Tata Sons set to get required majority to go private at AGM

The Shapoorji Pallonji family will be voting against the resolution to take the company private

The Tata Sons’ annual general meeting of shareholders to be held on Thursday is set to pass all the resolutions with the requisite majority of 75 per cent. 

Tata Trusts, Tata group companies and other individual shareholders have joined hands to vote in favour of the resolution to convert the company from a public limited one to a private limited one.

The Shapoorji Pallonji family, which owns 18.4 per cent stake in Tata Sons, will be voting against the resolution to take the company private. Tata Trusts owns 66 per cent in the company; group companies have 12.9 per cent and individual shareholders, including the Tata family, own 2.85 per cent. 

After the shareholders’ approval, Tata Sons will have to seek the National Company Law Tribunal’s nod to make the company private limited. 

The next task would be to address the Tata Teleservices problem. The loss-making telecom venture needs another fund infusion of Rs 12,000 crore. While Tata Sons has said it has all the options on the table for the company, analysts said it would be difficult for the Tatas to throw good money after bad when there was no clarity on the company making money in the near future.

The Mistry camp, meanwhile, is studying its legal options and may move the National Corporate Law Tribunal to bring a stay on the AGM’s resolutions, arguing that the proposed resolutions are against the interests of the minority shareholders.

On Monday, the Mistry family, which holds 18.4 per cent stake in Tata Sons, wrote to listed Tata group companies holding stakes in Tata Sons to oppose the company’s move to go private and vote against the proposal in the AGM. The Mistry family said the proposed move would not only be “detrimental to the interests of the minority shareholders”, but would also dilute the governance standards at Tata Sons.

In a communication to the board of directors of Tata Steel, Indian Hotels, Tata Power, Tata Motors, and Tata Chemicals, the investment company of the Mistry family, Cyrus Investments, said the resolution proposed by Tata Sons was not in the best interests of the public shareholders of the company, as the companies would have greater challenges in disinvesting their shareholdings in Tata Sons.