Open offer possible if Cyrus Mistry not ousted: SES

MUMBAI: Proxy advisory firm SES said if the takeover regulations of the Securities and Exchange Board of India (Sebi) are applied in the strictest manner, possibility of an open offer may arise if the resolution to oust Mistry is defeated.

Under Sebi regulations, an open offer is usually triggered in the event of an acquirers stake purchase in the target company crossing a set threshold. Also, an open offer can arise in case of management change in a company.

Six companies — Tata Consultancy Services, Indian Hotels, Tata Motors, Tata Chemicals, Tata Power and Tata Steel — have called EGMs to remove Mistry from boards.


“With the Board on his side, Mistry would be able to control all policy decisions at the board level, either collectively or individually with other board members and Tata Sons will no longer have any control over the board, policy or management,” said SES’s founder J N Gupta, also former executive director, Sebi.

“This would effectively put Mistry and other directors in position of acquirer... then consequences of being an acquirer must follow. The consequences are as per section 4 (of Sebi’s takeover regulations), require an open offer to be made.”

SES said although definition of ‘control’ excludes a director by virtue of his position, it cannot be excluded when it becomes a collective board decision and goes against majority shareholder.

In the eventuality of the resolution being defeated, Mistry will have to make an open offer alone or along with board members who had supported him, the SES report pointed out.