Tata Sons will seek minority shareholder nod to amend the company's Articles of Association (AoA) and Memorandum of Association (MoA) to make it a private limited company from a public limited one, sources tell CNBC-TV18.
If the shareholders approve the changes, Tata Sons will be renamed as Tata Sons Private Ltd. from Tata Sons Ltd. The change, proposed ahead of the annual general meeting (AGM) slated for September 21, will require to be cleared by NCLT. Along with this, 75 percent of minority shareholders will have to grant approval.
“The reinstatement of Tata Sons as a private company was considered by the Board to be in the best interest of the Company,” the company said.
Meanwhile, Shapoorji Pallonji has opposed the move saying, “The proposal to convert Tata Sons from a public company to a private company constitutes yet another act of oppression of the minority shareholders of Tata Sons at the hands of the majority shareholders.”
The company’s rationale behind the conversion into private limited is that it will mean less compliance. Also, transfer of shares can be restricted by adding necessary covenants in the AoA. Other benefits out of this change would be that in a public company restriction on free transferability of shares is not maintainable.
The company’s current shareholding pattern is as follows-
Tata trusts- 66 percent
Shapoorji Pallonji - 18.4 percent
(Via Cyrus investments & Sterling investment)
Rest- 15.6 percent
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