In a change of stance, the board of Tata Steel has appointed former Chairman of State Bank of India OP Bhatt as Chairman replacing Cyrus P Mistry.
Earlier this month, the board was divided on the decision to remove Mistry as at least three directors objected to such a move.
However, in a special board meeting held on Friday, Tata Steel board members took note of the leadership changes at Tata Sons and the special notice from it to organise an EGM to remove Mistry as director.
Following this, the board passed a resolution with majority consent to replace Mistry as the Chairman of the Board with immediate effect.
The company has also called for an extraordinary general meeting on December 21 to seek shareholders’ approval to remove Mistry and Nusli Wadia as directors of the company.
“The board appointed the independent director as the Chairman keeping in mind the principles of good corporate governance and to provide impartial leadership to the company in its preparation and conduct of the EGM,” the company said in a statement.
The decision was taken to ensure stability to the company and in the larger interest of Tata Steel’s stakeholders, it added.
Sources close to Cyrus Mistry said that there is “unprecedented erosion of core Tata values..each time one thinks the current standard of corporate governance in Tata Group listed companies under the leadership of the Interim Chairman cannot hit a newer low, one has been belied”. Sources said that just minutes before a convened and pre-scheduled Board Meeting, a circular resolution replacing the Chairman for the meeting is said to have been initiated.
“Those involved are representatives of Tata Sons, those drawing large remuneration from other Tata Trustee-controlled companies, and an "independent" director, who is the wife of a newly-inducted Tata trustee, who is also recently nominated director of Tata Sons,” sources close to Mistry said.
Incidentally, in 2007, SBI under OP Bhatt cleared $1 billion loan in five minutes to Tata Steel for acquiring Corus.
Other membersBhatt was appointed as an independent director of Tata Steel in 2013. Other board members of Tata Steel include Eicher Group Chairman Subodh Bhargava; Wadia Group Chairman Nusli Neville Wadia, Independent, Non-Executive Director; Tafe Chairman and Chief Executive Officer, Mallika Srinivasan, Independent, Non-Executive Director; former Corus board members Andrew Robb and Jacobus Schraven, Independent, Non-Executive Directors; Koushik Chatterjee, Group Executive Director (Finance and Corporate); Ishaat Hussain, non-executive director; former Chairman of LIC DK Mehrotra, non-executive director, and TV Narendran, Managing Director, Tata Steel India.