While the Tata Group says that independent directors should ensure that future of group companies are protected, Mistry says he built a corporate governance framework that balanced minority shareholder rights.
New Delhi: With the independent directors of two Tata Group firms – Indian Hotels and Tata Chemicals – coming out in favour of ousted Tata Sons chairman Cyrus Mistry, the Tata and Mistry camps on Sunday engaged in a heated exchange of words over how independent directors should view the removal of Mistry.
A statement from Mistry’s office on early Sunday morning defended the decisions of the independent directors, pointing out that when Mistry initially assumed his position, he set out to create a corporate governance framework that balanced “promoters interest with minority shareholder rights”.
Mistry’s statement said it was unfortunate to question the independence of the directors given that they were well-known names in the Indian business fraternity.
The independent directors on the Indian Hotels board include Deepak Parekh, chairman of Indian mortgage lender HDFC Ltd and Nusli Wadia, chairman of the Wadia Group, a textiles-to-aviation conglomerate.
He added that six out of nine independent directors were appointed during his predecessor Ratan Tata’s tenure.
In a boardroom battle last month Mistry was ousted as chairman of Tata Sons, with patriarch Ratan Tata back at the helm temporarily. A bitter public spat has since ensued between the two sides. While Tata Sons pins Mistry’s removal on his performance, a breach of trust and several other factors, Mistry in an earlier letter blamed Ratan Tata for some of the legacy issues the group faces and highlighted corporate governance failures at some operating companies.
Mistry in the statement on Sunday said the strategy of individual group companies should be created by their own management and approved by their own board of directors.
This would allow the independent directors to ensure the rights of minority shareholders were in sync with that company’s business model, Mistry said.
Tata Group responds
In a statement on Sunday evening, stated that it already “put forward facts so that the decision of the Tata Sons Board, to replace Mr. Cyrus P. Mistry as Chairman, is seen in the desired perspective.”
In a cryptically worded statement, the Tata Sons board also put out an appeal to the boards of its group companies, obliquely referencing the surprising defiance of Tata Chemicals and Indian Hotels’ independent directors.
“In the light of the developments since November 4, 2016, Tata Sons reiterates that it is crucially important for Boards, including independent directors, to consider that their views and positions ensure that the future of Tata companies is protected, taking into consideration the interest of all stakeholders,” the statement said.
With inputs from Reuters