Tata-Mistry row: Institutional investors' vote to be decisive

The vote of institutional investors will be decisive for Tata Sons if it seeks to oust Cyrus Mistry from the chairmanship of six other listed Tata group companies, proxy advisor InGovern said today, the day he was replaced as TCS chairman.
Mistry was sacked as chairman by the board of Tata Sons - the holding company of group firms - on October 24 but he continues to chair the boards of various entities.
Earlier in the day, software major TCS announced that Ishaat Hussain would replace Mistry as its chairman. TCS has received a letter from Tata Sons nominating Hussain to the post.

"Out of the 7 listed Tata companies where Mistry is a Director, TCS has the highest promoter holding at 73.33 per cent. The 6 other companies have a promoter holding in between 30-39 per cent," InGovern Research Services said in a report.
The other 6 companies are: Tata Steel, Tata Motors, Indian Hotels, Tata Power, Tata Chemicals and Tata Global Beverages Ltd.
"Once proposed, it is certain that the proposal will be accepted even if all public shareholders vote against, since the promoters hold more than 50 per cent of the voting powers," InGovern said.

It said it is to be seen as to what happens with all the other companies where Tata Sons has a holding below 40 per cent.

"In these companies, the vote of institutional investors will be decisive. Perhaps this is a reason why Tata Sons has come out with a detailed statement today explaining its need to replace Mistry and also rejecting claims made by him in his letter to the Board of Tata Sons," the report said.
Apart from TCS, another group firm Indian Hotels Company has notified stock exchanges of requisition received from Tata Sons to call an Extraordinary General Meeting (EGM) for removal of Mistry as a director of both companies.
"It is expected that Tata Sons will issue special notices and call for EGMs in all the 7 listed Tata Group companies where Mistry serves as a director and chairman," InGovern said.