Final EGM in Feb to oust Mistry from Tata Sons board

The Tatas are drawing the battle lines for the last extraordinary general meeting (EGM), in a series that were planned till now, to oust Cyrus Mistry from the group.

The final one, for Tata Sons, is slated for early February, just about a month before his term ends as a board member of the holding company, it is learnt.

This would be more challenging than the EGMs of the group companies as Shapoorji Pallonji, a company promoted by Mistry’s family, is the single largest shareholder of Tata Sons with 18.4 per cent stake, sources pointed out.

Tata Sons board members on Wednesday approved calling an EGM to remove Cyrus Mistry as a director, a source said. Although there was no board meeting, the resolution was circulated to the Tata Sons board members for their nod. A notice is likely to be issued by Thursday for the EGM.

The decision by Tata Sons to seek Mistry’s ouster from the holding company could be ratified at a board meeting on a later date.

Tata Trusts, the majority shareholders of Tata Sons, had earlier made a requisition to the holding company’s board to remove Cyrus Mistry as a director. Mistry was sacked as Tata Sons’ chairman on October 24, 2016. Following this, the Tatas sought Mistry’s removal as chairman from the boards of listed companies. After a couple of group company EGMs, where Mistry was voted out, the former Tata Sons chairman resigned from the boards of all listed firms in December. He also took the battle to the National Company Law Tribunal (NCLT) by filing a suit against Tata Sons for “oppression and mismanagement”. NCLT's next hearing in the current case is coming up for hearing on January 31.

Sources indicated that Cyrus Mistry could possibly move NCLT to seek a stay following the notice on evicting him from Tata Sons board. In case of such a development, Tata Sons is likely to contest the move, they said. While Mistry is out of the country, his office did not comment on the subject.

Tata Trusts, the largest shareholder of Tata Sons with a 66 per cent stake, made the requisition earlier this week. The Tata Sons spokesperson confirmed that a requisition has been received from a Tata Sons shareholder which has been acted upon. While Mistry became the chairman of Tata Sons in December 2012, he has been on the Tata Sons board since 2006. Mistry's term as Tata Sons board member is till March, but the group wants to evict him from the holding firm without losing any more time, it is believed. A source said it is possible that the group finds it tough to conduct business with Mistry as a member.

“Under the Tata Sons Articles of Association, the company does not have any obligation to have a representative from the Mistry family on the Tata Sons board,” said Amit Tandon, founder and managing director at proxy advisory firm Institutional Investor Advisory Services. “However, the appointment of a representative from the Pallonji Mistry family on the Tata Sons board has been by convention as it is considered a healthy practice to have opinion of a significant minority,” he said.