On Tuesday, December 13, at 3.30 pm, the board of Tata Consultancy Services Ltd. will seek shareholders’ approval to oust former chairman Cyrus Mistry as director of the company. The extraordinary general meeting is the first of many this month that will determine Mistry’s future at the Tata Group.
Mistry To Speak At TCS EGM?
By law the process of removal of a director requires that the director be allowed to make a written or oral representation to shareholders at the pertinent meeting.
TCS has already received a representation from Cyrus Mistry arguing against his removal as the director of the company. In that December 5 representation Mistry claimed TCS Chief Executive Officer N Chandrasekaran and his team had responded favourably to his suggestion of improving the company’s ability to convert profits into cash and dividend for the shareholders and building a war chest for potential growth opportunities.
BloombergQuint learns that Mistry has also expressed his desire to speak at the TCS EGM.
The Voting Has Begun
The process of Mistry’s removal is already underway. Electronic voting commenced on Saturday, December 10 (9.00 am) and ended on Monday, December 12 (5.00 pm). All shareholders holding shares as on December 6, 2016, i.e. the cut-off date, were allowed to cast their vote electronically. The regulations allow the votes cast via e-voting to be counted along with the votes cast by members at the EGM.
How The EGM Will Be Conducted
The EGM will start at 3:30 pm at south Mumbai’s Yashwantrao Chavan Pratishthan Auditorium, more commonly known as YB Chavan Centre.
It’s expected to be chaired by Ishaat Hussain, recently appointed interim chairman of TCS in place of Cyrus Mistry. TCS’ Articles of Association give Tata Sons the right to nominate the company’s chairman.
The chairman for the meeting, most likely Hussain, is expected to read out the resolution to be put to vote and make a brief statement seeking removal of Mistry as director of the company. Thereafter any one of four potential scenarios could unfold.
Mistry attends the EGM and chooses to detail his side of the story to shareholders. His representation is available on the TCS website but it’s not clear if TCS has distributed it to all shareholders. It is also not clear if a Tata Sons representative will choose to speak after Mistry. The law makes no such explicit provision.
Mistry does not attend the shareholder meeting in person choosing instead to send a representative to speak on his behalf. The representative maybe a close aide such as Nirmalaya Kumar, former GEC member at the Tata Group. Kumar was brought in by Mistry and lost his job after Mistry was sacked. Kumar has been seen representing Mistry in the media.
Neither Mistry nor his representative attend the EGM as the outcome of the vote is known well in advance. With a 73.26 percent stake in the company Tata Sons has enough votes for the simple majority that this resolution needs to succeed.
TCS may prevent Cyrus Mistry or his representative from speaking to shareholders at the EGM. The company could take this step in view of the hostile relationship Mistry shares with the current Tata Sons board.
The law permits the company or any other aggrieved person to apply to the National Company Law Tribunal (NCLT) to block Mistry’s representation (written or otherwise) on grounds that he’s doing so for “needless publicity for defamatory matter”.
Whether or not Mistry chooses to speak or is permitted to do so, TCS shareholders can voice their opinions, if time permits. Thereafter the resolution will be put to vote, votes will be cast and a scrutiniser will monitor the process as well as safeguard the votes till they are tallied with the e-votes and the outcome is revealed. That will likely be shared with the stock exchanges within a day or two.
Though the result of the TCS EGM is a foregone conclusion, the manner in which it is conducted will set the tone for the other meetings to follow.