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Nachiket Kelkar
Nachiket Kelkar

TATA-MISTRY FEUD

Mistry family opposes Tata Sons' plan to go private

TATA SONS-MANAGEMENTCHANGES/ Tata Sons annual general meeting is to be held on September 21 | Reuters

Tata Sons, the holding company of the salt to software Tata Group, has sought shareholder approval to convert itself into a private limited company from the current public limited structure. It's a move which, experts say, may have been taken to protect its interests, in the wake of ongoing disputes with Cyrus Mistry, the former chairman of Tata Sons, who was ousted last year.

Through two family firms—Cyrus Investments and Sterling Investments—the Mistry family holds 18.4 per cent stake in Tata Sons. Tatas would clearly not want the Mistry family to sell this stake to some other entity or group.

Tata Sons annual general meeting is to be held on September 21. Ahead of the AGM, the company sought the approval through special resolution to amend the article of association.

The company seeks to change its name to Tata Sons Private Limited from Tata Sons Limited. 

“The reinstatement of Tata Sons as a private company was considered by the board to be in the best interest of the company,” according to a Tata Sons spokesperson.

Tata Sons is a deemed public company under provisions of the Companies Act, 1956. However, this status is not statutorily recognised under the Companies Act, 2013. 

In the backdrop of Mistry's sacking, there has been an ongoing legal battle between the two investment firms and Tata Sons in the National Company Law Tribunal.

Therefore, the move hasn't gone down well in the Mistry family. 

In a letter to the board of director of Tata Sons, Cyrus Investments has described Tata Sons' steps to go private “as another act of oppression of the minority shareholders of Tata Sons.”

The Mistry camp alleges that the motive seems to be “malafide” and for “ulterior purposes”.

Experts who have tracked the matter say that the move will deepen the feud further between the two sides.

“At this stage Tata would definitely try to protect its interest by taking this step of converting to being private. Remaining public could mean that Mistry could legally sell its stake to one of Tata’s rival , which could be a threat,” said Mahesh Singhi, founder and MD of Singhi Advisors. 

Apart from protecting their interests, going private could also make things easy on compliance and regulations front for Tata Sons, he added.

However, this will also make them less liquid and restrict transferability. 

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Topics : #Tata sons

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