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Mistry welcomes NCLAT ruling, demands complete transparency from Tata Group

Mistry welcomes NCLAT ruling, demands complete transparency from Tata Group

Tata Sons on Thursday got the shareholders approval to convert it into a private company from a public limited holding that will help it become more swift in decision making. The appellate tribunal directed the Mumbai bench of the National Company Law Tribunal (NCLT) to allow the Mistry family firms to present their case and decide on it on merits within three months.

The resolution was passed by shareholders on Thursday with the "requisite majority" of more than 75%. The ruling comes after the Mistry camp filed an appeal contesting the decision of the National Company Law Tribunal (NCLT), which rejected its plea against Tata Sons on grounds of maintainability.

In January this year, the Tata Group appointed N Chandrasekaran a chairman of the group.

The appellate tribunal has granted waiver in the filing criteria of having 10 per cent shares of the company.

He said it's a fit case for waiver in the interest of the minority shareholders. "Tata sons will continue to defend its position at all appropriate legal forums". If this happens, it would dilute the Cyrus Mistry family's hold over Tata Sons from 18.4% to 2.82%.

The Mistry family, which holds 18.4 percent stake of Tata Sons, owns just 20,000 preference shares. The tribunal had concluded its hearing on July 24 and reserved its judgement.

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Tata Sons began its journey on 8 November 1917 when it was incorporated as a private limited company under the Indian Companies Act 1913.

The amended petition is also likely to oppose Tata's move to make Tata Sons private citing oppression of minority shareholders in the hands of majority shareholders, said sources. The switch, according to Tata Sons, is chiefly because its status of "deemed public company" is not statutorily recognised under the Companies Act, 2013. The NCLT had initially insisted Mistry's lawyers should argue their main case - that of oppression of minority shareholders and mismanagement at Tata Sons.

When asked to comment on the developments, C. Aryama Sundaram, counsel for Mr. Mistry's investment firms told The Hindu, "We are happy with the NCLAT order as the order vindicates our stand on the maintainability of the plea".

The appellate tribunal upheld the waiver of the minimum shareholding rule but dismissed another petition on maintainability. The statement issued by Mistry's office said: "We will continue to pursue the highest standards of corporate governance and demand complete transparency of the group for the benefit of all the millions of shareholders, and indeed, the employees of the Tata Group companies".

"These are proceedings to protect and reinforce the values for which the Founders of the Tata Group have given us the legacy that we should strive never to lose", the statement added.

The bench also accepted that the two majority shareholders - Ratan Tata and Narotam Sekhsaria - hold 31 per cent and 17 per cent respectively and as such none of the other 49 members of Tata Sons would be eligible to move Court at all if the 10 per cent shareholding requirement was imposed.