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Mumbai-based proxy advisory IiAS has asked public shareholders to vote in favour of removing Cyrus Mistry as Chairman of Tata Consultancy Services, the country’s largest software company. TCS has called for an extraordinary general meeting of all shareholders on December 13.
In its voting recommendation statement to shareholders, Institutional Investor Advisory Services (IiAS) said, “Our decision focusses on an outcome that enables Tata companies to operate with minimum disruption – by maintaining the existing chain of command between Tata Sons, the largest shareholder, and TCS, the operating company. Further, IiAS believes Cyrus Mistry’s position as a director of TCS was a consequence of his position as Chairperson of Tata Sons. With his removal as Chairperson of Tata Sons, his continuing on TCS’ board as a non-independent director becomes untenable.”
In April 2012, Cyrus Mistry became Chairperson of TCS after being appointed Chairperson and Executive Director of Tata Sons, TCS’ holding company. However, last month, Tata Sons announced that its board had decided to replace Cyrus Mistry, setting in motion the process for his ouster from several group companies, including TCS.
Not endorsement for removal TCS, in which Tata Sons holds 73.26 per cent, is the first Tata company to hold an EGM for Mistry’s removal as director. His dismissal has been supported by TCS’ board, which has already appointed Ishaat Hussain its new Chairperson, another Tata Sons’ representative.
However, IiAS said its voting recommendation is not an endorsement of Cyrus Mistry’s removal from the chairpersonship of Tata Sons. “Public statements from both Cyrus Mistry and Tata Sons do not provide any meaningful information, thus making it impossible to decide whether the group’s decision was well-founded,” IiAS’s statement said.
“We are aware that the boards, and the independent directors of some Tata companies (Indian Hotels and Tata Chemicals), have come out unequivocally in support of Cyrus Mistry,” the statement added.
Friction possible “But Cyrus Mistry’s currently remaining on the board is likely to lead to unnecessary friction between the operating companies and Tata Sons, the largest shareholder. Therefore, our intent is to provide a clean slate and an occasion to overhaul the structural issues, which may have been present all along, but have surfaced with this sacking.”
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