Mistry’s statement comes a day before top court hears Tata plea against NCLAT order
Mistry says his focus has always been upholding best standards in corporate governance
Mumbai: Ousted Tata Sons Ltd chairman Cyrus Mistry on Sunday said he will not seek to return to the post despite his victory in an appeals court, likely ending protracted uncertainty over the conglomerate’s leadership trajectory.
In a statement issued a fortnight after the National Company Law Appellate Tribunal (NCLAT) reinstated him, Mistry said he would not seek executive chairmanship of the group holding company Tata Sons Ltd, nor directorship of three group companies.
He will, however, seek a board seat at Tata Sons to improve its governance standards, he said.
Mistry’s statement comes a day before the Supreme Court hears a Tata Sons petition challenging NCLAT’s 18 December order restoring Mistry’s directorship on the boards of Tata Sons and operating companies.
In its order, NCLAT held the appointment of N. Chandrasekaran as Mistry’s successor as illegal, and also reinstated his directorship in Tata Consultancy Services, Tata Teleservices (Maharashtra) and Tata Industries Ltd. This was for the remainder of his tenure, which was just about five months.
Tata Sons moved the apex court on 2 December, calling the NCLAT ruling untenable in law and violative of the set principles of company law. The Supreme Court will hear the plea on Monday when it reopens after its winter vacation.
“Cyrus Mistry has extended an olive branch. Now, it is up to the Tatas to accept it as the ball is now in their court," said Amit Tandon, founder and managing director of corporate governance and proxy advisory firm Institutional Investors Advisory Services India Ltd. “As a majority shareholder, you might have all the rights, but you have a certain amount of responsibility towards your significant minority shareholders. A board seat will be the first step in ensuring that responsibilities towards significant minority shareholders remain."
Mistry said: “To dispel the misinformation campaign being conducted, I intend to make it clear that despite the NCLAT order in my favour, I will not be pursuing the executive chairmanship of Tata Sons, or directorship of TCS, Tata Teleservices or Tata Industries.
“In the last three years, both in conduct and in the statements to the world at large, the Tata group’s leadership has shown scant respect for the rights of minority shareholders. It is time the group’s management introspects and reflects on its conduct as it embarks on future actions."
NCLAT had cited haste in removal of Mistry as chairman of the Tata group’s holding company, ignoring the interest and oppression of minority shareholders and mismanagement at Tata Sons as reasons for the ruling.
With Mistry willingly letting go of chairmanship and directorships, the legality of the NCLAT judgement on these issues may not impact the future of Tata companies. Legal experts had raised concerns about whether the judgement could be implemented when viewed from the lens of corporate democracy.
Mistry was fired as chairman of Tata Sons on 24 October 2016 in a boardroom coup, just five months before his tenure was to end in March 2017. This triggered a three-year-long corporate and legal battle between the Mistry firms and the majority shareholders of Tata Sons.
The case landed in the National Company Law Tribunal in December 2016, where the Mistry firms—Cyrus Investments Pvt. Ltd and Sterling Investments Pvt. Ltd, which together own 18.4% of ordinary shares in Tata Sons—alleged oppression of minority shareholders and mismanagement.
In his statement, Mistry listed the reasons for his decision to seek a board seat.
“I will however vigorously pursue all options to protect our rights as a minority shareholder, including that of resuming the thirty-year history of a seat at the Board of Tata Sons and the incorporation of the highest standards of corporate governance and transparency at Tata Sons," he said. The Shapoorji Pallonji Group had representation on the Tata Sons board for 30 years until Mistry was sacked in 2016.
“The founding fathers of the Tata Group had laid a strong ethical foundation that cared for all stakeholders. The relationship between the Tata Group and the Shapoorji Pallonji Group is one spanning multiple decades that was built on common agreement and mutual faith," Mistry said. “Former Tata leaders worked together with the minority partner to create value for all stakeholders."
“Considering that they are the largest minority investors, Mistry firms may seek more than one board seat," said a person familiar with the group’s thinking.