Economy

Tata Sons seeks shareholders' nod to change status to private limited company

Tata Sons seeks shareholders' nod to change status to private limited company”

As Tata Sons sought shareholders' nod to change the company's status to private limited firm, Cyrus Investments, one of Shapoorji Pallonji family's holding companies, has objected against it.

Cyrus Investments said that the move would oppressed the minority shareholders.

Tata Sons wishes to amend its memorandum of association and articles of association to convert itself from a public limited company to a private limited one, a media reported suggested.

The change in Tata Sons' corporate structure will require to be cleared by a special resolution, needing at least 75 per cent of the votes.

Tata Sons will be called Tata Sons Private Limited once the Tatas-run company changes its structure to a private entity.

The move comes nearly a year after patriarch Ratan Tata ousted Cyrus Mistry as chairman of the US$105 billion cars-to-software group, sparking a corporate showdown that has yet to fully conclude because Mistry's family still owns more than 18 per cent of the holding company. That means the Mistry family could legally sell its stake to one of Tata's rivals, for example, something a private limited company shareholder could not do, according to India's Companies Act.

The objection by Mistry family-owned investment firms comes after months of legal wrangle between two groups following Cyrus Mistry's removal as Chairman of salt-to-steel conglomerate. The holding company's annual general meeting (AGM) is scheduled for September 21.

The proposal to alter Tata Sons' status amounts to "oppression of the minority interests", the Mistry family's investment fund wrote in a letter to the holding company on Thursday. Besides shareholders' approval, the change in its status will also need an approval from the NCLT. In 1975, it became a "deemed public company" under the Companies Act, 1956.

Tata Sons spokesperson says, "As far as Tata Teleservices is concerned, the group is examining all options at this point in time".

However, its AoA remained unchanged, that is it continued to contain features of a private limited company, the letter, which was seen by BusinessLine, added.

However, there is no mandatory requirement for the presence of an independent director in a private limited company.



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