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Mumbai: Cyrus Mistry, the ousted chairman of Tata Sons Ltd, said the government has an “inherent obligation" to “remedy and repair (the) breakdown" in the governance of Tata Trusts, the dominant shareholder in the group holding company.

In a 14-page letter to shareholders of listed group firms released to the media, Mistry said the governance structure of the Tata group needs urgent repair and accused Tata Trusts of overstepping its rights. He urged shareholders to “do the right thing" and think “beyond the here and now."

Mistry’s letter comes ahead of a series of extraordinary meetings called by Tata Sons Ltd to eject him from group company boards after he refused to step down following his removal as the chairman of the holding firm in October. The first of these meetings, at Tata Consultancy Services Ltd, is on 13 December.

The government, through its control of institutional shareholders in Tata companies such as the Life Insurance Corporation of India, could have a role in deciding whether Mistry goes or stays—especially in companies where Tata Sons does not have a majority stake.

Mint reported on 3 December that the institutions could abstain—a move that strengthens Tata Sons’s hand.

Also Read: Vote against Cyrus Mistry removal, ISS tells TCS minority shareholders

Tata Sons responded to Mistry’s letter by describing it as a “rehashed version from his earlier statements, press reports and leakages which we have forcefully rebutted".

“The price of his (Mistry’s) wanton allegations has been borne by none other than millions of shareholders. Tata Sons believes the shareholders will judge these malicious actions on their own merit or the lack of it," the holding company said in a statement. “The Tata Group has enjoyed the confidence of generations of shareholders for more than a century. The shareholders of Tata Group companies are eminently qualified to see through the smokescreen of baseless allegations being passed."

In his letter, Mistry accused Tata Trusts, and also Tata Sons, of a “flagrant widespread" breakdown in governance. He said the long-term interest of the group can be ensured only if there is governance reform at both.

“The governance charter across the Tata Group including the holding and operating companies requires repair to conform to company law and global best practices. The governance of Tata Trusts has to become more accountable, transparent and the moral high ground that has been lost needs to be reclaimed," the letter said.

Mistry said Ratan Tata and N.A. Soonawala, trustees of the Tata Trusts, took the veto rights of trust-nominated directors as an “entitlement to dictate to these directors how Tata Sons should conduct itself". These trustees tried to take indirect control by directly seeking information about individual Tata group firms, dictating decisions on starting a new business and getting involved in the day-to-day business of listed firms, said the letter.

“The conferment of all decision-making power in one man or a ‘high command’ among them is unethical, improper and a breach of trust," wrote Mistry. He called for a method of checks and balances in the trustees’ decisions and said the government should ensure that Tata Trusts, which are public charitable institutions, have a defined, transparent governance structure.

The trusts, which own two-thirds of Tata Sons, have previously talked about declining dividends and a “trust deficit" under Mistry’s watch.

“The Tata Group is no one’s personal fiefdom: it does not belong to any individual, not to the trustees of Tata Trusts, not to the Tata Sons directors, and not to the directors of the operating companies," wrote Mistry.

The Tata Sons’s statement retorted: “After he became the Chairman of Tata Sons, it is Mr. Mistry who converted the Group into his ‘personal fiefdom’, with his unilateral actions destroying precious institutional memory of the House of Tata."

Also Read: Tata vs Mistry: What’s next

Mistry also warned shareholders that without governance reform and accountability for the trustees, it will be difficult to stop value erosion in group companies. As the war of words between the Tata group and the former chairman escalated, listed group firms have lost a combined Rs1.12 trillion, or 12.87%, in market capitalization since the 24 October boardroom putsch.

Mistry also warned shareholders that the Tata brand will remain valuable only so long as the conduct of the Tata group is consistent with the values the brand stands for.

In its communications to shareholders asking for Mistry’s removal, Tata Sons had emphasized how group companies enjoy the right to the Tata brand name because of an agreement with Tata Sons, which also provided them with “substantial goodwill and benefits... by such usage of the Tata brand".

“Your Company has no reason to be swayed by the conduct of Tata Sons. Tata Sons does not guarantee any financial assistance for your company," Mistry wrote.

PTI contributed to this story.

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