The operating companies of Tata Group have to be run as per the wishes of majority shareholders, Tata Trusts, which has more than two-thirds stake of the holding company Tata Sons, the recent NCLT ruling said.
When Ratan Tata was executive chairman of Tata Sons, he was also the chairman of Tata Trusts. Therefore, there were no apprehensions over rights of majority shareholders being compromised. But when the executive chairman’s post went into the hands of the person who does not belong to the Trusts, to protect the rights of the majority, the Articles of Association article were amended by Tata Sons under the leadership of Mistry, who was the chairman of Tata Sons.
In December 2012, Ratan Tata said that in future with the chairman of the Tata Trusts and Tata Sons not likely to be the same individual, it would be desirable to enter into an agreement between the Trusts and the Tata Sons to clarify the involvement of Trusts in terms of strategic plans, annual plans and divestment of shareholdings.
When Cyrus was Tata Sons chairman, he was under the impression that he would be given a free hand to run the affairs of the company and exercise powers the way Ratan Tata did forgetting that Tata wore two hats as chairman of Tata Trusts and Tata Sons which was not the case with Mistry, the ruling stated.
The SP Group became shareholders in the company in 1965 buying shares from the Dinshaw Group.
The SP Group holds 18% shares as a minority investor without any special rights in the Articles of Association. They are not founder members and are investors and as equity shareholders earned more than Rs 800 crore as dividends till date.
In the company petition, the SP Group has been mentioned as the single largest individual group next to Tata Trusts, partners of the company but projected themselves as minority shareholders having a stake valued at Rs 1,00,000 crore. Tata Sons, which was established as a trading enterprise in 1868, is two-thirds owned by philanthropic trusts led by Sir Dorabji Tata Trusts and Sir Ratan Tata Trust.