Corporate romance ends

Corporate romance ends

As the year 2016 comes to a bittersweet end, we reflect back and witness the innumerable historic events happened that raised our eyebrows be it in th

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tata-knmc-621x414livemintAs the year 2016 comes to a bittersweet end, we reflect back and witness the innumerable historic events happened that raised our eyebrows be it in the field of politics, business, defence or other. And in business, one particular event that led to gossip everywhere, especially in the business community, is the end of bonhomie relationship of Tata and Mistry.

It is quite ironic that whenever we used to have a parlance of business ethics, integrity and corporate governance, unwittingly, Tata house makes its mark on the top of the chart along with other few. Apparently, it is not the same anymore since the spat between the mammoth Tata and the left-out Mistry. Be it Mr Arnab Goswami , you, or I, nobody knows what precisely happened inside that board room that very day however it does not take a rocket-scientist to comprehend that it is a sheer case of corporate governance.
Some of the prompt decisions that Mr Tata took which shook the world especially, illegally ousting of Cyrus Mistry is one of them are the reasons to believe that. Many theories are emerging to justify it and one of them is the power clash between the two honchos when Mr Mistry took decisions on the sale of UK steel plant without keeping the Tatas in the loop, which infuriated him or probably funding of Odisha assembly election with Rs 10cr, which was refuted by Tata sons’ nominees as the conglomerate contributes only to parliamentary polls and was not in consonance with Tata’s ethical standards or Tata-Welspun deal in which Mr Mistry isolated the Tata Sons board and did not seek its approval. And there are many more theories which could be the reason or could be just conjectures.

The bottom line is Mr Tata should not have expelled the chairman in this fashion, just because they are the majority shareholders in Tata Sons, this is nothing but the breach of corporate governance. There is a procedure which should have been followed by him, for instance according to Article of Association, a selection committee is supposed to be formed before ousting or replacing a chairman, which was not done. Retirement age policy at the house is 75 years for the directors then how come Mr Tata, who is 79 years old, has become the interim chairman. Just two months before the ousting, Mr Tata inducted two independent directors to the Tata Sons board at his personal request which undermined the role of Nomination and Remuneration committee of Tata Sons and there are many more.

Explicitly, we sure can make out that there is a clash of ethos and way of working between them however still Mr Tata needs to come out and clear the smoke and explain the removal of Mr Mistry to the stakeholders since they have a right to know what the saga is all about. Transparency should be respected at all cost. Let us just hope that he does and it better be a rationale one.