IiAS opposes Tata Motors’ proposal for OP Bhatt’s reappointment

Our Bureau | Updated on: Jun 24, 2022
OP Bhatt, former Chairman of State Bank of India

OP Bhatt, former Chairman of State Bank of India | Photo Credit: SHASHI ASHIWAL

Tata Motors disagrees with IiAS stating that its rationale for recommending against the vote is not in line with statutory requirement

Proxy advisory firm Institutional Investors’ Advisory Services (IiAS) has asked shareholders of Tata Motors to vote against the reappointment of Om Prakash Bhatt for the second term as an independent director, given his long association with Tata Group companies as a director.  

The 71-year-old banking veteran has been on the board of Tata Motors since May 2017, completing his five-year tenure as an independent director last month. He is seeking shareholders’ approval through a special resolution for a second term through till March 2026, when he attains the retirement age of 75.

Bhatt, who is the former Chairman of State Bank of India, has been a board member of Tata Consultancy Services since April 2012 and accordingly his tenure with the group has exceeded 10 years, claimed IiAS. Bhatt is also on the board of Tata Steel since June 2013.

“We believe that the tenure is inversely proportionate to the independence of a director. Therefore, we consider him as non-independent due to his long association (more than 10 years) with the group. IiAS recommends voting against the resolution. The company must reappointment him as a non-independent director,” IiAS said in its report.

Tata Motors’ statement

Tata Motors, however, disagrees with IiAS stating that its rationale for recommending against the vote is not in line with statutory requirement.   

“Pursuant to Regulation 25(2) of the SEBI Listing Regulations, 2015, the maximum tenure of independent directors shall be in accordance with the Companies Act, 2013 and the Rules made thereunder. It may be noted that as per Section 149(10) of the Companies Act, 2013, Bhatt is eligible for re-appointment as an independent director of the company for the second term of up to 5 years which has been restricted to March 7, 2026, when he attains the retirement age of 75 years, as per the terms of the Governance Guidelines for Tata Companies on Board Effectiveness. Also, Bhatt will cease to be a director of the company with effect from March 8, 2026,” Tata Motors stated.

In the explanatory statement in its latest annual report Tata Motors stated that Bhatt is a person of integrity, possesses relevant expertise / experience and fulfills the conditions specified in the Act and the SEBI Listing Regulations for appointment as an Independent Director and he is independent of the management.

“Given his experience, the Board considers it desirable and in the interest of the company to continue Bhatt on the Board of the company and accordingly the Board recommends the re-appointment of Bhatt as an Independent Director as proposed in the Resolution set out at Item No. 6 for approval by the Members,” Tata Motors said.

Published on June 24, 2022
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