Tata Steel said on Friday (Nov 25) its board has removed Cyrus Mistry as the steel giant’s chairman and appointed independent director OP Bhatt in his place.
'The board of directors through a resolution dated November 25, 2016 passed by majority consent, has decided to replace Cyrus P Mistry as chairman of the board with immediate effect and elected OP Bhatt, an independent director as the chairman of the board,' it said in a regulatory filing.
Tata Steel's board has taken note of the leadership changes at Tata Sons–which holds 29.75% stake in the firm–and had received a special notice from the promoter and principal shareholder to convene an Extraordinary General Meeting (EGM) for removal of Mistry and Nusli Wadia as its directors.
According to officials, six directors of the company supported the resolution for the removal of Mistry at the Friday board meeting while three, including Nusli Wadia and Subodh Bhargava opposed the move.
Tata Steel is the third Tata company to oust Mistry as the chairman. Earlier, TCS and Tata Global Beverages removed him as the Chairman. However, the directors of Tata Chemicals and Indian Hotels supported Mistry.
Bhatt, a former chairman of India’s largest commercial bank State Bank of India, will serve as chairman till outcome of the EGM, it added.
The firm said Bhatt has been appointed the chairman 'keeping in mind principles of good corporate governance and to provide impartial leadership to the company in its preparation and conduct of the EGM'.
This decision was taken to also ensure stability to the company and in the larger interest of Tata Steel’s stakeholders, including but not limited to employees, trading partners, financial stakeholders and local community around its operations, it added.
Besides, in a separate filing, the company said its board has convened the EGM on December 21 for removal of Cyrus Mistry and Nusli Wadia as directors of the company.
The board at its meeting held on November 25, 2016, decided to convene an EGM pursuant to the Special Notice & Requisition dated November 10, 2016, received from Tata Sons.
A source said the Mistry camp was looking at legal options to challenge the Tata Steel resolutions, considering that the independence of few ‘independent directors’would be questioned as some of them were earning from other Tata group companies.
‘We are studying all legal options and a clear picture would emerge by next week,’the source said,adding that the reason given for Mistry’s removal as ‘conflict of interest’is shocking and Sebi must investigate the conflict of interest of some of the directors.
On Friday evening, the Tata Steel website had changed Cyrus Mistry's position on the board of directors page from chairman to not-independent, non-executive director.
The Tatas are likely to bring a different chairman for various group companies instead of the earlier practice of Tata Sons chairman heading important companies in the group like TCS, Tata Steel and Tata Motors.
The war between former Mistry and Ratan Tata erupted after the Tata Sons board ousted Mistry as chairman in a surprise move on October 24.
The board installed 78-year old Tata in his place as interim chairman. Soon after he was removed, Mistry had said Tata Steel is staring at $10 billion (Rs 67,000 crore) of write-downs because of the wrong acquisition decision made by Tata in 2007.