The Cyrus Mistry and Tata spat has continued to escalate after Tata sons ousted Mistry as Chairman, following which company attempted to remove him from other companies as well and now Mistry has hit right back claiming group holding company has stooped new low.
In a statement on Sunday evening, Mistry’s office blamed Tata sons for questioning many eminent personalities who serve as independent directors on the boards of Tata Chemicals and Indian Hotels Company (IHCL), after Mistry was able to retain back his Chair in the two companies.
The statement said the eminent people serving as independent directors are being questioned for undertaking their fiduciary duty of protecting the shareholders of the companies.
Reportedly, the boards of these two companies include Deepak Parekh, Nusli Wadia, Gautam Banerjee, Ireena Vital, Keki Dadiseth, Nadir Godrej, Nasser Munjee, Vibha Paul Rishi, and Yashwant Thorat. Of this, six were appointed during Ratan Tata’s tenure and two of these directors, Dadiseth and Munjee, also serve on Tata Trusts board, the statement said.
In IHCL as well as Tata Chemicals, the independent directors were unanimous in their support of Mistry as Chairman. “The endorsement is a reflection of Mistry’s conduct as chairman in upholding the highest standards of corporate governance and in taking the board along in all decisions that impact the company,” the statement said.
“To question the independence of these directors… and to suggest that ‘ulterior objectives’ and ‘clever strategy’ can sway these eminent names in undertaking their fiduciary duties… as independent directors is absolutely astonishing and really speaks to how low Tata Sons has unfortunately stooped in their public statements,” the statement added.
In reply to the statement, Tata sons said that it has already put forward facts in its November 10 statement so that its decision to replace Mistry as chairman is seen in the desired perspective. “The Tata Sons management will do whatever is required to deal with the situation,” the statement highlighted.
It also added that, “In the light of the developments since November 4, 2016, Tata Sons reiterates that it is crucially important for boards, including independent directors, to consider that their views and positions ensure that the future of Tata companies is protected, taking into consideration the interest of all stakeholders.”
According to Mistry claims, he was ousted following his insistence on a strong corporate governance structure across Tata group of companies. Mistry said he wanted a strong corporate governance framework that balanced the interest of the promoter with minority shareholders’ rights, adding that there was a need of law compliance in relation to insider trading.
However, Tata group had alleged that operating companies were drifting away, Mistry claimed it was furthest from the truth, as “To understand the rationale behind the new Tata group governance model, one needs to understand the contextual difference within which the group currently functions,” the statement said.
“In the spirit of protecting the interests of all stakeholders, employees, and minority shareholders, the strategy of individual operating companies Mistry believed should be created by their management and approved by their own board of directors. By placing the responsibility where it should lie, with the board of directors of the operating companies, allowed the independent directors to ensure that the interests of minority shareholders were aligned with the operating company’s strategy as well as the overall direction of the Tata Group,” the Mistry’s office said in a statement.
Even though Mistry saved his Tata Chemicals and IHCL chair, the Ratan Tata camp has been trying to evict Mistry from the chairmanship of group companies and has already fired him as chairman of TCS.