At the 99th Annual General Meeting on Thursday, Tata Sons has got shareholders’ nod to change its legal status from public to private, a move which is going dilute the role of Cyrus Mistry’s Pallonji group. All resolutions placed before the shareholders have also been passed with a requisite majority, ET Now reported quoting sources.
The other important resolution that was placed before the AGM was to tweak the voting rights of the preferential shareholders, again weakening the position of the Pallonji group in the company. This resolution was also passed with a required majority.
The change in legal status of the company would restrict Tata Sons’ shareholders such as Mistry’s Pallonji group, which holds 18.4 per cent equity shares in the company, from selling the shares to external investors. The Pallonji group was against the move and sought to oppose the move at the AGM. Tata Sons needed to clear a special resolution, where at least 75 per cent votes were required to change the legal status. Now, the company will need an approval from National Company Law Tribunal.
Tata Sons’ shareholders have also passed a proposal to give voting rights to preferential shareholders if the holding company has not been able to pay dividends for a period of two years or more. This also dilutes the rights of the Pallonji group while strengthening the position of preferential shareholders. Tata Trusts’ chairman Ratan Tata owns 10.5 lakh, Narotam Sekhsaria 5.7 lakh and NA Soonawala 2.6 lakh preference shares. The Pallonji group holds merely 20,000 preference shares, The Economic Times reported. Preference shares entitle its holders to a fixed dividend, whose payment takes priority over that of ordinary share dividends.
Ahead of the AGM on Thursday, Cyrus Mistry had a partial win against the group as the National Company Law Appellate Tribunal (NCLAT) granted a waiver to his firms from minimum shareholding criteria following which the investment firms can move to NCLT Mumbai and argue the case. NCLAT, however, rejected the first plea by Cyrus Mistry, saying that his investment firms did not have required share-holding to bring charges of mismanagement and oppression.
The pleas were filed after Cyrus Mistry was removed as Chairman of Tata Sons on October 24 last year. He was later removed as director from Tata Son’s board and other companies of the Tata Group.