Chairman can be removed without prior intimation – ICSI

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.

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.Image result for icsi

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.

Advertisements