Tata Sons gets shareholders' nod to be private Ltd company

All resolutions placed before the annual general meeting (AGM) of shareholders were passed with requisite majority, a Tata Sons source said.

A resolution placed before the AGM pertained to changing the closely-held company's registration to a private limited firm as opposed to a public one.

The Mistry family, which owns 18.4 per cent of Tata Sons, had called the move "oppression of the minority interests" and stated that it would vote against the proposal.

Tata Trusts holds 66 per cent in Tata Sons.

The voting pattern was not immediately known. At least 75 per cent of shareholders' nod was required for the proposal to go through.

The move comes almost a year after Mistry was ousted as chairman of the Tata Group, triggering a bitter boardroom battle. N Chandrasekaran was appointed Chairman in January this year.

A public limited company allows shareholders to legally sell their stake to anyone. But a shareholder of a private limited firm cannot sell the shares to outside investors. In a notice to its shareholders, Tata Sons' board had sought approval through special resolutions to amend its article of associations to bring about the change.

It has also sought to amend the memorandum of association to change its name to Tata Sons Pvt Ltd from Tata Sons Ltd.

Last week, a Tata Sons spokesperson had stated: "The reinstatement of Tata Sons as a private company was considered by the board to be in the best interest of the company."

The switch, according to Tata Sons, is chiefly because its status of 'deemed public company' is not statutorily recognised under the Companies Act, 2013.

In a letter to the board of directors of Tata Sons last week, Cyrus Investments Pvt Ltd had described the step as "another act of oppression of the minority shareholders of Tata Sons at the hands of majority shareholders".

"The real motive behind convening the proposed AGM is malafide and for ulterior purposes and the proposed resolutions are not in the interest of Tata Sons as a whole or at all," the letter had alleged.

Cyrus Investments Pvt Ltd and Sterling Investments Corporation of the Mistry family are fighting a legal battle against Tata Sons at the National Company Law Tribunal (NCLT) following Mistry's dismissal as chairman last year.

"Given the nature of grievances already raised and relief sought in the NCLT petition, the timing and issuance of the AGM is a subversion of the judicial process," the letter had stated.

The move to convert Tata Sons into a private limited company would put restrictions on "free transferability" of shares of the company and is "yet another attempt by the majority shareholders to oppress minority shareholders", it added.

The letter to the Tata Sons board had further alleged that the shift is a device to "subvert the highest standards of good corporate governance, which is expected to be maintained in a company of the stature and repute as Tata Sons".

New Delhi: Ousted Tata Sons chairman Cyrus Mistry on Thursday got a boost in his fight against Tata Sons when the National Company Law Appellate Tribunal (NCLAT) waived the minimum shareholding rule for him to file a case of alleged oppression of minority shareholders.

The Mistry family owns 18.4 per cent stake in the closely-held Tata Sons. The holding is less than 3 per cent if preferential shares are excluded, not meeting the criteria of at least 10 per cent ownership in a company for filing of a case of alleged oppression of minority shareholders.

Mistry has been locked in a legal battle with the Tatas since his unceremonious exit as chairman of Tata Sons -- the promoter company of the $105-billion car-to-software Tata group in October last year.

The appellate tribunal said that although the Mistry companies did not meet the minimum shareholding norm, there are exceptional circumstances for waiver of the statutory requirements.

It directed the National Company Law Tribunal (NCLT), which had previously dismissed Mistry's petition against Tata Sons on the ground of not meeting the minimum shareholding criteria, to decide the case in three months.

The NCLAT bench, headed by Justice S J Mukhopadhaya, however, dismissed another petition filed by Mistry family's investment firms – Cyrus Investments Pvt Ltd and Sterling Investments Corporation Pvt Ltd – on maintainability, saying the firms do not have more than 10 per cent in Tata Sons.

The NCLAT granted the waiver to the entities in the filing criteria of having 10 per cent shares of Tata Sons.

"The ruling of the NCLAT is a welcome vindication of what we have stood for and the values for which we are pursuing the petition against oppression and mismanagement of Tata Sons Ltd," said a statement issued by Mistry's office.