in Focus Apurv Sardeshmukh PARTNERLEGASIS PARTNERS March 30 2019 Tata Mistry SERIES OF EVENTS Date Event Nov 1917 Incorporation of Tata Sons March1991 Ratan Tata a ppointed as Chairman of Tata Sons and Tata Group ID: 810473
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Slide1
Boardroom Battles - Corporate Governance
in Focus
Apurv Sardeshmukh
PARTNER,LEGASIS PARTNERS
March 30, 2019.
Slide2Tata /Mistry
Slide3SERIES OF EVENTS
Date
Event
Nov, 1917
Incorporation of Tata Sons.
March,1991
Ratan Tata
a
ppointed as Chairman of Tata Sons and Tata Group.Sept, 2006Cyrus Mistry appointed on the Board of Tata Sons.Dec, 2012Ratan Tata retires as Chairman.Cyrus Mistry appointed as Chairman.April 2014AOA of Tata Sons amended.Oct 24, 2016Cyrus Mistry removed as Chairman of Tata Sons. Ratan Tata appointed as Interim Chairman.
Slide4SERIES OF EVENTS
Date
Event
Oct 25, 2016
Cyrus
Mistry writes letter to Tata Sons Board alleging several Corporate Governance lapses at the Group.
Oct
27,
2016Tata Sons responds to Mistry’s letter in 2 page reply stating that before an appropriate forum a detailed response would be given.Nov 25,2016Mistry moves NCLT against Ratan Tata, Tata Sons and some of its directors.Dec 20, 2016SP Group Investment Companies move NCLT against Ratan Tata, Tata Sons, Tata Trusts, some of its directors and add Cyrus Mistry as respondent.
Slide5Oppression/Mismanagement- Section 241- Companies Act 2013.
Threshold for filing? Equity Capital ? Preference + Equity.
DISPUTE BEFORE THE NCLT
Slide6no
change or no new concept was brought in by Section 244 of the new act with respect to the requirements to make an application under the Act and in fact the old section of the law was in toto lifted.
Hence
, the ratio decided in
Northern Projects Ltd. v/s Blue Coast Hotels and Resorts Ltd.
is still relevant and hence, it cannot be contended by the Mistry Companies that issued share capital means issued equity share capital only.
NCLT Decision
Slide7Waiver not Granted.
Cause of Action.
Oppression Mismanagement Continuous.
NCLT WAIVER DECISION
Slide8The tribunal is to steer clear of the merits of the case and should instead take into account other special considerations demonstrated in the waiver application.
Found that the allegations made in the petition filed by the Mistry group related to instances of oppression and mismanagement, although several of them related to group companies.
NCLAT
Slide9Ouster of an employee of the Company
-not oppression.Rights of the majority cannot be curtailed by the minority -powers entrusted upon the minority cannot be used as a weapon against the majority but it is a right that has been given to them as against prejudicial oppression by the majority.
NCLT
Slide10Is it an employee dispute?
Amendments to the Article?Tata Sons Private Company. Mistry Shares?
NCLAT
Slide11Any Other Business in the Agenda?
Role of Chairman?Role of Independent Directors?
ISSUES
Slide12INFOSYS VS INFOSYS
Slide13SERIES OF EVENTS
Date
Event
1981
Infosys was co-founded in 1981
by seven engineers.
1981 to 2014
Since
inception, the position of CEO in Infosys was held by promoters of the Company like Mr. Narayan Murthy (CEO till 2002, Chairman 2002-2011, returned in June 2013 for 5 years), Mr. Nandan Nilekani, Mr. S. Gopalkrishnan etc.Aug 1, 2014
Mr.
Vishal
Sikka
was appointed as the of CEO & MD on to become the 1
st
non- promoter CEO of the Company
Oct 2014
Narayan
Murthy steps down at Company’s 30
th
AGM- Founder shareholder
Jan
13,
2
017
Infosys published
their Report of third quarter of the Financial Year 2016-2017.
9000 employees were “released”
Slide14SERIES OF EVENTS
Date
Event
Feb, 2017
Allegations were made regarding Corporate Governance Lapses at Infosys and splits between founders and the Board of Directors.
Feb 9,
2017
The main issues of these allegations were CEO Compensation and Severance Pay of former employees.
Feb102017The Founder of Infosys i.e. Narayan Murthy questioned the Pay Package of $11 million after increase of 55% in a year which was offered to Mr. Vishal Sikka.Raised from Rs.47 crores to Rs.74 croresAlso questions asked about Infosys
Panaya Deal
Slide15Corporate Governance?
Disclosures?Role of Management?
ISSUES
Slide16Thank you
apurv.s@legasispartners.in