Tata Sons gets investors’ nod to go private

Tata Sons, the holding company of the $105 billion Tata Group, today secured approval of its shareholders to convert itself into a private limited company, making the partial victory of its detractor Cyrus Modi at the NCALT also look shortlived.

Tata Trusts holds 66 per cent in Tata Sons. A resolution placed at the annual general meeting (AGM) sough a change in the closely held company's registration to a private limited firm from a public one.

The resolution also sought to amend the memorandum of association to change its name to Tata Sons Pvt Ltd from Tata Sons Ltd.

Shareholders at the group's annual general meeting (AGM) also discussed giving voting rights to preferential shareholders of the holding company.

The development effectively limits the Cyrus Mistry family's ability to sell their stake in the group to outsiders.

All resolutions placed before the annual general meeting (AGM) of shareholders were passed with requisite majority, PTI quoted a Tata Sons source as saying.

While a public limited company allows shareholders to legally sell their stake to anyone, a shareholder of a private limited firm cannot sell the shares to outside investors.

The Mistry family, which owns 18.4 per cent of Tata Sons through Cyrus Investments Pvt Ltd, had in a letter to the board of directors of Tata Sons last week, described the move as "another act of oppression of the minority interests" and stated that it would vote against the proposal.

While the Mistry family firms have voting rights below 10 per cent, the exact voting strength of Tata Trusts is not known. However, to pass the resolution in its favour Tata Trusts needs at least 75 per cent of the votes.

The move comes almost a year after Mistry was ousted as chairman of the Tata Group, triggering a bitter boardroom and media battle with allegations and counter-allegations between Mistry and Tata Group.

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

The change to a private company status, according to Tata Sons, is chiefly because its status of 'deemed public company' is not statutorily recognised under the Companies Act, 2013.

In a notice to shareholders, the Tata Sons board had sought approval through special resolutions to amend its article of associations to bring about the change.