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Tata Sons, the promoter of major operating companies of the Tata group, is planning to convert itself into a private limited firm from a public limited one, which has been opposed by the family of ousted chairman Cyrus Mistry.
In a notice to shareholders ahead of its annual general meeting to be held on 21 September, the company's board had sought approval through special resolutions to amend its article of associations to bring about the change.
When contacted, a Tata Sons spokesperson said:
The proposed switch, according to Tata Sons, is chiefly because its status of 'deemed public company' is not statutorily recognised under the Companies Act, 2013.
The move was, however, been objected to by the Mistry family, which holds 18.4 percent stake in Tata Sons, while Tata Trusts holds 66 percent.
In a letter to the board of directors of Tata Sons, Cyrus Investments Pvt Ltd described the step as "another act of oppression of the minority shareholders of Tata Sons at the hands of majority shareholders".
Cyrus Investments Pvt Ltd and Sterling Investments Corporation of the Mistry family are fighting a legal battle against Tata Sons at the National Company Law Tribunal (NCLT) following the dismissal of Mistry as chairman last year.
The move to convert Tata Sons into a private limited company would put restrictions on "free transferability" of shares of the company and is "yet another attempt by the majority shareholders to oppress minority shareholders", it added.
The letter to the Tata Sons board further alleged that the proposal is a device to "subvert the highest standards of good corporate governance, which is expected to be maintained in a company of the stature and repute as Tata Sons".
Tata Sons spokesperson did not comment on the allegations raised by the Mistry side.
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