from the managements of these companies. In addition, they also demanded that the senior members of the management brief them on various business proposals from time to time,” Wadia said.
The financial, strategic presentations and data sought, as also the presence of key managerial personnel at Tata Sons’ board and Tata and Soonawala — not as directors but as trustees of the public charitable Tata Trusts, could be regarded as unpublished material and price sensitive information and knowledge,” Wadia said, adding both Tata and Soonawala also received information of Tata Steel’s negotiations with ThyssenKrupp for a proposed merger.