Comments
Capital markets regulator SEBI has found no merit in Tata Sons’ ousted chairman Cyrus Mistry’s allegation of violation of insider trading norms in Tata Group companies.
Going by the minutes of the SEBI board meeting held on January 14, the board observed that sharing of information with the Chairman Emeritus is done with the aim of benefiting from his valuable expertise. When a person is appointed Chairman Emeritus, the board of directors may discuss the corporate performance, information pertaining to mergers and acquisitions, divestments and other price-sensitive information with a view to benefit from the experience of that person. Sometimes, sensitive documents pertaining to board and committee meetings can be circulated to him under the current law, it felt.
In a petition to the National Company Law Tribunal on December 20, Mistry had charged Ratan Tata with having influenced key decisions of the conglomerate at a time when he did not have any managerial role and with having sought price-sensitive information from group companies.
The petition, filed by Mistry’s investment firms, said Tata acted as the ‘super controller’ of the group, giving directions to the trustees and nominee directors of Tata Trusts, which hold two-thirds stake in holding company Tata Sons. On allegations of influence wielded by Ratan Tata in commercial decisions taken by Tata companies, the board said the audit committee and board of directors are the best decision-makers as these are taken based on the facts and circumstances of each case, keeping in mind legal provisions and best interests of the company. The intervention of the regulator is not envisaged in such situations unless there appears to be violation of securities laws, it said.
Mistry also raised concern over promoters voting on resolutions mooted to remove independent director(s). The average shareholding of promoters in Nifty 50 companies is 45.09 per cent and in BSE 30 companies is 43.32 per cent as on September 30, 2016. Thus, they exercise high degree of control in these companies. Therefore, if promoters so wish, they can remove an independent director as removal of a director requires only an ordinary resolution in which promoters also participate. The SEBI board said there is no restriction on promoters voting on such resolutions.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.