Friday, December 16, 2016

Corporate Governance Initiative's Nusli Wadia accuses Tatas of violating insider trade rules, urges Sebi to probe

MUMBAI: Nusli Wadia, an independent director on the boards of three listed Tata companies — Tata Steel, Tata Motors and Tata Chemicals, has asked the Securities and Exchange Board of India (Sebi) to "inquire and investigate" into the unpublished material and price-sensitive information shared by these companies with Tata trustees and Tata Sons. 

In a letter dated November 30, 2016, Wadia said that even after Ratan Tata was appointed as chairman emeritus on the boards of these three companies in 2012, he used to get the agenda and board papers of various meetings. Despite new Sebi insider-trading regulations in 2015, Ratan Tata, Noshir Soonawala, the two Tata trustees, and the board of Tata Sons continued to get financial information, strategic presentations from the management of these companies. 

"In addition, they have demanded senior members of the management brief them on various business proposals and activities from time to time," the letter, reviewed by ET, said. 

In 2015, Ratan Tata and Soonawala had insisted that the board of directors of these companies pass resolutions to permit the management to legally pass information to the board of directors of Tata Sons. 

But Wadia has alleged that no resolution was passed by the board of the companies on which he is a director. 

The letter said Tata and Soonawala had also sought certain important matters to be shared with them as trustees (not being directors of Tata Sons) with regard to the affairs of Tata Motors and Tata Steel. 

"As a result, it has come to my knowledge that presentations with regard to Tata Steel Europe, its strategy, its financials, its proposed merger with ThyssenKrupp and other material and unpublished price-sensitive information matters were presented to Mr Ratan Tata and Mr Noshir Soonawala," Wadia said. 

A Sebi official said the regulator had received a letter from Wadia and it would be looking into the issues raised in it. 

"The law is clear that communication of unpublished price-sensitive information should be disclosed only on a selective basis even within a company. Such information passing outside the company should be shared even more selectively based on legitimate purpose," said Sandeep Parekh, founder, Finsec Law Advisors. 

"However, I believe that information relating to Tata Steel Europe as also Tata Motors was thereafter, on more than one occasion, shared and presented and discussed with both Mr Ratan Tata and Mr Noshir Soonawala and the board of Tata Sons on different occasions," Wadia, the longest-serving independent director on the boards of these three listed companies, said.