Tata Sons, the promoter of the $105 billion Tata Group, on Thursday won the support of its shareholders to convert itself into a private limited company, news agency PTI reported. 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, a Tata Sons source was quoted by PTI as saying.
A public limited company allows shareholders to legally sell their stake to anyone. But 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.
Tata Trusts holds 66 per cent in Tata Sons. A resolution placed before the AGM pertained to changing the closely held company's registration to a private limited firm as opposed to a public one, the report said. It also sought to amend the memorandum of association to change its name to Tata Sons Pvt Ltd from Tata Sons Ltd, the report said.
It added that the voting pattern was not immediately known. The support of at least 75 per cent of shareholders was required for the proposal to go through.
Last week, a Tata Sons spokesperson had stated, "The reinstatement of Tata Sons as a private company was considered by the board to be in the best interest of the company."
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 erupting between Mistry, interim chairman and patriarch Ratan Tata and other senior officials of the group.
N Chandrasekaran was appointed chairman of the group in January this year.
In a notice to its shareholders, the Tata Sons board had sought approval through special resolutions to amend its article of associations to bring about the change. The switch, according to Tata Sons, is chiefly because its status of 'deemed public company' is not statutorily recognised under the Companies Act, 2013.