Cyrus Investments Pvt. Ltd of Mistry family has now written a letter to the board of Tata Sons, objecting the proposal and terming it as "yet another weapon" to exploit the minority shareholders of the firm.
In total, Mistry family jointly owns 18.4% in Tata Sons via Cyrus Investments and Sterling Investments Pvt. Ltd.
The proposal gets okayed if 75% of the shareholders agree.
"Withdraw the AGM notice and the proposal"
"The true effect of converting the status of Tata Sons into a private company is to introduce/reintroduce restrictions on transferability of shares which otherwise today are void and unenforceable under law and norm applicable to public companies"
Curbing Mistrys with a master stroke
A private firm has the right to restrict shares from changing hands under the Companies Act, 2013. This gives Ratan Tata a greater control over the firm.
Tata Sons' Articles of Association does have a clause, which restricts share transfer but that was "unenforceable" under the current law.
However, if it becomes private, the rights of the minority shareholders would get heavily diluted.
Expect more trouble ahead
However, conversion of a firm from a public enterprise to a private one requires the permission of National Company Law Tribunal, as per the Companies Act, 2013.
Mistry family would approach NCLT with their grievances if this move gains traction.
Meanwhile, a Tata Sons spokesperson said, "Tata Sons as a private company was considered by the board to be in its best interest."