In the ongoing leadership tussle at Tata Group, the camp of Ratan Tata got a shot in the arm after the country’s market regulator ruled there was nothing wrong if the company seeks the expertise of the “Chairman Emeritus” even after he has left the company.
However, Securities and Exchange Board of India also called for stricter rules to govern removal of independent directors.
After Tata axed Cyrus Mistry on October 24, the former chairman has aired concerns over corporate governance problems at the nation’s biggest conglomerate. These have included allegations of improper interference by the Tata patriarch.
Mistry had filed a petition at the National Company Law Tribunal on December 20 alleging that Tata was influencing key decisions in the functioning of the conglomerate at a time when he did not have any managerial role. The petition was filed through Mistry’s investment firms. It said Tata acted as the “super controller” of the group,
giving direction to the trustees and the nominee directors of Tata.
Sebi officials claim they carried out a detailed scrutiny of any possible breach of securities laws and found no serious breach. However, the regulator felt the Tata-Mistry episode has shown that further tightening of rules may be required for removal of an independent director. Nusli Wadia was removed from the board of Tata group companies including Tata Steel, Tata Motors and Tata Chemicals for backing Mistry.