The Mumbai Bench of the National Company Law Tribunal (NCLT) justified Tata Sons’ conversion into a private limited company from a deemed public limited one. This was one among the various points elaborated upon in the 368-page order on the Tata-Mistry verdict on Thursday. The Bench had ruled in favour of Tata Sons on July 9.
Cyrus Mistry’s family, which owns 18.4 per cent in Tata Sons’ equity capital, had moved a petition in the NCLT, opposing Mistry’s sacking in October 2016 as well as the conversion of the Tata group holding company into a private limited company.
Presided over by B S V Prakash Kumar and V Nallasenapathy, the Bench dismissed all allegations and pleas made by the Mistry family firms as it found no merit in the case.
Mistry had contested that taking Tata Sons private would constraint the ability of his family firms to sell their stake. Drawing from the provisions of the Companies Act, 2013, and 1956, Kumar said that Tata Sons was at liberty to go ahead with changing its legal status.
“We are of the view that Section 43A (2A) is still applicable to say that the company is at liberty to inform the RoC (Registrar of Companies) that it has become a private company and thereupon registrar shall substitute the words “private company” for the words “public company,” Kumar said in the order.
The change in status, he added, would not be tantamount to an 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, one is public company and another is private. “If the articles of the company are looked into, it falls within the definition of a private company under new regime as well. Therefore, it is quite obvious that it will continue as private company,” he said.