Cyrus Mistry family opposes Tata Sons' plan to turn into private company
By PTI | Published: 15th September 2017 06:35 PM |
NEW DELHI: Tata Sons, the promoter of major operating companies of the Tata group, is planning to convert itself into a private limited firm from a public limited one, which has been opposed by the family of ousted chairman Cyrus Mistry.
In a notice to shareholders ahead of its annual general meeting to be held on September 21, the company's board had sought approval through special resolutions to amend its article of associations to bring about the change.
It has also sought to amend the memorandum of association to change its name to Tata Sons Pvt Ltd from Tata Sons Ltd.
When contacted, a Tata Sons spokesperson said: "The reinstatement of Tata Sons as a private company was considered by the board to be in the best interest of the company."
The proposed switch, according to Tata Sons, is chiefly because its status of 'deemed public company' is not statutorily recognised under the Companies Act, 2013.
The move has, however, been objected by the Mistry family, which holds 18.4 per cent stake in Tata Sons, while Tata Trusts holds 66 per cent.
In a letter to the board of directors of Tata Sons, Cyrus Investments Pvt Ltd described the step as "another act of oppression of the minority shareholders of Tata Sons at the hands of majority shareholders".
"The real motive behind convening the proposed AGM is malafide and for ulterior purposes and the proposed resolutions are not in the interest of Tata Sons as a whole or at all," the letter alleged.
Cyrus Investments Pvt Ltd and Sterling Investments Corporation of the Mistry family are fighting a legal battle against Tata Sons at the National Company Law Tribunal (NCLT) following the dismissal of Mistry as chairman last year.
"Given the nature of grievances already raised and relief sought in the NCLT petition, the timing and issuance of the AGM is a subversion of the judicial process," it said.
The move to convert Tata Sons into a private limited company would put restrictions on "free transferability" of shares of the company and is "yet another attempt by the majority shareholders to oppress minority shareholders", it added.
The letter to the Tata Sons board further alleged that the proposal is a device to "subvert the highest standards of good corporate governance, which is expected to be maintained in a company of the stature and repute as Tata Sons".
Tata Sons spokesperson did not comment on the allegations raised by the Mistry side.