Expanding board of trustees, introducing retirement among options before Noel Tata to counter dissent in Trusts

/ 2 min read
Summary

Following the passing of Ratan Tata and Noel Tata’s appointment as chairman, tensions surfaced over the selection of a nominee director to the Tata Sons board.

Noel Naval Tata, Chairman, Tata Trusts
Noel Naval Tata, Chairman, Tata Trusts

To address dissent within the Tata Trusts board of trustees, chairman Noel Tata may explore options such as expanding the number of trustees and introducing a retirement age, according to people familiar with the matter. Another measure that the Trusts are likely consider is granting the chairman greater authority to take decisions on behalf of the trustees in crucial matters like appointments and restructuring of Trusts, which could help reduce friction within the board, an executive said.

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Following the passing of Ratan Tata and Noel Tata’s appointment as chairman, tensions surfaced over the selection of a nominee director to the Tata Sons board. Four trustees—Mehli Mistry, Pramit Jhaveri, Jehangir Jehangir, and Darius Khambata—reportedly opposed the reappointment of Vijay Singh and proposed one of them for the nominee director. Singh eventually resigned from Tata Sons’ board in the face of this opposition.

Under Noel Tata’s leadership, Tata Trusts has instituted a new practice: the board of trustees now meets before every Tata Sons board meeting to deliberate on matters that will be discussed at the holding company. “Nominee directors are bound to push for the decisions that have been cleared by the trustees’ board,” said another source.

The controversy has also underscored the concerns around the requirement of information flowing from the Tata Sons board to those who do not hold board positions. While some trustees argue that updates are insufficient, Tata Sons board members maintain that their fiduciary duties and regulatory obligations—especially given that several subsidiaries are publicly listed—restrict the amount of information they can share.

According to sources, expanding the trustee board and introducing a retirement age remain key options for Noel Tata as he works to resolve the stalemate.

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During the meeting where the four trustees opposed Vijay Singh’s appointment, they attempted to nominate Mehli Mistry, one of the dissenters in their group, to the Tata Sons board. Noel Tata and Venu Srinivasan resisted the move, stressing the need to follow proper procedures that align with the Tata Group’s core values.

The issue is significant because Tata Trusts’ nominee directors hold veto power over major decisions at Tata Sons. Under Article 121 of the Articles of Association, nominee directors can block key resolutions, including large capital allocations, acquisitions, and senior appointments. Experts noted that the effort to replace one nominee with another was viewed as an attempt by some trustees to consolidate control within them.

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For now, Tata Sons continues with two nominee directors from Tata Trusts--- Noel Tata and Venu Srinivasan--- on its board, while the search for a new member continues. The company may engage a professional firm to identify and recommend suitable candidates, reports said earlier. In addition to the vacancy created by Vijay Singh’s exit, the Tata Sons board is also expected to fill seats vacated by Ralph Speth, Ajay Piramal, and Leo Puri.

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