A day after Cyrus Mistry was replaced as Chairman of the Tata Sons board, there is little clarity on the why and what next. But the ‘how’ is down in black and white in the Tata Sons’ Articles of Association (AoA).
Articles of Association: The Fineprint
The AoA sets down the process of appointment and removal of the chairman.
Regarding the appointment process, the AoA says as long as the Tata Trusts own and hold at least 40 percent of Tata Sons:
The AoA specifies that two Tata Trusts – Sir Dorabji Tata Trust and the Sir Ratan Tata Trust – ‘acting jointly, shall have the right to nominate one-third of the prevailing number of directors on the board’.
The AoA says quite the same about removing a chairman of the board.
That means, if there are nine members on the Tata Sons board, the removal of the chairman would require
Rajat Sethi, a partner at law firm S&R Associates confirms this interpretation.
Meanwhile, a Tata Sons spokesperson said in a statement to BloombergQuint, “we have followed the process of law and the AoA.”
(The article was originally published on BloombergQuint.)
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