Mistry misled to become chairman, breached governance norms: Tata Sons
With the extraordinary general meetings (EGMs) to replace former chairman Cyrus Mistry slated next week, both Tata Sons and Mistry’s office have raised the pitch to inform shareholders of the resolutions and alleged breach of norms by either side.business Updated: Dec 12, 2016 10:54 IST
With the extraordinary general meetings (EGMs) to replace former chairman Cyrus Mistry slated next week, both Tata Sons and Mistry’s office have raised the pitch to inform shareholders of the resolutions and alleged breach of norms by either side.
While the office of Mistry levelled charges on Vijay Singh, former defence secretary and a Tata Trust nominee on Tata Sons, the Tatas have said Mistry breached governance norms and misled the group when he was approached by a selection panel for the post of group chairman in 2011.
Mistry’s office while responding to Tata Sons’ appeal to shareholders said Singh “concocted theories to defend his role in Ratan Tata’s conspiracy to replace Mr Cyrus Mistry,” mentioning Singh’s track record as chief secretary in the Madhya Pradesh government in 2006 and later as defence secretary when the Augusta Westland contract was awarded.
Tata Sons charged Mistry of going back on vital norms.
“When Mr Mistry was appointed as executive vice-chairman in 2011, he was informed that he should distance himself from his family enterprise - Shapoorji Pallonji & Company and the other Shapoorji Pallonji group entities of which he is a major shareholder by putting his shareholding in an arms-length Trust. Mr Mistry agreed but after some time, retracted his position. Such conduct was inappropriate and created a sense of breach of trust on his part.”
Incidentally, the Securities and Exchange Board of India (Sebi), is already monitoring the charges traded by both sides as they pertain to listed companies and as the breach in norms impact minority shareholders.
Tata Sons said that Mistry misled the selection committee set up in 2011 for selecting a chairman of Tata Sons, by making “lofty statements about his plans for the group and more importantly indicated an elaborate management structure for managing the Tata Group, given its diversity of business…These statements and commitments from Mr Cyrus Mistry played an important role in the final selection of Mr Mistry as Chairman. After waiting for a period of four years, almost none of these management structures and plans have been given effect to. Clearly, in our opinion, the selection committee was misled in its choice of Mr. Mistry.”
Tata Sons also said that under the governance guidelines framework which Mistry introduced in 2015, all employees of a Tata company should, after their employment ceases, immediately resign from the boards also. “Therefore Mr Mistry, on ceasing to be the executive chairman of Tata Sons, should have immediately resigned from the boards of all other companies under his own guidelines. Yet he has chosen not to do so in wilful breach of the Governance Guidelines Framework.”
First Published: Dec 12, 2016 10:54 IST