In a significant corporate dispute, senior lawyer Abhishek Manu Singhvi, representing Tata Trusts, has stated that a ‘runaway board’ cannot make major decisions when there is an ‘active disagreement’ from 66 percent of shareholders. This conflict arises over the re-appointment of N Chandrasekaran as chairman of Tata Sons.
Here, what has happened unfortunately, is that now you cannot have this famous movie called Runaway Jury. “How do you have shareholder owners who are nullified, who are sidelined, who ultimately, at the end of the day, do not have any say in the board, in particular any chairman?… “It has been brewing for a while. It appears that it is now irreversible, except through a legal battle. I think the ideal situation would be to avoid it some way or the other. But then I am not a principal actor in the dialectics of it. And sometimes, you know, the ideal solutions don’t occur. So be that as it may, I hope it is not too protracted. I hope it is not too nasty or too, you know, brutish.
“So therefore, I think everything should be done in letter and spirit to promote that original hyphen and the umbilical cord. You can’t have a runaway board, which decides things with the active disagreement of a 66 per cent shareholder,” he said.
Referring to the decision to announce the passing of the resolution on the Tata Sons chairman’s reappointment for a period of five years, the lawyer said the “runaway board” can’t act independently of an entity that owns 66 per cent of the salt-to-software conglomerate. He said if the board is allowed to take decisions despite the majority shareholder’s express objection, it would be “disastrous” for corporate governance in India. There is a practical commercial corporate fact of life which you can’t deny,” he said. Singhvi, one of the top lawyers in the country, said the dispute, which began as a corporate disagreement, is veering towards a courtroom battle. But certainly, I think it is headed for some kind of a legal fight,” he said.
