The order of the National Company Law Appellate Tribunal (NCLAT) in Cyrus Investments Pvt. Ltd Vs. Tata Sons Ltd. & Ors. (Company Appeal (AT) No. 254 of 2018) is landmark and one that compels a relook at boardrooms and corporate governance.
Following his removal, Mistry, pursuant to the decision of the Board of Directors’ of M/s. Tata Sons Limited, dated 24th October, 2016 as its ‘Executive Chairman’, Mistry/ Minority group of shareholders had moved the NCLT alleging prejudicial and acts of oppression by the majority shareholders backing Tata. Upon the NCLT rejecting the pleas of Mistry/Minority shareholders, Mistry had appealed to the NCLAT.
The NCLAT, in its order finds fault with the conduct of Tata/Majority shareholders in as much as the affirmative voting power of the nominated Directors of the ‘Tata Trusts’ over majority decisions of the Board. Such affirmative voting power has been seen as going against the spirit of independent and effective functioning of Boards. Such voting rights are thus against the spirit of transparent board functioning as managements and boards are expected to conduct themselves as trustees for all stakeholders. The recent recommendations of the Kotak Committee on corporate governance give strength to this expected line of conduct of boards.
The NCLAT order therefore suggests that the fact that the Company (‘Tata Sons Limited’) has suffered loss because of ‘prejudicial’ decisions taken by the Board of Directors. The conduct of the board in the manner in which Mistry was suddenly and hastily removed without any reason and the absence of any discussion in the board meeting followed his removal as Director(s) of different ‘Tata Companies’ did not meet the requirements of transparent and independent functioning of the board.
هذه القصة مأخوذة من طبعة January 2020 من Legal Era.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك ? تسجيل الدخول
هذه القصة مأخوذة من طبعة January 2020 من Legal Era.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك? تسجيل الدخول
If You Think Positive Covid Is A Big Opportunity
Senior Vice President and Head of Legal, ESSAR CAPITAL, Badrinath Durvasula, holds forth on his professional journey, the essence of leadership, working from home, books and more…
PROJECT DEVELOPMENT
JOINT VENTURE TRANSACTIONS
NEW ARBITRATION RULES
PUBLISHED BY THE LONDON COURT OF INTERNATIONAL ARBITRATION (LCIA) AND INTERNATIONAL CHAMBER OF COMMERCE (ICC)
M&A in the time of COVID and beyond
What is clear for those engaging in cross-border M&A is that countries around the world are becoming increasingly protective of their economies and industries, with new rules being introduced and existing rules being more widely applied
SWITZERLAND A DIFFERENTIATED APPROACH TO FRAUD
Swiss law interprets the offense of fraud in a special way where in addition to the characteristics of deception and damage as known in many jurisdictions, a qualified lie, i.e. a malicious approach, is required
JOINT VENTURE DISPUTES MEDIATING
Mediation has shown itself to be a powerful tool for bringing a speedy and effective end to crossborder disputes while preserving the commercial relationship between them.
Recognition of HONG KONG INSOLVENCY PROCEEDINGS IN MAINLAND CHINA
A TEST CASE IN THE MAKING?
CONFIDENTIALITY IN ARBITRATION: RECENT DEVELOPMENTS IN SINGAPORE
Two recent developments in Singapore case law and legislation reflect a willingness to preserve confidentiality related obligations in all arbitrations
ESSENTIAL GOODS SERVICES UNDER IBC
WHAT DOES IT ESSENTIALLY MEAN?
A BIDEN ADMINISTRATION'S NEW VISION FOR THE AMERICAN WORKPLACE
A LOOK AT THE KEY CHANGES PRESIDENT-ELECT BIDEN IS LIKELY TO MAKE ONCE HE TAKES OFFICE
