Cyrus Mistry rules out returning to Tata Sons as chairman

Mistry says he will fight to defend rights of minority shareholders

Cyrus-Mistry-Reuters Cyrus Mistry | Reuters

Weeks after the National Company Law Appellate Tribunal (NCLAT) in a shock verdict reinstated him as the executive chairman of Tata Sons, Cyrus Mistry has clarified that he has no intention to pursue the chairmanship of the group or the various Tata companies. However, he will fight to protect minority shareholder rights.

The NCLAT had on December 18, 2019, ruled that the board meeting held to remove Mistry as the chairman of Tata Sons on October 24, 2016, was illegal. The tribunal had also reinstated him as the chairman, and director of Tata Companies. While the NCLAT gave Tata Sons four weeks to appeal against Mistry's reinstatement as chairman, he had to be reinstated on the board of various group companies immediately.

The Tata Sons moved the Supreme Court on January 2 against the NCLAT order. By ordering Cyrus Mistry's reinstatement, the NCLAT order has created confusion in the working of important corporate entities, some of which are listed companies, the group had said in the petition. Later, Ratan Tata too approached the Supreme Court in his personal capacity against the judgement.

In the petition, Mr Tata said the NCLAT judgment was wrong as it treated Tata Sons as a two-group company, although Mistry was made the executive chairman of Tata Sons in a purely professional capacity and not as a representative of the Shapoorji Pallonji Group.

On Sunday, Mistry issued a statement, which he said was being made in the interests of the Tata Group, whose interests are far more important than the interests of any individual.

"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," he said.

"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 added.

The Tata Sons is the holding company of the salt to software conglomerate, in which the Tata Trusts hold close to 66 per cent stake. The Mistry family holds 18.4 per cent stake. 

"As an 18.37 per cent shareholder, it is in our own interest to ensure the Group’s long-term success. My family, although a minority partner, has been a guardian of the Tata Group for over five decades," Mistry said. 

Mistry further said that 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 spanned multiple decades that was built on common agreement and mutual faith. Former Tata leaders worked together with the minority partner to create value for all stakeholders. However, there had been little respect for the minority shareholder in recent years. 

"In the last three years, both in conduct and in their 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," he felt.

Mistry was appointed as the chairman in 2012, to succeed Ratan Tata. However, he was sacked unceremoniously just four years later. Post the verdict, Mistry said that the NCLAT verdict had vindicated his stand. His counsel Aryama Sundaram had told THE WEEK that he was sacked not for performance, but for his insistence on management transparency and shareholder rights.

"This legal fight has never been about me. It has always been and will always be about protecting the rights of minority shareholders and upholding their right to demand a higher standard of corporate governance from controlling shareholders," said Mistry.