Sebi, stock exchanges seek report from Tatas

The Securities and Exchange Board of India (Sebi) will seek a detailed report from the Tata group companies to look into possible violation of corporate governance and listing norms referred by Cyrus Mistry in his five-page letter to Tata Sons board members.

"We are taking note of each and every development and will act immediately if there is any hint of possible violation of corporate governance and listing norms or any other regulation under our jurisdiction," a senior official said.

Meanwhile, both the stock exchanges have also issued notice to Tata group companies named by Mistry, seeking clarification on various deals mentioned by him in the letter.

Sources said, regulator has a view that allegations made by Mistry are of very serious and damaging nature. It said to have also raised serious concerns on corporate governance, if at all violated, as claimed by Mistry in the letter.

In an explosive confidential email to Tata Sons board members, Mistry said he was promised a free hand when he was appointed Chairman in December 2012 but the Articles of Association were modified, changing the rules of engagement between the Tata family Trusts and the Board of Tata Sons.

Mistry alleged that it was Ratan Tata who forced the Group to enter the aviation sector by making him a 'fait accompli' to joining hands with Air Asia and Singapore Airlines and making capital infusion higher than initially commited. Also, 'ethical concerns' had been raised over certain transactions and a "recent forensic investigation revealed fraudulent transactions of Rs 22 crore involving non-existent parties in India and Singapore," he wrote.

He also questioned the Tata-DoCoMo transaction and said the original structure of the DoCoMo deal raises several questions about its appropriatness from a commercial or prudential perspective within the then prevailing Indian legal framework.

"The letter clearly indicates that how a shareholder (Ratan Tata) had called a sudden meeting with CEOs of the respective group companies by surpassing the board. Being a stakeholder one has a limited interference in the board decision which was not the case here," said J N Gupta of Stakeholders Empowerment Services. He adds, letter pointed out that most of the decision was taken under the supervision of Ratan Tata, but fails to understand under what capacity he had done so, Gupta added.