Tata Sons, the holding company of the $105 billion software-tosteel conglomerate, on Thursday won the approval of its shareholders' to convert itself into a private limited company in what is seen as a major victory for group patriarch Ratan Tata in the fight with ousted chairman Cyrus Mistry.
A spokesman for Mistry declined to immediately comment, while an email sent to the Tata Sons' press office went unanswered.
"The proposal to convert Tata Sons from a public company to a private company constitutes yet another act of oppression of the minority shareholders of Tata Sons at the hands of the majority shareholders", Cyrus Investments said in a letter to Tata Sons' board of directors.
Cyrus Investments Pvt Ltd and Sterling Investments Corporation of the Mistry family are fighting a legal battle against Tata Sons at the National Company Law Tribunal (NCLT) following Mistry's dismissal as chairman past year.
N Chandrasekaran was appointed Chairman in January this year. The holdings of the different group companies in Tata Sons are mostly in single digits, the Mistry family holds 18.4 percent stake in Tata Sons while Ratan Tata holds 66 percent.
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Apart from dilution of transparency and initiation of opaque governance standards, Tata Sons Private Limited is absolved from various legal and regulatory aspects which they had to abide by had they been a public limited company.
Tata Sons on Thursday received investors' nod to change legal status of the holding firm to private limited from public one, limiting in effect Cyrus Mistry family's ability to sell their stake to outsiders.
Tata Sons' preference shares are held by several former Tata veterans and Tata family members. NCLAT bench headed by Chairperson Justice SJ Mukhopadhaya asked NCLT to dispose of the matter in three months.
A Tata Sons spokesperson said: "We strongly believe that the allegations made by the petitioners are without basis and incorrect".
The NCLAT had concluded its hearing on July 24 and reserved its judgement. In a notice to its shareholders, Tata Sons' board had sought approval through special resolutions to amend its article of associations to bring about the change to a private limited company. However, the appellate tribunal upheld the NCLT's order that the petition of the family firms was not maintainable because it lacked the minimum shareholding necessary to raise such issues. Earlier, on April 17, the Mumbai bench of the National Company Law Tribunal (NCLT) had rejected the waiver plea filed by the investment firms while on March 6, it had set aside the one over maintainability. "These are proceedings to protect and reinforce the values for which the Founders of the Tata Group have given us the legacy that we should strive never to lose", a statement noted. The NCLT had initially insisted Mistry's lawyers should argue their main case - that of oppression of minority shareholders and mismanagement at Tata Sons. Mistry's family first invested in Tata Sons in 1965.