In a letter sent on Monday by Cyrus Investments Private Limited, he has stated that, “the resolution supposed to be passed at the AGM of Tata Sons are not in the interest of the company.
Cyrus Mistry has reached out to shareholders of six Tata Group companies having shareholding in Tata Sons to vote against the special resolution that includes change in the structure of Tata Sons from a public limited to a private limited company. In a letter sent on Monday by Cyrus Investments Private Limited, he has stated that, “the resolution supposed to be passed at the AGM of Tata Sons are not in the interest of the company. These resolutions, if passed would impose restrictions on the free transferability of shares held by the company in Tata Sons and the company would face greater challenges in divesting its shareholding in Tata Sons”.
The letter further said, “another distinct disadvantage of converting Tata Sons from a public company to a private company from the stand point of minority shareholders is that various governance standard would potentially get diluted in relation to private companies”. The six companies to which the letters have been sent out are: Tata Steel, Tata Motors, Tata Power, Tata Chemicals, Tata Global Beverages, and Indian Hotels. The letter calls upon the directors of Tata Group’s public limited companies having a shareholding in Tata Sons to be mindful of the fact that the investments involved are material in nature and size. “I trust you will discharge your duties responsibly. Further, in your case, the company is a listed company and as directors you also have additional responsibilities owed to public shareholder and investors in company’s own securities,” the letter said.
Last week, in a notice to its shareholders ahead of the annual general meeting (AGM) scheduled for September 21, Tata Sons had sought approval to amend its memorandum of association and articles of association to convert itself from a public limited company to a private limited one. It has also sought to change the name of the company from Tata Sons Limited to Tata Sons Private Limited. Apart from shareholders’ approval, the move will also have to be cleared by National Company Law Tribunal.
While two investment firms of the Shapoorji Pallonji family – Cyrus Investments and Sterling Investment – own 18.4% in Tata Sons. Tata Trusts own 66% of the share capital of the company, while the remaining shares are held mostly by the Tata family, some group companies and a few individuals.