Revising its recommendation, proxy advisory firm Institutional Investor Advisory Services (IiAS) has supported removal of independent director Nusli Wadia from board of Tata Motors and Tata Steel, saying it was in the long-term interest of Tata Group.
IiAS, which supports removal of estranged Chairman Cyrus Mistry from Tata Group firms, “changed its voting recommendation on the resolution to remove Nusli Wadia from Tata Steel and Tata Motors – we support the resolution,” it said in a report.
The change in recommendation follows the recent Rs 3000 crore defamation case filed by Nusli Wadia against the Tatas.
“Given this, we believe the relationship between Nusli Wadia and the Tatas has become antagonistic and will therefore likely be a distraction for the boards,” it said.
The lawsuit, and the amounts demanded as reparations, is significant evidence to suggest that Nusli Wadia’s presence in the boardroom is likely to be a distraction, it said.
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IiAS had previously recommended that shareholders vote against the removal of Nusli Wadia as a director.
Nusli Wadia’s support for Cyrus Mistry is purportedly causing harm to the interests of the Tata Group. But no evidence is provided to support this claim.
“Given recent developments, IiAS now changes its voting recommendation to support the resolution – it is in the long-term interest of the Tata companies to remove Nusli Wadia as a director,” it said.
IiAS said its previous recommendation in support of Nusli Wadia emanated from a larger governance question – can Tata Sons, as the controlling shareholder, ask for the removal of an ‘independent’ director on account of his support to Cyrus Mistry?
Tata Sons accused Nusli Wadia of being disruptive and galvanizing other independent directors to act against the interests of the Tata group.
While Nusli Wadia has been vocal in his views, there was no tangible evidence of his ‘contrarian’ views being detrimental to the interest of Tata companies or the group in general.