Tata Sons Said to Propose Shareholder Meetings to Remove Mistry
(Bloomberg) -- Tata Sons, the holding company of India’s biggest conglomerate, plans to propose extraordinary general meetings to remove Cyrus Mistry from the chairmanship of group companies where he still retains the post, people with knowledge of the matter said.
Tata Sons plans to send notices next week to convene extraordinary general meetings, one of the people said, asking not to be identified because the information is private. The notices will be sent to most of the companies where Mistry is chairman, the person said.
As a shareholder, Tata Sons would have to propose a resolution for Mistry’s removal as chairman and the group company would have to call the extraordinary general meeting, said Shriram Subramanian, founder of proxy advisory firm InGovern Research Services Pvt. Ltd. Once shareholders receive the notice, the meeting needs to be called within 21 days and must be convened within 45 days, he said.
Cyrus Mistry, 48, was replaced as Tata Sons chairman by his 78-year-old predecessor Ratan Tata at a board meeting on Oct. 24 after its board lost confidence in his leadership. More than a week after a coup that stunned India’s business community, Mistry remains chairman and non-executive director of group companies including Tata Power Ltd., Tata Motors Ltd., owner of Jaguar Land Rover; and Indian Hotels Co., which runs the Pierre in New York.
The holding company doesn’t have a majority stake in those and other group units, making the task of evicting Mistry more difficult and setting up a dual power structure that has the potential to create confusion.
V.R. Mehta, trustee of the Sir Dorabji Tata Trust -- one of the largest shareholders in Tata Sons -- said he couldn’t speculate on the holding company’s measures to remove Mistry. Tata Sons was expecting Mistry to step down from the chairmanship of various group companies voluntarily, but matters have become more complicated with Mistry not doing so, he said.
Mistry is also chairman of software services firm Tata Consultancy Services Ltd., the most valuable asset in the group, but Tata Sons holds 73 percent of that unit.
A Tata Sons spokesman declined to comment on the matter. Mistry’s office also declined to comment.
Investors got a sense of some of the issues that may arise from this dual structure when independent directors of Indian Hotels Co Ltd. expressed in a board meeting Friday their confidence in Mistry as chairman and praised steps taken by him. They felt the need to air their views to investors and the public so traders in the company’s stock can make an informed decision, according to an exchange filing.
This is the first time that independent directors have officially extended their support to Mistry, in a snub to Ratan Tata.