Mumbai: Industrialist Nusli Wadia’s office late on Friday said he would have won a vote at Tata Motors Ltd’s shareholders meeting and stayed on as an independent director had the promoters not backed a resolution seeking his removal.
Wadia was removed as a director from boards of Tata Steel and Tata Motors following extraordinary general meetings (EGM) called by these companies on the instruction of Tata Sons Ltd, the group holding company. The result of a similar vote at Tata Chemicals Ltd’s EGM has not yet been released.
Tata Sons has accused Wadia of working in concert with Cyrus Mistry, the ousted chairman of Tata Sons—a charge he has denied.
“Tata Steel voted in the Tata Motors EGM against Mr Wadia in contradiction to their own notice and explanatory statement that they were only attaching the special notice of Tata Sons as a postman, that these were not their views and the company and the board of directors and its officers are neutral and do not take any responsibility for the same,” the Wadia Group statement said.
The statement added that as per the Companies Act, the reappointment of an independent director for a second term has to be through a special resolution, which requires the backing of 75% of the total votes cast. The same principle should be followed for an independent director’s removal, the Wadia camp argued.
“As in the case of Tata Motors less than 75% votes have been cast in favour of the resolution to remove Mr Wadia, therefore, Mr Wadia would have continued to be on the board if the resolution would have been a special resolution,” the statement said.
The statement said the passage of the resolution was a pyrrhic victory for Tata Sons because of a lacuna in the law, adding that “if government and Sebi (Securities and Exchange Board of India) agree with Mr Wadia’s contention, he will be back on the Tata Motors board.”
In Thursday’s Tata Motors EGM, about 61℅ of retail shareholders and about 50℅ of institutional shareholders voted in support of Wadia and against the resolution.
Wadia group’s statement claims that a promoter entity, Af-Taab Investment, a Tata Power Co. Ltd subsidiary, also voted against the resolution.
“In fact, only 49.8% votes have been cast in favour of the resolution out of the total voting power available. If one were to look at the non-promoter voting, abstinence amounted to 44.4%, and only 25.8% votes were cast in favour of the resolution,” it added.
Tata Sons last week raised its stake in Tata Motors to 28.71% from 26.98% earlier by buying 50 million shares in a bulk deal at a 7% premium from the previous day’s closing. The move was aimed at gaining an edge in the EGM, Mint reported.
At Thursday’s EGM, about 1,517 shareholder votes, or 71.20%, were in favour of the resolution seeking the removal of Wadia but a total of 1,037 shareholders, constituting 28.80% of votes, voted against the resolution. In all, 69.9% of total shareholders cast their votes on Thursday.