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Safeguards must at Tata Group for minority shareholders: Cyrus Mistry

Tata Sons Ltd is the holding company of the Tata Group and holds the bulk of shareholding in its companies,

Press Trust of India  |  Mumbai 

Cyrus Mistry
Cyrus Mistry

Ousted Sons Cyrus Mistry's on Monday argued before the National Company Tribunal (NCLT) for introduction of certain "safeguards" within the Group to protect the interests of minority shareholders.

Mistry's C told the tribunal's bench that such safeguards would ensure the diversified conglomerate works like a "board-managed" entity.

Sons Ltd is the holding company of the Group and holds the bulk of shareholding in its companies, whose activities range from making salt to

Sundaram, who represents all the where Mistry is a stakeholder, told the bench that his ouster from Sons was also a "consequence of the company's rampant practice of allowing the nominee directors of Trusts to override the opinions of the minority shareholders and even the company board".

"Increasingly, all decisions for Sons as well as other group were being taken or approved by the two nominee directors of the Trust, who superseded the decisions of even the Sons board," he argued.

He said the articles of association of Group, that deal with powers of and the company's board, had several provisions that were often "misused" to undermine the sanctity of the Sons board and the minority shareholders.

Sundaram said the opinions of the majority shareholders of the company always superseded those of the minority ones and there "was a constant interference from the nominated trustees of the Trust in the functioning of Sons as well as that of the smaller group companies".

"The articles enable the trustees to reduce the company board to a dummy board," Sundaram claimed.

"One of these articles allows the Trusts to nominate one-third of the directors of Sons. Another article permits the majority shareholders to force the minority shareholders to sell their shares or to allow transfer of shares," Sundaram argued.

He said these articles were not in consonance with the Act and dubbed them as "oppressive".

"They are oppressive to the interest of the minority shareholders and defeat the purpose of having a board-run/ managed company. All that Mistry is seeking is that these articles be struck down or that some essential safeguards be introduced."

Sundaram said the reason Mistry had approached the NCLT was to seek protection for the minority shareholders through safeguards such as bringing in place a "transparent corporate governance" for Sons and its decisions vis-a-vis the group

Mistry has been locked in a legal battle with the Tatas since his unceremonious exit as of Sonsthe promoter company of the USD 105 billion group in October 2016.

Mistry's arguments will continue tomorrow.

Mistry was ousted as Sons on October 24, 2016, and also removed as a on the board of the holding company on February 6, 2017.

and had moved the NCLT against Sons after Mistry's ouster alleging oppression of minority shareholders and mismanagement.

First Published: Mon, January 08 2018. 23:19 IST