Institute of Company Secretaries sees no corporate governance norms breach, says a chairman can be removed without prior intimation
The Tatas are unlikely to face troubles over allegations of breach of corporate governance norms while dealing with Cyrus Mistry, particularly while removing him as the head of Tata Sons.
Institute of Company Secretaries of India (ICSI), the standard setting body for corporate governance, believes a chairman of a company can be removed without prior intimation of such an agenda for a Board meeting in cases of prior knowledge about the agenda allows the targeted person to take preventive measures.
Mistry has alleged that his removal was unlawful as it has happened in a sudden way.
“Can a chairman be removed all of a sudden without giving prior notice? I believe that since it is a price sensitive intimation, prior notices should have been given to the directors in the agenda of the board meeting and also to the stock exchanges. But if such notice was given out and Cyrus Mistry knew he would be removed, he may have created problems. That is the reason a prior notice may not have been issued,” Santosh K Agarwala, central council member, ICSI told DNA Money.
Even the secretarial standards on meetings of the Board of Directors (SS1) weren’t violated, said Mamta Binani, president of the institute that has created the standards which have come into the revised Companies Act of 2013.
The 2013 Act requires every company to observe secretarial standards specified by the Institute with respect to general and board meetings under Section 118 (10) of 2013 Act, which were hitherto not given cognizance under the 1956 Act.
“We have been following the development, which is in the public domain. There hasn’t been a violation of secretarial standards on Board meeting. What we understand is that there are both sides to the story,” Binani said.
“To replace your chairman without so much as a word of explanation and without affording him an opportunity to defend himself must be unique in the annals of corporate history,” Mistry had said in his email to Tata Sons directors.
There is a divergent view, though.
“A chairman can’t be removed during the meeting. A chairman has to be selected at the beginning of the meeting. There have been lapses in following the standards and the meeting wasn’t conducted as per governance norms,” said Sutanu Sinha, consultant and former chief executive officer of the Institute.
ALL IN ORDER
Even the secretarial standards on meetings of the Board of Directors (SS1) weren’t violated, said Mamta Binani, president of the Institute that has created the standards
The 2013 Act requires every company to observe secretarial standards specified by the Institute with respect to general and board meetings under Section 118 (10) of 2013 Act, which were hitherto not given cognizance under the 1956 Act
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