Companies

Allegations of betrayal of trust, dismantling organisational structure astonishing: Mistry

Our Bureau Mumbai | Updated on January 27, 2018 Published on November 13, 2016

Cyrus Mistry

Says new structure in line with tightened corporate governance framework in India

Cyrus Mistry on Sunday said that allegations of betrayal and destruction of the well-established organisational structure of Tata group under his chairmanship were “astonishing” and “far from truth” as he had introduced a corporate governance framework aimed at balancing the promoters’ interests with minority shareholders’ rights.

Last Thursday, Tata Sons had accused Mistry of dismantling the organisational structure of the group in a manner that operating companies were drifting away from the promoter company. Tata Sons had also alleged that Mistry had betrayed the trust reposed in him by trying to take control of group companies.

In response, Mistry’s office today said that the new structure was in line with the corporate governance framework in India, which had been tightened considerably in recent times, with more stringent rules in terms of the independence of directors, women directors, and board evaluation.

“Cyrus Mistry uniquely understood that the Tata Group needs a strong corporate governance framework that balanced the interest of the promoter with minority shareholders’ rights. In addition, between Tata Trusts, Tata Sons, and the Tata operating companies, there was a need to be compliant with the law relating to insider trading by ensuring communication of unpublished price-sensitive information strictly on a need-to-know basis,” it said.

It added that Indian Hotels and Tata Chemicals had eminent corporate leaders, including Deepak Parekh and Keki Dadiseth, on their boards and, therefore, “to question the independence of the directors by Tata Sons, is truly unfortunate, given that the country acknowledges them as stalwarts of India Inc.”

The independent directors on the board of Indian Hotels and Tata Chemicals had backed Mistry last week. Of the nine independent directors, six were appointed during Ratan Tata’s tenure. Two of these directors also serve as trustees of Tata Trusts.

“To suggest that ‘ulterior objectives’ and ‘clever strategy’ can sway these eminent names in undertaking their fiduciary duties and in discharging the duties mandated by statute as independent directors is absolutely astonishing and really speaks to how low Tata Sons has unfortunately stooped in their public statements,” the statement from Mistry’s office said.

Prior to Mistry’s chairmanship, all the board members of Tata Sons, with the exception of himself, were internal to the group. “Today, the structure is exactly the opposite. The requirement to have 30 per cent trust nominees and 30 per cent independent directors meant that in addition to Ishaat Hussain and Mistry, there was possibly only one more senior group centre member who could be on the board of Tata Sons,” the statement said, adding that this limited the involvement of other group representatives on the Tata Sons board.

Published on November 13, 2016
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