No end to saga? Mistry to challenge Chandra's appointment at Tata Sons
Latest Business News - The sparring match between Tata Sons and ousted chairman Cyrus Mistry is far from over as the latter has now decided to oppose the appointment of Natarajan Chandrasekaran as his successor. According to a report published in The Economics Times, Mistry has shot off a letter to the Tata Group board challenging the legality of the appointment. He has termed the appointment 'illegal' as the matter was still sub-judice. Mistry, who is still a director of Tata Sons, had not attended the meeting that appointed Chandrasekaran as its chairman. "Unlike the October board meeting when the decision to sack Mistry was not mentioned in the board agenda circulated before, this time the members were aware of what to expect. Mistry is still a director of Tata Sons and the agenda papers were circulated to him as well. That prompted the mail from him," an official told ET.
Did Tata Sons follow instructions in appointment of its Chairman? Article 118 of the Articles of Association of Tata Sons, passed under a special resolution following a Tata Sons EGM on December 6, 2012, lays out the terms for the appointment of the chairman. It says: "For the purpose of selecting a new
Chairman of the board of directors and so long as the Tata Trusts own and hold in the aggregate at least 40% of the paid up Ordinary Share Capital of the Company for the time being, a Selection Committee shall be constituted in accordance with the provisions of this Article to recommend the appointment of a person as the Chairman of the Board of Directors and the Board may appoint so recommended as the Chairman of the Board of Directors, subject to Article 121 which requires the affirmative vote of all Directors appointed pursuant to Article 104B." Similarly, Section 196 and 104 (i) (ii) of Companies Act also stipulates the grounds for the appointment of chairman, MD and directors.
Tatas serve legal notice on Mistry Last month, Tata Sons served a legal notice on Cyrus Mistry, alleging breach of confidentiality and passing on sensitive information to his family-controlled companies. No damages were sought. The notice was served to Mistry by leading law firm Shardul Amarchand Mangaldas.Accordingly, Mistry passed on sensitive information which he was privy to under the capacity of a Director of Tata Sons to companies owned and controlled by his family. Mistry has already challenged the decision in the National Company Law Tribunal (NCLT). In his petition, Mistry alleged collusion between Tata Sons and Tata Trusts and oppression of minority interests at the $103-billion Indian conglomerate. The petition was filed by Cyrus Investments and Sterling Investments — Mistry's investment companies. It also alleged that Tata Sons' move to call an extraordinary general meeting on February 6 violated the undertaking given by its lawyers at the NCLT in December.
Cyrus Mistry vs Tata Sons The simmering discontent between Tata Trusts and Cyrus Mistry came to light on October 24 when the Tata Group surprised everyone by ousting Mistry as Chairman. Without giving any specific reasons, Tata Sons simply said growing trust deficit and repeated departures from the culture and ethos of the Tata group was the reason behind the removal of Mistry. Ratan Tata took over as the interim chairman of Tata Sons and a committee was formed to hunt for a new chairman in four months. ALSO READ: Full text: Why Tata Sons lost confidence in Cyrus Mistry Mistry still remains a Director on the board of the holding arm of the $100 billion-plus group.
Appointment of Natarajan Chandrasekaran
Last week, Tata Sons appointed Chandrasekaran as its new chairman. He was the CEO and Managing Director of the IT giant, Tata Consultancy Services. Popularly known as 'Chandra', the 54-year-old will take charge at the helm of $103billion Tata Sons, the main holding company of the salt-to-software conglomerate from February 21. He is the first non-Parsi chairman of the 150-year old Tata Group. The appointment to the prestigious and coveted post came nearly 10 weeks after the removal of Cyrus P Mistry as Tata Sons Chairman on October 24 last year, following which Ratan Tata was brought back by Tata Sons as its Interim Chairman. According to a report in Business Standard, he is likely to be the highest paid chairman of Tata Sons, if his current compensation package at Tata Consultancy Services (TCS) is retained. As TCS managing director and chief executive, Chandra’s compensation package was Rs 25.6 crore in the financial year 2015-16, including Rs 19 crore as commission, Rs 2.28 crore as salary, Rs 2.64 crore as perquisites and Rs 1.73 crore in other allowances. In FY15, he also got a one-time special bonus of Rs 10 crore.
What is the role of Tata Sons? Tata Sons is essentially the holding company of the Tata Group, which is a conglomerate of over 100 companies ranging from salt to software, automobiles and aviation with combined revenues in excess of $100 billion. Typically, the chairman of Tata Sons is also the chairman of key group companies.
Article by – Business Standard