Tata Sons get RoC nod to go private
10 Aug 2018
1
Tata Sons, the holding company of the Tata group, has received clearance from the Registrar of Companies (RoC) to change its status from a deemed public limited company to a private limited one, according to the certificate of incorporation filed by the firm.
The Tata move comes as yet another blow for ousted former chairman of Tata Sons, Cyrus Mistry, and the trusts controlled by his family, which has been involved in a legal slugfest with Tata Sons since December 2016.
Cyrus Mistry was removed as chairman of Tata Sons in October 2016.
The private entity status will effectively restrict the Mistry family’s ability to sell its stake in the Tata group holding company to external entities.
The Mistry family firms — Cyrus Investments and Sterling Investment — jointly own 18.4 per cent in Tata Sons’ equity capital. Shareholders of the Tata Trusts-controlled Tata Sons had passed a resolution favouring the conversion of its status at its annual general meeting on September 21, 2017.
Tata Sons had been a private limited company since 1917. It was deemed to be a public company in 1976 on the grounds of turnover according to Section 43(A) of the Companies Act, 1956.
The NCLT bench comprising B S V Prakash Kumar and V Nallasenapathy, in its 9 July order, had justified Tata Sons’ move. The change in status, Kumar said, would not be tantamount to oppression against the Mistry family — the largest shareholder in Tata Sons after Tata Trusts — because the law itself directs the company to become private according to Section 43A (2A) of the Companies Act, 1956.
Under the Companies Act, 2013, there is no provision for a deemed public company. It only has two classes: public company and private. Tata Sons, he added, was at liberty to become a private company.
Tata Sons got RoC’s nod on 6 August, just a day before the National Company Law Appellate Tribunal (NCLAT) in Delhi started hearing the Mistry family’s appeal against the 9 July order of the NCLT, Mumbai. On Wednesday, the appellate tribunal heard a petition filed by Cyrus Investments seeking a stay on the conversion while challenging the July order.
The NCLAT has directed Tata Sons to file an affidavit and written responses by 10 August regarding its conversion into a private limited company from a deemed public company. The two-judge NCLAT bench, headed by Justice S J Mukhopadhyay, said it would hear arguments on 14 August after all documents related to the conversion are presented by Tata Sons in a proper manner and not as “loose documents”.
Tata Sons is the promoter of the major operating Tata companies and holds significant shareholdings in these companies. Tata companies are commonly referred to as the Tata group and the Chairman of Tata Sons as Chairman of the Tata group.
About 66 per cent of the equity capital of Tata Sons is held by philanthropic trusts endowed by members of the Tata family. The largest of these trusts are the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust, which were created by the sons of Jamsetji Nusserwanji Tata, the founder.
