Indian Hotels, which operates the Taj group of hotels, has decided to convene an extraordinary general meeting of shareholders on December 20 to consider removal of Cyrus Mistry as director of the company. The Tata group, which hold 38.65 per cent stake, will be able to remove Mistry as director only if financial institutions, insurance companies and mutual funds back the group.
In another development, Tata Consultancy Services (TCS) said its former chairman Cyrus Mistry caused “enormous harm” to the company by his conduct and sought his removal from the board of the company.
Watch What Else Is making News
The board of Indian Hotels had earlier fully supported Mistry and stalled his ouster as chairman. If the shareholders vote in favour of Mistry’s removal as director, Mistry will automatically cease to be the chairman. “The board of directors of the company, at its meeting held on November 21 has pursuant to the special notice and requisition dated November 9 sent by Tata Sons, decided to convene an EGM to consider and if thought fit, to pass an ordinary resolution for removal of Mistry as director of the company,” it said.
On November 4, independent directors of Indian Hotels met before the board meeting and decided to back Mistry, making the situation tough for Tatas to dislodge Mistry from the company. Interestingly, Cyrus Mistry, after he was sacked as Tata Sons chairman, had questioned the operations of Indian Hotels.
While Tata Sons directly holds 28.01 per cent stake in Indian Hotels, mutual funds and UTI hold 12.87 per cent and financial institutions and insurance companies 12.63 per cent. Public shareholding is only 14.02 per cent. Tata Sons, Tata Trusts and other Tata group companies together hold around 38.65 per cent stake in Indian Hotels.
Meanwhile, in a notice to shareholders seeking Mistry’s removal, TCS said Mistry had “lost confidence” of Tata Sons. “Subsequent to his replacement as executive chairman of Tata Sons, Mistry has made certain unsubstantiated allegations, which cast aspersions not only on Tata Sons and its board of directors, but also on the Tata group as a whole, of which TCS is an integral part,” TCS said. The communication, which was marked as ‘confidential’ was made public, it said. TCS has convened an EGM on December 13 to consider the removal of Mistry as director of the company.
“Mistry’s conduct has caused enormous harm to the Tata group, TCS and its stakeholders, including employees and shareholders. Consequently, the board of directors of Tata Sons by its resolution dated Nov 9, 2016 has resolved to propose the removal of Mistry as director of TCSL,” TCS said. The board of directors is in agreement with the removal of Cyrus P Mistry as director of the company, as the same would be in the best interests of the company, it said.
“TCS, of which Tata Sons is the promoter, forms an integral part of the Tata group and enjoys the right to use the ‘Tata’ brand name by virtue of the Tata Brand Equity and Business Promotion Agreement entered into between TCS and Tata Sons. Substantial goodwill and benefits accrue to TCS by such usage of the ‘Tata’ brand and association with the Tata group,” TCS said. “Under Article 90 of the Articles of Association of the Company, Tata Sons vide its letter dated Nov 9, has nominated Ishaat Hussain as the chairman of the board of directors of the company, in place of Cyrus P Mistry,” TCS said.
Wadia asks Tatas to withdraw letter
Mumbai: Industrialist Nusli Wadia has termed the allegations made by the Tata Sons to the Tata Steel Board as “false, defamatory and libelous” and demanded the withdrawal of the notice issued by Tata Sons.
In a letter to Tata Sons Board, Wadia asked the Board to withdraw the special notice within two days of receiving his letter, failing which he would embark on inititiating criminal and civil proceedings against the board of Tata Sons. Wadia, who is an independent director of leading Tata companies including Tata Steel, has charged the board of Tata Sons of embarking on “personal vendetta” for discharging his duties as an independent director. ENS