The move comes nearly a year after patriarch Ratan Tata ousted Cyrus Mistry as chairman of the US$105 billion cars-to-software group, sparking a corporate showdown that has yet to fully conclude because Mistry’s family still owns more than 18 per cent of the holding company.
Tata Sons, the holding company of all Tata Group firms, has also sought shareholders’ approval to amend its Memorandum of Association and AoA. Tata Sons is the promoter of the major operating Tata companies and holds significant shareholdings in the companies.
After failing to offload the loss-making telecom unit Tata Teleservices, N Chandrasekaran, chairman of Tata Sons, is considering to wind down the mobile services business, reports Economic Times.
Tata Group’s feud with one of India’s richest families deepened after the country’s biggest conglomerate moved to change its holding company’s legal status to one that would restrict the Mistry family’s ability to sell its stake to external investors. Ltd has written to Tata Sons objecting to the proposal to convert Tata group’s holding company to a private limited company, calling it “yet another weapon” to oppress minority shareholders, Livemint reported.
The company has circulated a notice among its shareholders seeking their approval for the exercise, and has also called its annual general meeting on September 21.
The change in Tata Sons’ corporate structure will require to be cleared by a special resolution, needing at least 75% votes, NCLT approval. On the other side, 66 percent stake is owned by the Tata Trust, while the rest of the shares are mostly held by the Tata family and group companies.
“The real motive behind convening the proposed AGM is mala fide and for an ulterior purposes and the proposed resolutions are not in the interests of Tata Sons as a whole or at all”, says the letter from Cyrus Investments. With effect from May 1, 1975, Tata Sons became a “deemed public company” under provisions of the Companies Act, 1956.
“The reinstatement of Tata Sons as a private company was considered by the board to be in the best interest of the company”, a Tata Sons’ spokesperson, when contacted, said. While converting to a private limited concern would entail less compliance requirements, any restrictions on sale or transfer of shares would be decided by clauses in the articles of association of the company.