Ahead of the Annual General Meeting (AGM) scheduled for August 18, Tata Trusts is considering urgent legal action to allow one of its key charitable trusts, Sir Ratan Tata Trust (SRTT), to participate in the key decision-making regarding Chandrasekharan’s successor.
SRTT and Sir Dorabji Tata Trust (SDTT) together hold around 52 per cent of the 66.4 per cent stake held by charitable trusts in Tata Sons, the holding company of the Tata Group. These two trusts are required to jointly nominate a representative for the upcoming AGM and three other members to the search committee that will decide the next chairman.
SRTT is currently under a restraining order from the Maharashtra Charity Commissioner that prevents it from holding trustee meetings or making key decisions. The action pertains to SRTT allegedly violating the Maharashtra Public Trusts Act, which stops lifetime trustees from constituting more than 25 per cent of the total board.
The SRTT board consisted of six trustees. Three of them — Noel Tata, Jimmy Tata and J.N Mistry held permanent positions. This meant 50 per cent of the board consisted of lifetime trustees, exceeding the 25 per cent threshold.
This means the permanent or central group can easily outvote temporary-tenure trustees and exert indirect control over one of India’s largest corporate networks.
Complicating things further, Vijay Singh, an SRTT trustee, stepped down from his position on August 11, three days before his term ended.
SRTT is seeking relief from the restrictions, highlighting that it would prevent its participation in the AGM and could affect its philanthropic gains.
The ET reported that during a meeting on Thursday, Tata Trusts said they were unable to elect a joint representative since SRTT could not participate in the process. Tata Sons will now review the matter, and the Trusts are to update them before next Tuesday.
N. Chandrasekaran stepped down as Chairman, citing that he failed to receive unanimous support from the Tata Sons board. He will remain in office to complete his term, which runs till February. The upcoming AGM would have decided whether he continues as a director, the prerequisite for being chairman.
