Institutional EYE

Commentary on Corporate Governance Issues

India’s static governance ranking

Two reports published over the last few weeks warrant close reading and carry important lessons: Ease of Doing Business and Asia CG Watch. ‘Ease of Doing Business’ is a quantitative measures of business regulations across ‘11 regulatory areas that are central to how the private sector functions.’ Since it puts a quantitative number on regulations and outcomes – example, how many days does it take to get permits to start a business, it provides policy makers a clear target. As it is being published annually since 2003, it allows regulators to measure effectiveness of policies. And it now covers some 190 countries, so countries can benchmark themselves against each other and strive for better

Removal of Independent Directors: A Sword of Damocles

The ongoing tussle between Tata Sons and Cyrus Mistry is spilling over to the boardrooms of the listed companies in the group. Soon after the independent directors of Tata Chemicals, which includes Nusli Wadia, issued a unanimous statement backing Cyrus Mistry, Tata Sons moved resolutions to unseat Nusli Wadia from the boards of Tata Chemicals, Tata Steel and Tata Motors. Nusli Wadia, current Chairperson of the Wadia Group, is an old Tata associate. He has served as an independent director on the board of Tata Chemicals since 1981, on the Tata Steel board since August 1979, and on the Tata Motors board since December 1998. In a reciprocal arrangement, Ratan Tata had also served on the board

Tata Group: Structural Fixes Necessary

IiAS believes the current back-and-forth between Tata Sons and Cyrus Mistry, with Independent Directors of listed companies in the fray, is reactionary – and unlikely to provide a long-term solution. The Tata Group needs to focus on making its complicated holding and governance structure work. IiAS believes the current combative conversation between Tata Sons and Cyrus Mistry is a distraction from the core issue. While both Cyrus Mistry and Tata Sons have their positions, the discourse is unlikely to provide any meaningful long term solution. Tata Chemicals Limited’s (Tata Chemicals) and Indian Hotels Company Limited’s (IHCL) Independent Directors decision to support Cyrus Mistry adds to the

Tata Group: Game of Thrones

Cyrus Mistry’s position as Chairperson of listed companies of the Tata group is now being questioned. Whatever be Tata Sons’ opinion in this matter, IiAS believes independent directors of the listed companies must provide comprehensive guidance to shareholders on whether Cyrus Mistry should remain Chairperson. And, if boards of listed Tata group companies are divided in their of support Cyrus Mistry, there is a risk of boards becoming dysfunctional which has operational implications for the companies. Cyrus Mistry’s ouster in Tata Sons as Chairperson and Executive Director has raised several questions. For investors in the seven major listed companies, the immediate question is whether he wi

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