1-MIN READ

Tata Sons Objects to Pallonji Mistri Group Planning to Pledge Part of Stake: Report

Image for representation. (Image source)

Image for representation. (Image source)

Senior Tata executive referred to the Clauses in the Articles of Association that say shares cannot change hands including to lender or other parties.

Share this:

Pallonji Mistri Group has gotten in touch with Canadian investor Brookfield for a $2-2.5 billion funding facility and has used part of its stake in Tata Sons as collateral, according to a report in the Economic Times.

The move has brought them in conflict with the Tata Sons.

Speaking to ET, an SP Group spokesperson said that they have recorded their strongest performances in the last 2 years and has adequate liquidity to meet current obligations.

However, a senior Tata Sons executive who is aware of the development said there is clear restriction on transfer of Tata Sons shares to a non-shareholder since it is a closely held holding company.

The person, on condition of anonymity, said that the first right of refusal rests with Tata Sons and that SP Group will have to issue a notice to the Tata Sons board.

Senior Tata executive referred to the Clauses in the Articles of Association that say shares cannot change hands including to lender or other parties.

But a top legal official close to SP Group said that AoA does not ply when it comes to pledging shares. The official added that if SP Group cannot meet obligations on pledged shares, no one can stop them from selling shares which belong to Cyrus & Sterling investments, the report added.

According to the official Tata Sons can only object to transfer of shares to undesirable entities like a criminal or competitors.

The 18.4 per cent stake that the Mistry family has in Tata Sons is held through two family entities Sterling Investment and Cyrus investment.

Tata Trusts, helmed by Ratan Tata owns 66 per cent stake in the conglomerate, valued at USD 111 billion.


Share this:
Next Story
corona virus btn
corona virus btn
Loading