Tata Sons can’t force Mistry to sell shares, says NCLAT

New Delhi, August 24 

The National Company Law Appellate Tribunal (NCLAT) on Friday restrained Tata Sons from forcing ousted chairman Cyrus Mistry’s family out of the holding firm of the $100 billion Tata Group, but refused to stay its conversion to a private company.

The tribunal, in an interim order on Mistry’s plea for putting on hold the approval for conversion of Tata Sons’ into a private company from a public limited company, admitted his petition against the move and posted the matter for hearing on September 24.

The Mistry family has also challenged the order of the Mumbai Bench of the National Company Law Tribunal that upheld ouster of Cyrus as Chairman of Tata Sons in a boardroom coup in 2016.

Besides change to a private company, the Mistry family, which is the largest shareholder in Tata Sons, had in NCLAT challenged the move by the company to restrict shareholders from freely selling their stake and the Article 75 of the articles of association that can be used by the Board to force a shareholder to sell out.

“Taking into consideration the facts and that the appeal is pending and if the Appellants (Mistry) are forced to sell their shares which may affect the merits of the appeal, as they will cease to be member(s) of the company (Tata Sons).

“We direct the Respondents (Tatas) not to take any step in terms of Article 75 for transfer of shares of minority shareholders like Appellants (Mistry) and others during the pendency of the appeal,” the tribunal said.

Over change of status of Tata Sons, NCLAT said, “No further interim order is required to be passed at this stage”.

Tata Sons has contended that it was always a closely held private entity but was considered a public limited company due to its size under an old legal provision.

The status of the public limited company allowed investors greater flexibility in transferring their shares.

A few years ago, the law was altered, allowing Tata Sons’ shareholders to approve a change to its legal status last year, overriding objections from Mistry.

“The appeal is admitted for hearing,” the tribunal said while directing the petition filed by the investment firms supporting Mistry to be listed on September 24, 2018, for next hearing.

A two-member Bench headed by its Chairperson Justice SJ Mukhopadhaya has directed Tata Sons and other respondents to file their reply within 10 days. — PTI

Tatas asked to file reply within 10 days 

• The tribunal, in an interim order on Mistry’s plea for putting on hold the approval for conversion of Tata Sons’ into a private company from a public limited company, posted the matter for hearing on September 24
• The Mistry family has also challenged the order of the Mumbai Bench of the National Company Law Tribunal that upheld ouster of Cyrus as Chairman of Tata Sons in a boardroom coup in 2016
• Tata Sons and other respondents have been asked to file their reply within 10 days.