Tata vs Mistry: Minority shareholders cannot claim board seat, says SC

The Supreme Court verdict on the Tata versus Mistry case has clarified the point that the minority shareholders cannot get a seat on a private company’s board unless the firm’s articles of association or the majority shareholders back them.

While the Companies’ Acts 1956 and 2013 recommend a director on the board to be elected by small shareholders in listed companies, the court has made it clear that Mistry Group is not a small shareholder and a board seat cannot be allotted to it contractually or by law.

‘Small shareholders’ are defined in the Companies Act as those holding shares