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Tata Sons on Thursday received shareholders’ approval to convert its legal status to a private company, a move that will make it more agile and swift-footed. The holding company of all Tata Group firms got the approval at its annual general meeting held at the group’s headquarters, Bombay House.
“The resolutions were passed with requisite majority,” a source in Tata Sons told BusinessLine .
The company also discussed offering voting rights to preferential shareholders at the AGM, which also received required majority, said another source, close to the development.
“This was much on the expected lines, and nothing much is going to change in the immediate future. Now Tata Sons is a private company, the majority shareholders will have greater flexibility in decision-making,” Ramesh Vaidyanathan, Managing Partner at Advaya Legal, told BusinessLine .
Tata Trusts — with the biggest of them being Sir Dorabji Tata Trust and Sir Ratan Tata Trust — owns two-thirds of Tata Sons. Tata Trusts’ Chairman Ratan Tata owns 10.5 lakh, Narotam Sekhsaria 5.7 lakh and NA Soonawala 2.6 lakh preference shares.
Shapoorji Pallonji group through two of family firms — Cyrus Investments and Sterling Investment Corporation — owns 18.37 per cent stake in Tata Sons. However, this translates to a meagre 20,000 preference shares.
Tata Sons, in its notice convening the AGM, had sought shareholders’ approval to convert the firm from a public to a private company. The move was opposed by ousted chairman Cyrus Mistry who termed it as a move to oppress minority shareholders.
Tata Sons was incorporated under the Companies Act, 1913, when its Articles of Association (AoA) had the features of a private limited company. With effect from May 1, 1975, Tata Sons became a “deemed public company” under the provisions of the Companies Act, 1956.
However, its AoA remained unchanged, that is, it continued to contain features of a private limited company, Mistry alleged.
Thereafter, the Companies Act was amended in 2000 under which Tata Sons was required to inform the Registrar of Companies (RoC) if it had become a private company.
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