Mistry objects to Tata Sons’ proposal to go private
Ahead of its annual general meeting on Thursday, Tata Sons has sought shareholders’ approval to convert itself into a private limited company
Though Cyrus Mistry had stepped down as Tata Group Chairman in December last year, he and his family continue to be influential as they own 18.4% stake in Tata Sons, the holding company of Tata Group.
This often puts them at loggerheads with the former chairman Ratan Tata, who was instrumental in Mistry’s ouster and wants to reduce his
family’s influence over the group.
The latest row is over a proposal by Tata Sons to convert itself into a private limited company from a public limited one. Ahead of the annual general meeting (AGM) of shareholders on Thursday, Tata Sons has sought shareholders’ approval to amend its memorandum of association and articles of association for the purpose of converting itself into a private limited company.
Cyrus Investments, the investment company of the Mistry family, has written to listed Tata group companies holding stakes in Tata Sons to vote against the company’s bid to go private at the AGM. The letter said the proposed move would be “detrimental to the interests of the minority shareholders” and would also dilute the governance standards at Tata Sons.
In a communication to the board of directors of Tata Steel, Indian Hotels, Tata Power, Tata Motors, and Tata Chemicals, Cyrus Investments has said that the resolution proposed by Tata Sons was not in the best interests of the public shareholders of the company as they would face greater challenges in disinvesting its shareholdings in
Tata Sons, reports Business Standard.
The five listed Tata group companies own an 11.41% stake in Tata Sons, while Tata Trusts owns 66% stake in the holding company.
The change in the Tata Sons’ corporate structure will have to be cleared by a special resolution, needing at least 75% votes. It will also need an approval from the National Company Law Tribunal.