In a huge setback for Tata Sons ousted chairman Cyrus Mistry, the National Company Law Tribunal (NCLT) on Monday dismissed a petition for a waiver to Mistry’s family-owned companies from the shareholding requirement of filing a petition alleging mismanagement and oppression of minority shareholders at Tata Sons Ltd.
A waiver would have allowed Mistry’s family-owned companies to file the petition and be heard on merit.
On March 7, Cyrus Investments Pvt. Ltd and Sterling Investments Pvt. Ltd – two companies owned by Cyrus Mistry’s family – requested the tribunal to waive the requirement that shareholders hold at least 10 percent of a company to file a petition against promoters.
The tribunal said a final order would be issued on Friday.
As per new Companies Act, minority shareholder should be holding at least one-tenth of the “issued share capital” or should represent at least one-tenth of the total number of minority shareholders. The term issued share capital covers not only the issued equity capital but also the issued preference capital.
Tata Sons argued that if preference capital is also considered, the two petitioner firms hold only 2.17 per cent of the total issued share capital of Tata Sons, while the Pallonji Mistry Group holds 18.4 per cent of ordinary share capital.