A week before its 99th annual general meeting (AGM), Tata Sons has sought investors’ nod to make the public limited company to a private limited company, to which Cyrus Investments, one of Shapoorji Pallonji family’s holding companies, has strongly objected. According to media reports, Tata Sons wants to amend its memorandum of association and articles of association to convert the company from Tata Sons Limited to Tata Sons Private Limited.
The move would restrict its shareholders such as Mistry’s Shapoorji Pallonji from selling the shares to external investors, which the Pallonji family is seeking to oppose.
Tata Sons needs to clear a special resolution where at least 75 per cent votes are required to change its legal status. Besides a nod from its shareholders, the company would also need also need National Company Law Tribunal’s approval. The Mistry family holds 18.4 per cent equity shares in Tata Sons and has objected to the move.
The Tata group is also in the middle of its plans to undertake a massive exercise to clean up the ownership structure of its group companies, with the holding firm Tata Sons buying equity shares held by various group entities one another through a complex web of cross-holdings.
The exercise would also result in some prominent listed companies, including Tata Steel, Tata Motors and Tata Chemicals receiving investments to the tune of Rs 6,000 crore, which those companies could use to pare debt to some extent.
Tata Steel, India’s largest private steel maker, has a sizeable equity stake in 13 listed entities, including Tata Power, Tata Motors, Tata Consultancy Services, Tata Sponge Iron and Titan.
According to the proposal, Tata Sons will buy all these equity stakeholdings from Tata Steel, effectively infusing that much cash into the steel company. Similarly, Tata Motors, in turn, holds equity stakes in Tata Capital, Tata Chemicals, Tata Steel, Tata Sons, among others, which it would sell to the parent company as part of the plan. The entire exercise is likely to take about three-four quarters.