Tata group plans to take legal action, regarding infringement of intellectual property rights, against a Kolkata-based businessman who started a company last month by the name of Tata Sons Ltd in London, reported the Livemint. Narotam Sekhsaria (5.7 lakh shares) and NA Soonawala (2.6 lakh shares) are among other major holders of preference shares.
The Mistry family-promoted firm Cyrus Investments Pvt Ltd on Monday asked directors of Tata Group firms, including Tata Steel, Tata Motors and Tata Power, to vote against the move to convert Tata Sons into a private limited firm.
Tata Trusts own two-thirds of the stake in Tata Sons, while Ratan Tata, who chairs the charitable bodies, holds less than 1 per cent of the company individually. Tata Sons regularly pays a dividend.
According to the Companies Act, 2013, certain types of related party transactions and transactions where value is beyond prescribed limits require approval from the Board of Directors and shareholders. “Being private will also entail fewer filings to the RoC (Registrar of Companies) and therefore will mean lesser public scrutiny”, said Kosturi Ghosh, partner and deputy head of the corporate practice group at Trilegal.
This would imply that the voting rights of the holders of preference shares would be at par with equity shares and give them an equal seat at the table, Ghosh said. Another disadvantage of converting Tata Sons from a public company to a private one from the standpoint of minority shareholders “is that various governance standards would potentially get diluted in relation to private companies”, the letter said. The letter by the investment firm led by Cyrus Mistry, the ousted chairman of Tata Sons, further said any resolutions such as the ones proposed to be passed at the AGM of Tata Sons would be detrimental to the companies and “contrary to the interests” of their public shareholders.
The move has drawn strong opposition from the Shapoorji Pallonji Group investment firms of Mr. Mistry’s family, which together own 18.4% in Tata Sons and have already filed a lawsuit at the National Company Law Tribunal alleging oppression of “minority shareholders”.