Registrar of Companies says Tata Sons violated in sacking Cyrus Mistry from board: report

Last Updated: Fri, Nov 02, 2018 13:34 hrs
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A report by news agency PTI says Cyrus Mistry's sacking from the board at Tata & Sons Ltd may have violated Tata's own articles of association.

The report quotes a reply shared by the assistant Registrar of Companies (RoC) to a RTI request filed by Shapoorji Pallonji Group. Cyrus Mistry is the Managing Director at Shapoorji Pallonji Group.

According to the registrar, the sacking was in violation of legal provisions under the Companies Act, 2013; the Reserve Bank rules governing NBFCs; and also the rule 118 of the articles of association (AoA) of Tata Sons, the parent of the diversified Tata group. This Tata company is registered as an NBFC with the central bank.

Mistry, whose family is the single largest non-Tata shareholder with 18.4 per cent stake in Tata Sons, was nudged to take over the reins of the $ 103 billion group as the second non-Tata chairman, after Nowroji Saklatwala(1934-38), in December 2012, after group patriarch Ratan Tata retired.

After being elected to lead as the Chairman of the board, Mistry's sacking in 2016 was reported as one of the most ugliest board-room coups.

The PTI report, further states that "article 118 of the AoA of Tata Sons prescribes that its chairman can be removed in the same process as specified for his appointment i.e. by the selection committee consisting of four persons and based on such recommendation of the removal committee only the board is empowered to remove its chairman".

Tata Sons is yet to confirm on the report yet. But a National Company Law Tribunal in its observation in July had observed the sacking of Mistry as Chairman as a "valid" one. In fact the NCLT upheld the decision of the Tata board.

The NCLT ruled that the Tata Sons Board of Directors was competent to remove the Executive Chairman and that Mistry was ejected as the board members had lost confidence in him.

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