Mumbai–Asking its ousted Chairman Cyrus Mistry to follow his own assertions on corporate governance, Tata Sons on Tuesday said that he should step down from the boards of Tata companies.
“The same corporate governance guidelines, Mistry ‘s office is referring to, prescribes that a Tata employee must step down from the Boards of Tata companies, after he ceases to be a Tata employee,” a group spokesperson for Tata Sons said.
“After being replaced as Chairman of Tata Sons, Mistry ceases to be a Tata employee. It is he who is violating the guidelines that he himself propounded, and not Tata.”
Tata Sons board had ousted Mistry on October 24 and appointed Tata as the Interim Chairman.
The rebuttal came after Mistry’s office on Tuesday said the governance guidelines developed under him created an effective check and balance against any individual
becoming larger than life.
“Far from Mistry taking over control over all Tata Group activity, it is a matter of record that the governance guidelines developed under him in consultation with the board of directors of Tata Sons, and CEOs and independent directors of various Tata Group operating companies, subjected Mistry himself to an unprecedented scrutiny of nearly 50 individuals who appraised his corporate performance,” his office said.
“This approach empowered Boards of Directors – both at Tata Sons and the Tata Group operating companies. It created an effective check and balance against any individual
becoming larger than life. So there was no question of anything remotely like what is sought to be alleged.”
The comments from Mistry’s office came a day after Tata Sons in a statement rebutted its ousted Chairman’s appeal for support from stakeholders ahead of the extraordinary general meetings called by several Tata Group companies to remove him from their board.
Tata Sons had alleged that Mistry has gradually over the past years concentrated all power and authority in his own hands as Chairman in all the major Tata operating companies, where there are no longer any representatives from the board of Tata Sons, the main promoter and largest shareholding group.
Mistry’s office pointed out that his ‘fight is to protect the Tata Group from capricious decision-making by its Interim Chairman Ratan Tata’.
“Mistry’s fight today is to protect the Tata Group from capricious decision-making by the Interim Chairman,” his office said.
The statement from Mistry’s office explained that Mistry would hurt his own family’s financial interests if he sought to make Tata Group companies break away from Tata Sons.
“The statement itself records that Mistry’s family holds over 18% interest in Tata Sons. If he were to indeed seek to make Tata Group companies break away from Tata Sons, he would have been hurting his own family’s financial interests,” Mistry’s office said.
“It is in fact these individuals prone to impulsive control who have inflicted severe damage and enormous financial loss to all stakeholders of the Tata Group, including shareholders. They have also exposed the Tata Group to perilous violation of regulatory requirements, seeking to procure unpublished price sensitive information from listed Tata Group companies, breaking down governance.”
“This has the potential to hurt shareholders values and it’s a sorry allegation to attempt to throw back.”
In another development Tata Power while calling for an extraordinary general meeting on December 26 to consider removing Mistry as a director with the company said that its Independent Directors were appreciative of his performance.
“During his tenure with the company as Director and Chairman, till date, Mistry has attended 38 out of the 39 Board Meetings, all 24 ECOB (Executive Committee of the Board) Meetings and 20 out of the 21 NRC (Member of the Nomination and Remuneration Committee) Meetings,” the company said in a regulatory filing to the BSE.
“The Act requires the Independent Directors to meet each year and to, inter alia, evaluate the performance of the Chairman of the Board. Such Independent Director Meetings were conducted in March 2015 and March 2016. At both those meetings, the Independent Directors were appreciative of the performance of Mr. Mistry and had nothing of significance to recommend to him in that regard.”
The regulatory filing added that the feedback of the meeting was conveyed to Mistry by one of the directors present, chosen for that purpose by his colleagues.