Wadia complains to Sebi, MCA against LIC, UTI-MF

Complaint to the regulators was made after they voted along with Tatas for Wadia's removal

Nusli Wadia, chairman of Wadia group of companies, has written to the market regulator, the Securities and Exchange Board of India, and the Ministry of Corporate Affairs (MCA) complaining against government-owned Life Insurance Corporation of India (LIC) and UTI Mutual Fund (UTI-MF) who voted for his removal from the boards of Tata Steel, Tata Motors and Tata Chemicals.

The complaint to the regulators was made after the two Indian institutions voted along with the Tatas for Wadia’s removal even as foreign funds voted against the proposal at the extraordinary general meetings (EGM). “There were no charges of fraud, malfeasance or insider trading against Wadia. Yet the institutions went ahead and voted against Wadia. They should provide reasons for their vote on Wadia’s removal. It’s time the institutions became more transparent with the public on their decisions as small shareholders are impacted directly,” said a source close to the development. Wadia, the source said, was fighting for small shareholders on the boards of these three companies which made bad decisions while making acquisitions abroad. 

In similar letters to the three companies just before the EGMs, Wadia had said he was an independent director of the three Tata companies, and had acted accordingly. “I have a fiduciary responsibility to act as an independent director in the best interest of the companies on whose boards I serve, no more no less,” he had said, adding he never acted in concert with Cyrus Mistry, who was removed as Tata Sons chairman on October 24. 

But in EGMs of shareholders held in December, the three companies voted in favour of removing Wadia. Wadia had also moved the Bombay High Court that gave permission for the EGMs to go ahead but asked the three companies to keep a seat of independent director vacant till the court gives its verdict.

While queries to LIC and UTI-MF remained unanswered, a source from the mutual fund industry cited a report by institutional advisory firm Institutional Investor Advisory Services (IiAS), which supported removal of Wadia from the boards of Tata Motors, Tata Steel and Tata Chemicals. 

IiAS, in fact, changed its voting recommendation on the resolution. It had first asked institutional investors to vote against the proposal and then changed it to support the resolution on December 16. 

IiAS said it changed its recommendation on Tata Sons proposal after Wadia filed a ~3,000-crore defamation suit against Tata Sons, the holding company of the Tata group as it believed that the relationship between Wadia and the Tatas had become antagonistic and would therefore likely be a distraction for the boards.