WADIA COMPLAINS TO SEBI ABOUT TATA FIRMS’ INDEPENDENT DIRECTORS
Nusli Wadia, the chairman of Wadia group of companies, has written to market regulator, the Securities and Exchange Board of India (Sebi), claiming some of independent directors of Tata group companies have a “direct conflict of interest” and should be removed from the boards.
The persons he has named are Tata Steel independent directors Jacobus Schraven and Andrew Robb, and Mallika Srinivasan and Naseer Munjee, independent director of Tata Chemicals and Tata Motors, respectively.
Till recently, Wadia was also an independent director on the boards of Tata Steel, Tata Motors and Tata Chemical. However, after Cyrus Mistry was ousted as Tata Sons chairman on October 24, he put his weight behind Mistry — and was removed from the boards of these companies through extraordinary general meetings.
In his January 6 letter to Sebi, Wadia said as the chairman of the nomination and remuneration committees (NCRs) of these companies, he wrote to these directors individually telling them that they cannot be appointed as independent directors as they were drawing remuneration from other Tata group companies.
He said Schraven was a nonexecutive independent director since 17 May 2007 and also a non-executive director of TSL’s wholly owned subsidiary,
Tata Steel Europe and Tata Steel Netherlands.
“Besides receiving remuneration as an independent director from Tata Steel, he also receives a remuneration of £99,000 from TSL Europe and another £45,000 from TSL Netherlands as chairman and member of supervisory board.
Robb, Wadia said, receives a remuneration of ~2 crore from TSL Europe.
“Robb is the chairman of the audit committee of TSL Europe as well as a member of audit committee of TSL India. Had he been not classified as an independent director on the board of TSL, he would not have qualified for appointment on the audit committees of both companies as independent director,” Wadia said.
An email sent to Tata Sons did not elicit any response.
Wadia said independent directors were allowed remuneration of only ~1 lakh and, if the company makes money, commission to the extent of only one per cent of net profits, under the Companies Act. Schraven and Robb received remuneration from TSL Europe and TSL Netherland over and above their entitlements.
Wadia said the company secretary and chief financial officer of Tata Steel had earlier refused to share requested information.
However, on repeated requests as the NRC chairman, the details were provided to him.
This information was not provided in the annual report of TSL, Wadia wrote.
On Srinivasan, Wadia said her husband, Venu Srinivasan was a director of Tata Sons and also a trustee of Sir Dorabji Trust, a disclosed constituent of the promoter group, holding 28 per cent stake in Tata Sons.
“By virtue of the definition of ‘associate company’ under the Companies Act 2013, Tata After Cyrus Mistry was ousted as Tata Sons chairman on October 24, Wadia put his weight behind Mistry — and was removed from the boards of these companies through extraordinary general meetings Steel was an associate company of Tata Sons. Dorabji Trust is a non-profit organisation that is direct beneficiary and receives 25 per cent of its receipts in the form of dividend from Tata Sons. The Act provides clearly that the receipts by a non-profit organisation could be from the company concerned of any of its promoters. Mallika Srinivasan has direct conflict of interest with TSL,” he said.
On Munjee, Wadia said he was appointed as non-executive independent director of Tata Chemicals in September 2006 and is appointed as an independent director under the Companies Act 2013. Munjee was also a non-executive independent director since 2008 on the Tata Motors board and was appointed as an independent director till 2014.
“Munjee is also a trustee of the Ratan Tata Trust, which is classified as a promoter of Tata Motors and Tata Steel. The Ratan Tata trust holds 23.5 per cent stake in Tata Sons and the trust and Tata Sons together hold 26.5 per cent in Tata Motors. Ratan Tata Trust is a direct and an indirect beneficiary of all receipts from TCL and Tata Motors. Munjee has been appointed as the Chairman of the Audit Committees of Tata Motors and Tata Chemicals and further by virtue of he being an independent director on the board of TML. It has nominated him on the boards of JLR, UK and also appointed as member of its audit committee. Sir Tata trust, constituent of the promoter group, and receives 25 per cent of its receipts in the form of dividends from TCL and Tata Sons,” Wadia said.
He asked Sebi to give necessary directions to the directors, adding that false declarations made by them could entail legal retribution under the Indian laws.