Tata Sons wins shareholders' approval to become a private limited company, major setback for Cyrus Mistry
Tata Trusts own a majority 66 per cent stake in Tata Sons with the biggest two of them being the Sir Dorabji Tata Trust and Sir Ratan Tata Trust. Cyrus Mistry's family owns a 18.4 per cent in Tata Sons while the remaining shares are held by the Tata family, a few group companies and individuals.
- Sep 22, 2017,
- Updated Sep 22, 2017 9:07 AM IST
Tata Sons, the holding company of the $105 billion software-tosteel conglomerate, on Thursday won the approval of its shareholders' to convert itself into a private limited company in what is seen as a major victory for group patriarch Ratan Tata in the fight with ousted chairman Cyrus Mistry.
The switch from being a public limited company to a private entity is expected to usher in a quicker decision making process in Tata Sons housed at Mumbai's historic Bombay House.
It is also expected in effect to limit the Mistry family's scope to sell their stake to outsiders. Mistry had launched an aggressive campaign ahead of the annual general meeting (AGM) to prevent the Tata Group from getting the three-fourths majority for the approval of the proposal.
Tata Trusts own a majority 66 per cent stake in Tata Sons with the biggest two of them being the Sir Dorabji Tata Trust and Sir Ratan Tata Trust. Cyrus Mistry's family owns a 18.4 per cent in Tata Sons while the remaining shares are held by the Tata family, a few group companies and individuals.
All resolutions placed before the annual general meeting of shareholders were passed with requisite majority, a Tata Sons executive said. The Mistry family had termed the move as oppression of minority interests and stated that it would vote against the proposal.
A public limited company allows shareholders to legally sell their stake to anyone. But a shareholder of a private limited firm cannot sell the shares to outside investors. The move comes almost a year after Mistry was ousted as chairman of the Tata Group, triggering a bitter boardroom battle.
N Chandrasekaran was appointed Chairman in January this year. In a notice to its shareholders, Tata Sons' board had sought approval through special resolutions to amend its article of associations to bring about the change to a private limited company.
It has also sought to amend the memorandum of association to change its name to Tata Sons Pvt Ltd from Tata Sons Ltd. The switch, according to Tata Sons, is chiefly because its status of 'deemed public company' is not statutorily recognised under the Companies Act, 2013.
Tata Sons, the holding company of the $105 billion software-tosteel conglomerate, on Thursday won the approval of its shareholders' to convert itself into a private limited company in what is seen as a major victory for group patriarch Ratan Tata in the fight with ousted chairman Cyrus Mistry.
The switch from being a public limited company to a private entity is expected to usher in a quicker decision making process in Tata Sons housed at Mumbai's historic Bombay House.
It is also expected in effect to limit the Mistry family's scope to sell their stake to outsiders. Mistry had launched an aggressive campaign ahead of the annual general meeting (AGM) to prevent the Tata Group from getting the three-fourths majority for the approval of the proposal.
Tata Trusts own a majority 66 per cent stake in Tata Sons with the biggest two of them being the Sir Dorabji Tata Trust and Sir Ratan Tata Trust. Cyrus Mistry's family owns a 18.4 per cent in Tata Sons while the remaining shares are held by the Tata family, a few group companies and individuals.
All resolutions placed before the annual general meeting of shareholders were passed with requisite majority, a Tata Sons executive said. The Mistry family had termed the move as oppression of minority interests and stated that it would vote against the proposal.
A public limited company allows shareholders to legally sell their stake to anyone. But a shareholder of a private limited firm cannot sell the shares to outside investors. The move comes almost a year after Mistry was ousted as chairman of the Tata Group, triggering a bitter boardroom battle.
N Chandrasekaran was appointed Chairman in January this year. In a notice to its shareholders, Tata Sons' board had sought approval through special resolutions to amend its article of associations to bring about the change to a private limited company.
It has also sought to amend the memorandum of association to change its name to Tata Sons Pvt Ltd from Tata Sons Ltd. The switch, according to Tata Sons, is chiefly because its status of 'deemed public company' is not statutorily recognised under the Companies Act, 2013.