Share pledge issue: SP Group slaps notice on Tata Sons’ board members

The Shapoorji Pallonji Group has slapped a notice against Tata Sons’ board members questioning their decision to block Mistry family from raising funds against the shares they hold in the Tata group firm.

In the notice, SP Group has given three days’ time to respond to the notice, failing which the SP Group will seek appropriate remedies including a claim for damages for the harm inflicted.

The notice has sought an explanation from board members, particularly the independent directors (both individually and collectively) whether the oppressive action that causes prejudice to a minority shareholder was with their concurrence.

SP Group has highlighted there is no restriction in the Articles of Association (AoA) of Tata Sons that prohibit the pledge of shares.

Further, the group also stated that the Tatas had failed to disclose a crucial fact that the lending documents entered into by SP Group had a specific covenant that lenders would comply with the AOA of Tata Sons in the event that a pledge of shares were ever invoked.

The SP Group also added that the Tatas were intentionally misleading the Supreme Court by suppressing this vital information.

The Mistry firms also stated that Tata’s application to block funding, after definitive documents were signed with a global investor, showed the “vindictive, prejudicial and oppressive nature”.

An SP Group spokesperson stated that this move was solely intended to inflict irreparable harm on the SP Group.

The malafide motive of Tatas move was further evident by the fact that Tatas kept their application on hold, purportedly for curing defects, despite moving a plea for urgency before the Supreme Court.

The Mistry firms stated that under the Companies Act, the independent directors on the Tata Sons board were duty bound to protect the interests of minority shareholders.

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