Mumbai: Automobile major Tata Motors on Friday said a majority of its shareholders at an extra-ordinary general meeting (EGM) have voted to remove Industrialist Nusli Wadia as an Independent Director of the company.
According to a Tata Motors’ regulatory filing with the BSE, over 69 per cent of total shareholders of the company voted during Thursday’s EGM.
Out of the total number of shareholders who voted, 1,517 — or 71.20 per cent of votes — favoured the resolution to remove Wadia from the Board of Directors.
In contrast, 1,037 shareholders, or 28.80 per cent of votes cast on Thursday, were opposed to the resolution to remove Wadia.
“Wadia was not present and as per his request, his letter dated December 21, 2016, addressed to the shareholders was read out by the Company Secretary,” the automobile major said in its filing.
“On an invitation by the Chairman, Ishaat Hussain representing the requisitionist, Tata Sons, spoke at the meeting clarifying certain issues raised by Wadia.”
The Wadia Group in a statement said that non-promoter shareholders had backed Nusli Wadia during the Tata Motors’ EGM.
“Wadia wins the majority of independent vote — non-promoter public and institutional shareholders support the Independent Director. Out of the retail shareholders Wadia gets 61% and of the institutional share holders Wadia gets 50%,” the statement said.
The statement pointed out that even a promoter entity — Af-Taab Investment (a Tata Power subsidiary) — also voted against the resolution to remove Wadia from the company’s Borad of Directors.
“In fact, only 49.8% votes have been cast in favour of the resolution out of the total voting power available. If one were to look at the non-promoter voting, abstinence amounted to 44.4%, and only 25.8% votes were cast in favour of the resolution,” the statement explained.
“When the Companies Act was amended in 2013, special provisions such as Sec 188 (Related Party Transaction) and for M&As were made wherein Promoter Shareholders have been debarred from voting if they are interested, in order to protect the interest of the minority shareholders.”
“Independent Directors are appointed for protecting the interest of the minority shareholders and have a fiduciary duty towards them. Therefore Promoter Shareholders should be debarred from voting when it comes to the appointment or removal of an Independent Director.”
The statement highlighted that Tata Steel voted in the ‘Tata Motors’ AGM’ against Wadia and that this was in contradiction to their own notice and explanatory statement.
“Thus Tata’s victory is a pyrrhic victory because of the lacuna in the law and if Government and SEBI agree with Wadia’s contention he will be back on the Tata Motors board,” the statement added.
Tata Motors convened the EGM to take shareholders’ approval for the removal of Tata Sons’ ousted Chairman Cyrus Mistry and Independent Director Wadia from its Board of Directors.
However, on Monday, Mistry voluntarily stepped down from his position as non-executive Chairman from the Board of Directors of Tata Motors.
Tata Sons board ousted Mistry on October 24 and appointed Ratan Tata as the Interim Chairman. Wadia’s support for Tata Sons’ ousted Chairman Mistry has led several Tata Group companies to call for their respective EGMs to decide whether or not to remove Wadia from their respective boards.
The development comes few days after Wadia was removed from Tata Steel’s Board of Directors.
On Wednesday, a majority of shareholders of Tata Steel removed Wadia as an Independent Director of the company.
At the end of the last quarter on September 30, Tata Sons held 26.98 per cent stake in the company, while the complete promoter group had a holding of 33.01 per cent in Tata Motors.
On December 13, Tata Sons hiked its stake in Tata Motors buying five crore shares worth Rs 486.13 per share.
Wadia approached the Bombay High Court, which on December 16 declined relief to minority shareholders of three Tata Group companies. They had sought restraint on promoters from voting at EGMs between December 21-23 on a resolution to remove Wadia as an Independent Director.
However, the Bombay High Court has barred Tata Steel, Tata Motors and Tata Chemicals from filling up the vacancy on the Board of Directors till further orders in the matter.