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Wadia urges Sebi to take action against 3 Tata firms' directors

Alleges group firms made wrong declarations in annual reports

Shrimi Choudhary  |  Mumbai 

MD of Britannia Industries Limited Varun Berry (left) with Nusli Wadia, chairman, at the company's 98th annual general meeting in Kolkata. Photo: Subrata Majumder
Nusli Wadia | Photo: Subrata Majumder

Nusli Wadia, chairman of the group of companies, has urged the Securities and Exchange Board of India (Sebi) to take action against three independent directors of the who he alleges made wrong declarations in annual reports.
 
The persons he has named are independent directors Andrew Robb and Mallika Srinivasan and independent director on both Tata Chemicals and Nasser Munjee.

 
In the eight-page letter addressed to Chairman Ajay Tyagi, said the regulator had not adequately addressed issues raised by him in his previous complaint filed on January 6.
 
requested Tyagi to conduct a “full and impartial investigation” under listing regulations on the reports submitted by the audit committees of the respective   He alleged that the regulator was relying on the audit committees, which was “illegal and unconstitutional”.
 
Citing the annual reports, which state that the audit committees had examined the charges made by and had filed their response with Sebi, said Munjee, who was the chairman of the audit committee of both and Tata Chemicals, was not independent and the committee, therefore, was “wrongfully and illegally constituted”.
 
“The audit committee of these companies, whose chairman though not independent, de facto and de jure, reported to that there has been compliance with all legal requirements and corporate governance standards,” wrote to
 
said should disregard the statements of the and their respective audit committees made during the preliminary enquiry as these were clearly biased and prejudiced as the members of the committees were those against whom he had filed complaints earlier before He added that their certificates amounted to nothing more than self-certification.
 
He pointed out that as the audit committees were constituted in violation of the Act and the Listing Obligations and Disclosure Requirements they were not qualified to certify that there had been no violation on compliance.
 
An email sent to and did not elicit any response.
 
was also an independent director on the boards of Tata Steel, and Tata Chemicals till he was removed last December. After Cyrus Mistry’s ouster as chairman of on October 24, had supported Mistry. Along with Mistry, was also removed from all the boards of the Tata where he was a director.
 
has formed a committee on corporate governance where the role of independent directors is being discussed extensively. “The agenda is how to ensure independent spirit of the independent directors. There is a lot of criticism on whether the independent directors are really independent. This is a problem worldwide. All matters related to the role of independent directors are being discussed very thoroughly,” Sebi’s whole-time member S Raman had said last week.
 
Sources said also wanted the to tighten rules relating to the removal of independent directors.
 
This is the second letter has written to In the first letter dated January 6, he wrote as chairman of the nomination and remuneration committees of these and explained why each independent director had a direct conflict of interest.
 
has also attached an independent opinion of Justice B N Srikrishna along with his letters to
 
said Robb received a remuneration of £190,000 from Europe, a subsidiary of Tata Steel, while he remained a member of the audit committees of both and “Had he been not classified as an independent director on the board of Tata Steel, he would not have qualified for appointment on the audit committees of both as independent director,” said.
 
said independent directors were allowed remuneration of only Rs 1 lakh and commission to the extent of only 1 per cent of net profits under the Act.
 
On Srinivasan, said her husband, Venu Srinivasan, was a director of and also a trustee of the Sir Dorabji Trust, a disclosed constituent of the promoter group, holding a 28 per cent stake in
 
“By virtue of the definition of ‘associate company’ under the Act 2013, was an associate company of Sir Dorabji Trust is a non-profit organisation that is a direct beneficiary and receives 25 per cent of its receipts in the form of dividend from The Act provides clearly that the receipts by a non-profit organisation could be from the company concerned of any of its promoters,” he said. Mallika Srinivasan had a direct conflict of interest with Tata Steel, alleged.
 
On Munjee, who has been an independent director at Tata Chemicals since 2006 and at since 2008, said, “In February 2012, Munjee was appointed as a trustee of Ratan Tata Trust, which is a constituent of the disclosed promoter group.” He added that the trustees would be classified as promoters as the trust has been disclosed as promoter. “This being so, Munjee would be treated as a promoter and, therefore, cannot be an independent director.”
 
The Ratan Tata Trust holds a 23.5 per cent stake in and the trust and together hold 26.5 per cent in

to Sebi
  • Conflict of interest of IDs not adequately addressed by Sebi
  • Urge to take action against three IDs
  • Alleges that directors made wrong declaration
  • Declaration a violation of Act & Listing Obligations and Disclosure Requirements
  • Alleges audit committee “illegal and unconstitutional”
  • Report submitted by audit committee “biased and prejudiced”
  • Asks regulator to disregard report, as it is only “self-certification”

First Published: Thu, September 07 2017. 01:26 IST
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