The EGM notices may have reached them, but shareholders of TCS, Tata Steel, Tata Motors and Tata Chemicals are none the wiser on why Tata Sons, the dominant shareholder, wants Cyrus Mistry removed as director from the respective Boards.

For, the special notice from Tata Sons requesting an EGM only says that Mistry’s removal is “absolutely necessary”.

“It may be noted that the board of directors of Tata Sons Ltd has lost confidence in Mr Cyrus P Mistry to lead Tata Sons for a combination of several factors. The Tata Sons board, in its collective wisdom, took the decision to replace Mr Mistry. The board had felt that the removal of Mr Mistry as Chairman was absolutely necessary for the future success of the Tata group,” reads the notice.

It goes on to add that “Mistry has made certain unsubstantiated allegations, which cast aspersions not only on Tata Sons and its board of directors, but also on the Tata Group as a whole.... Mr. Mistry’s conduct has caused enormous harm to the Tata group, Tata Motors and its stakeholders, including employees and shareholders.”

JN Gupta, former Executive Director of SEBI and founder of proxy advisory firm Stakeholder Empowerment Services, says “the notice probably does not meet expectations of full and right disclosure.”

A practising chartered accountant who did not wish to be identified pointed out that Tata Sons is not required by law to give an explanation but in the context of the suddenness and the surrounding circumstances, an explanation would have constituted good governance.

The notice draws attention to how the company enjoys the right to use the Tata brand and how “substantial goodwill and benefits accrue to Tata Motors by such usage...”

While some interpret this as a veiled threat to shareholders that voting for Mistry could lead to adverse consequences, Gupta does not see it that way. “The fact is, the companies have been deriving benefit of the Tata brand and that has to be disclosed.”

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