The options before Cyrus Mistry after stepping down

Mumbai: Cyrus Mistry, the ousted chairman of Tata Sons, stepped down from the boards of the group’s listed companies ahead of shareholder meetings called to oust him. He said that going ahead with the extraordinary general meetings (EGMs) was “more destructive than productive” and the interests of the group would be best served by taking it to a new platform.

In that sense, it is just a tactical retreat as Mistry prepares a blueprint for a larger war whose end game, according to him, is “governance reform” in the Tata group. While Mistry remained tight-lipped about this future course of action, here are some of the options he could look at:

Move courts: One thing which Mistry can do is to challenge in the courts whether his removal as Tata Sons was legal. According to the holding firm’s articles of association, a selection committee is needed both to select and replace a chairman. However, the Tatas have said they had sought legal opinion before replacing him and it isn’t clear why Mistry has not pursued this option so far.

Also read: Cyrus Mistry cedes space to take moral high ground

He could also approach the National Company Law Tribunal citing an oppression of minority shareholders.

Go to the regulator: Mistry has been talking about Tata Trusts trustees seeking information directly from Tata operating companies. “Such conduct posted a serious moral hazard apart from a real legal risk… exposing the trustees, the directors and management of Tata Sons as indeed the directors and management of the Tata Group operating companies to risk of violating the need-to-know principle under securities regulations,” he wrote in his representation to shareholders.

This, along with other corporate governance violations allegations he has made in his letter on 25 October, falls in the domain of capital markets regulator Securities and Exchange Board of India.

Approach the government: At the heart of the governance reform which Mistry wants to institute lies the relationship of the Tata Trusts with the group operating companies. He has said the government has an “inherent obligation” to “remedy and repair (the) breakdown” in the governance of Tata Trusts.

In his Monday message, he talked about how the trustees wielded no voting power on Tata Sons shares until 15 years ago, because company law had vested it in the hands of the government.

Go to institutional investors: Mistry could present these issues of corporate governance and ethics to institutional investors and ask them to raise questions with the Tatas.

Also read: The message from Tata group stocks

“We have brought the dialogue on the table, both from the point of view of governance and ethics, and I think that is today in people’s minds. I believe you will see shareholders in the near future demanding (better) governance,” Mistry said in an interview.

Buy shares from the market: Mistry and his family can also buy shares of Tata group companies from the open market, if he thinks that will best serve his interests as a shareholder in the group. The Shapoorji Pallonji group has little more than 18% in Tata Sons and very small stakes in at least one group operating company.

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