From NCLT to Sebi, Mistry shifts battleground

Claims corporate governance breakdown was due to Ratan Tata's hold over nominee directors

Ousted Tata Sons chairman Cyrus Mistry has written a letter to the Securities and Exchange Board of India (Sebi) Chairman U K Sinha seeking the regulator’s intervention on alleged violation of corporate governance and insider trading norms in some Tata group companies.

In a six-page letter to Sebi, he said, “Considering that the conduct of corporate governance in the Tata group has been considered a benchmark for governance in the Indian securities market, and indeed a signal to the world at large of how corporate India conducts itself, and how misconduct is regulated in India, it is important that I write this letter to keep you apprised.”

Mistry alleged the conglomerate and Tata Trusts’ nominee directors were controlled by Ratan Tata, resulting in complete breakdown of corporate governance. He also attached internal documents with the letter to Sinha.

Mistry had, on December 20, taken the legal route in his fight against the Tatas by filing a suit at the National Company Law Tribunal against them.

According to sources, the developments in the Tata-Mistry battle would be part of Sebi’s board meeting agenda on Saturday. “Though no call has been taken yet, Sebi is conscious of the matter and is examining the issue. We are also seeking explanation from the listed companies as well as reports from stock exchanges on trading aspects,” said a Sebi official.

In his letter, Mistry also alleged interference by Tata and N A Soonawala in the business decisions and transaction structure relating to business interests of not only Tata Sons but also listed and unlisted group companies.

Mistry also highlighted how he wanted to assert the revised Sebi laws involving insider trading, which prohibit communication of unpublished price-sensitive information outside a need-to-know principle. Mistry claimed Tata had responded that he had advice from senior counsel and that Mistry’s concerns were unfounded.

He also put his perspective on the role of independent directors and mentioned Nusli Wadia’s ouster from the boards of three Tata group companies.

Wadia, too, had written to Sebi over lapses in corporate governance at Tata group companies last month.

Emails sent to Sebi and Tata group did not elicit any response. Mistry's office said it would not comment on the issue.