The rift between Tata Trusts and Tata Sons appears to be widening further after two senior trustees, including Venu Srinivasan, said they were not consulted before Tata Trusts proposed the decision to re-organise the group’s holding company.
According to an ET report, vice chairmen and trustees of Sir Dorabji Tata Trust (SDTT), Venu Srinivasan and Vijay Singh, in an official letter, noted that they were surprised to receive a copy of the letter proposing the merger and learnt about the press release from public sources.
The SDTT is one of the lead constituent philanthropic trusts that make up Tata Trusts. It also holds 27.98 per cent of Tata Sons, making it the single-largest shareholder of the holding company. Singh and Srinivasan said they were concerned that the press release was issued on behalf of Tata Trusts, without SDTT’s consent or authorisation.
“To our knowledge, no meeting of the Trustees of SDTT was held to discuss or deliberate on this issue before the Letter was sent to Tata Sons. We were not consulted, and are not aware that the other Trustees were consulted either. It is accordingly unclear whether the Letter and the proposal it sets out have the support of all the Trustees of SDTT,” the letter said, as per The Indian Express.
Tata Trusts had issued a letter on September 28, calling upon the Tata Sons board to consider merging Tata Electronics Systems Solutions and Tata Consulting Engineers with Tata Sons. It sought to ensure that the holding company would no longer be classified as a non-banking financial company (NBFC) or a core investment company (CIC) under the RBI’s rules.
Given the significance and the possible implications of the decision, Singh and Srinivasan reportedly said that it warrants a “consideration of its legal, financial, commercial, governance and institutional consequences.” They added that the analysis ought to have been made available to all the Trustees before a proposal was made in the Trust’s name.
They reportedly questioned whether a shareholder can direct the company’s independent board and also noted that controlling commercial decisions can violate their status as a charitable trust.
“Trustees should also be conscious of the impact that such a mode of communication could have on the charitable status of the Trusts, if it were construed as an attempt by a public charitable trust to direct the commercial decision-making of a company rather than to exercise the rights available to it as a shareholder,” they said, as per reports.
They concluded that such matters require appropriate analysis and need to consider the interests of Tata Sons as well.
