Corporate Governance and Battles - Newspaper Summary

 The sources provide extensive detail on various aspects of Corporate Governance and Battles in October 2025, revealing significant internal conflicts at major corporate houses, active regulatory intervention in founder accountability, and enhanced scrutiny of market operations and financial ethics.

1. High-Stakes Boardroom and Shareholder Conflicts

The most prominent corporate battle detailed is the new Tata-Mistry clash following the removal of Mehli Mistry as a permanent trustee of the Tata Trusts.

• The Mehli Mistry Ouster: Mehli Mistry, a first cousin of ousted Tata Sons chief Cyrus Mistry, was Ratan Tata's long-time confidant, having executed his will and inherited his Alibaug bungalow. His reappointment as a permanent trustee was opposed by Tata Trusts chairman Noel Tata, and vice-chairmen Venu Srinivasan and Vijay Singh, setting the stage for a 2016-like legal contest.
• Board Division: The vote regarding Mehli Mistry's candidature for trustee for life was split, with three trustees voting against and three voting in favour. This divergence marked a sharp departure from the previous consensus-driven approach.
• Legal Challenge & Governance Implications: Mehli Mistry is considering challenging the decision legally. The dispute hinges on a previous unanimous resolution agreed upon on October 17, 2024, to make all trustees permanent. If a trustee fails to be reappointed, a senior Supreme Court lawyer noted this suggests the remaining trustees may have violated that unanimous decision, giving the ousted trustee the right to legal action. Under the Trusts’ rules, both appointments and removals require unanimous consent.
• Impact on Tata Sons: Consensus within the Trusts, which hold a majority stake of 65.9% in Tata Sons, is vital as Tata Sons requires Trustee approval for key decisions, such as appointing directors or authorizing investments over ₹100 crore.

Another legal battle regarding corporate structure and dilution involves the subsidiary of the debt-laden edtech firm Byju's.

• Aakash/Glas Trust Dispute: The National Company Law Appellate Tribunal (NCLAT) rejected a plea by US-based Glas Trust, the trustee for Byju's lenders, opposing an Extraordinary General Meeting (EGM) of Aakash Educational Services Ltd (Aakash).
• Dilution Concern: The EGM was intended to approve a rights issue to raise Aakash’s authorized share capital, a move Glas Trust alleged would drastically reduce the shareholding of Byju's parent, Think & Learn Pvt. Ltd (TLPL), from approximately 25% to 5%.
• NCLAT Rationale: The Tribunal ruled that the spirit of the Insolvency and Bankruptcy Code (IBC) is best served when companies in which the corporate debtor (Byju's/TLPL) has shares are allowed to prosper, regardless of who holds the controlling power.

2. Regulatory Focus on Founder Accountability and Corporate Structure

The Securities and Exchange Board of India (Sebi) has sharpened its focus on ensuring founders accept the legal responsibilities associated with control, framing key developments in corporate governance.

• The Promoter Tag and Accountability: The "promoter" tag is linked to strict regulatory requirements and imposes a higher standard of accountability, requiring individuals to legally protect all public shareholders. Promoters must adhere strictly to insider trading rules, disclose share encumbrances, and ensure minimum public float.
• The Paytm Loophole: The 2021 IPO filing by One97 Communications Ltd exposed a regulatory loophole when founder Vijay Shekhar Sharma avoided the promoter tag based on his 9.1% direct stake, classifying Paytm as professionally managed. This allowed him to accept 21 million Employee Stock Options (Esops). Sebi subsequently questioned this attempt to evade obligations, leading to a settlement in May 2025 where the Esops were cancelled, and Sharma was barred from accepting new Esops from any listed company for three years.
• Sebi Reforms (September 2025): Sebi responded by shifting towards a more pragmatic 'person in control' concept. If a founder is the CEO and has a significant stake (around 10% individually, or 20% as a group), Sebi now seeks the group to be categorized as promoters. Furthermore, Sebi notified an amendment in September 2025 allowing a founder to retain Esops granted at least a year prior, even if classified as a promoter. The mandatory post-IPO lock-in period for minimum promoter contribution was also reduced from three years to 18 months to ease liquidity planning.
• Industry Shift: Some founders are proactively embracing the promoter tag. For example, the CEO of IPO-bound Lenskart, Peyush Bansal, stated he and co-founders were named promoters to ensure "skin is in the game much longer," following precedents set by Urban Co., Ather, and Bluestone.
• Global Comparison: Indian rules do not permit the dual-class share structures common in major markets like the US (e.g., Meta, Google), where founders retain voting control through unequal voting rights despite lower ownership percentages.

3. Oversight, Compliance, and Executive Remuneration

Corporate governance extends to compliance, handling operational disruptions, and setting executive compensation standards.

• MCX Technical Glitch: A technical glitch at the Multi Commodity Exchange of India (MCX) coincided with the expiry of silver monthly options contracts. This operational hiccup exposed MCX to a potential fine of ₹25 crore, calculated as 10% of the average standalone net profit from the preceding two fiscal years (FY24 and FY25 average net profit was ₹248.95 crore). Sebi rules mandate declaring a disaster within 30 minutes and restoring trading within 45 minutes of the declaration.
• HDFC Bank Misselling Probe: HDFC Bank placed two senior executives on "gardening leave" amidst a probe initiated after customers alleged the misselling of Credit Suisse securities (Additional Tier 1 bonds). HDFC Bank acknowledged that it takes matters concerning its reputation seriously, although a spokesperson stated the bank has not found any instances of misselling so far.
• Indus Towers Dividend Delay: Financial stability concerns regarding Vodafone Idea (Vi), a major customer, caused Bharti Airtel’s tower arm, Indus Towers, to put on hold any cash returns (dividend payouts) to its shareholders. The CEO confirmed decisions on dividend payouts remain scheduled for the March quarter.
• Orkla IPO Governance Question: The timing of Orkla India's first-ever dividend of ₹600 crore in FY25, which was more than double its annual profit, raised governance questions because it occurred just weeks before filing its draft IPO papers.
• Executive Compensation: An analysis of Nifty 500 companies showed that the compensation gap between the highest-paid corporate executive heads and their median employees widened in FY25. The median remuneration for executive directors grew by 16.5% to ₹3.6 crore, nearly doubling the share of executives earning ₹10 crore or more in the last seven years.

These developments highlight that while major business activities continued (M&A, IPOs, banking reforms, international trade negotiations), corporate integrity and internal power structures remained a central concern, driving both major legal conflicts and decisive regulatory action in October 2025.