Tata Chemicals to vote on Nusli Wadia’s removal as independent director today
Shareholders of Tata Chemicals will vote today on a resolution to remove independent director Nusli Wadia from the board of the company at an extraordinary general meeting (EGM). This is the third company of the Tata group from which Wadia is sought to be removed, having been already voted out at the EGMs of Tata Steel and Tata Motors.
While 9.2% of shareholders voted against removing Wadia from Tata Steel, the results of the EGM vote of Tata Motors which concluded on Thursday showed that 28.80% of the votes were not in favour of Tata Sons, implying these shareholders also wanted Wadia to continue. However as 71.20% voted against him, Wadia has been removed.
Although the outcome of Tata Chemicals EGM is likely to be in line with that of previous two, it would be significant to see how many vote in favour of retaining Wadia, given that there has been a gradual increase in the number of such shareholders; 9.2% in Tata Steel and 28.8% in Tata Motors.
In a letter to shareholders of Tata Chemicals early Friday, Wadia again reiterated his opposition to the reasons stated by Tata Sons for his removal, denying strongly Tata charges of linking Wadia with ousted chairman Cyrus Mistry. Wadia also raised issues of erosion of corporate governance and of the ‘independence’ of independent directors. “The ability of a promoter to remove an independent director through the brute force of its holding in an ordinary resolution on which it can vote, is a serious and major dichotomy and contradiction that needs to be addressed urgently. Two respected jurists have opined accordingly. I have provided their opinions to the government, department of company affairs and to Sebi for their consideration,” Wadia said in the letter.
Incidentally, shareholders of Tata Steel and Tata Motors, had at the EGMs posed queries on the issue to the boards of the companies. On Dec 20, 21, two independent directors of Tata Global Beverages, Darius Pandole and Analjit Singh, stepped down from the board which Wadia said was attributed to the “lack of transparency and governance in removing Mr Cyrus Mistry by Tata Sons.”
Industrialists who have been closely watching the developments say that while Tata Sons will eventually win in the leadership dispute, the issues raised by both Mistry and Wadia may prompt the Tatas to review their organization structure and also on the extent of control that Tata Trusts, the principal shareholder of Tata Sons, holds.