Tata Consultancy Services Ltd (TCS) shareholders voted to remove Cyrus Mistry, the ousted chairman of Tata Sons, as a director, according to the results of an extraordinary general meeting on Tuesday.
About 93 percent of TCS shareholders, who cast their vote, were in favour of removing Mistry, TCS said in a regulatory filing.
His ouster comes as no surprise given Tata Sons majority stake in the company, about 73 percent as of September end, according to Thomson Reuters data.
TCS, India’s biggest technology services firm by sales, contributes the bulk of the group’s revenue and profit.
About 43 percent of TCS’s institutional holders who voted were against the removal of Mistry, according to the filing. Interestingly, 78 percent of voting shareholders who were not promoters or institutional holders were against Mistry’s ouster.
The divisions within the minority shareholders on the contentious issue were out in the open with a few minority shareholders voicing support for Mistry. As many as 38 shareholders spoke at the 150-minute long EGM. Even though a bulk of them voiced support for Tata, those handful who affirmed their support to Mistry were applauded.
Mistry’s office, meanwhile, issued a statement late in the night, claiming moral victory.
“Almost 20 percent of shareholders of TCS that accounts for more than 70 percent of non promoter shareholders supported Cyrus by voting against the resolution or abstained (expressing their disapproval of the promoter actions),” said the statement.
In a bitter boardroom coup in October, Mistry was ousted as the chairman of Tata Sons, the holding firm for the $100 billion steel-to-software conglomerate, and group patriarch Ratan Tata returned to the helm temporarily.
A public power struggle has since ensued between the two sides. Mistry, however, still sits on the boards of several group companies. Tata Sons has called shareholder meetings at these companies over the next few days to vote on his removal.
Indian Hotels Co Ltd, Tata Steel and Tata Motors will hold their shareholder meetings next week.
“The fight is a matter of principle rather than facing the foregone outcome (of this meeting),” Mistry said ahead of the TCS shareholder meet in an indication that he had expected to be ousted given Tata Sons’ majority shareholding in TCS.
“The very future of TCS hinges on good governance and ethical practices. In the past several weeks, we have seen good governance being thrown to the wind in every sense of the term, replaced by whims, fancies and personal agenda,” he said.
Since his ouster from Tata Sons, Mistry has attacked the group’s corporate governance standards several times, saying that his efforts to establish stronger guidelines contributed to his removal.
“Whatever be the decibel level of the voice that would drown your vote, I call on you to vote with your conscience and send a signal that catalyses a larger discussion on governance reforms,” Mistry said.
Independent director Aman Mehta, who officiated the meeting after interim chairman Ishaat Hussain recused himself, said Mistry had lost “the trust and confidence” of the promoter group (Tata Sons and Tata Trusts) which had nominated him and it was in best interest of TCS that he leave now.
Asserting that the core issue goes far beyond the “performance or competence”, Mehta said, “It seems to me that the real issue here is one of trust and confidence of the promoter group in its nominated chairman.”
“Independent directors of TCS have met separately and have reviewed the whole issue in some details. It is clear to all of us that the current issue can have some materially negative effect on the functioning of the company,” he said.
With Reuters and PTI
First Published On : Dec 14, 2016 07:45 IST