All eyes now on Charity Commissioner’s nod for SRTT meeting to convene Tata Sons AGM, find new Chairman

The Maharashtra Charity Commissioner’s clean chit to the 1989 transfer of 833 Tata Sons shares from Navajbai Ratan Tata Trust (NRTT) to Naval Noel Tata has cleared one dispute, but it has not resolved the immediate hurdle facing Tata Sons. The focus now shifts to whether the Commissioner will allow the Sir Ratan Tata Trust (SRTT) to hold a board meeting and nominate a representative jointly with the Sir Dorabji Tata Trust (SDTT) for the Tata Sons annual general meeting (AGM).

The AGM, which was earlier deferred after the required quorum could not be achieved, is also important because shareholders will have to extend N. Chandrasekaran’s directorship until the end of his second term as chairman of Tata Sons in February 2027. Chandrasekaran has already decided not to pursue a third term because of Tata Trusts chairman Noel Tata’s objections to the renewal.

Tata Sons, the holding company of around 100 Tata group companies, had been scheduled to hold its AGM on August 18. The meeting could not proceed because SRTT and SDTT failed to arrive at a joint nomination for the representative required at the meeting.

While SDTT can hold its board meeting, SRTT remains restricted from doing so because of the Charity Commissioner’s inquiry into complaints concerning the trust’s governance. The restriction was imposed in May amid an investigation into alleged breaches of trustee-composition provisions under Section 30A(2) of the Maharashtra Public Trusts Act. Complaints, including one filed by Tata Trusts vice chairman Venu Srinivasan, alleged that SRTT had crossed the statutory 25% limit on lifetime or perpetual trustees.

The Commissioner has not yet permitted SRTT to convene its board and take up the nomination. Noel Tata, along with trustees Darius Khambata and Jehangir H.C. Jehangir, has approached the Commissioner seeking permission.

The trustees have pointed to three matters that they say cannot be addressed while the restriction remains in force—approval of accounts, allocation of funds for charitable activities and appointment of the representative for the Tata Sons AGM, according to people familiar with the matter.

The importance of the SRTT decision stems from Article 86 of Tata Sons’ Articles of Association. The provision lays down the quorum requirements for the company’s AGM and requires an authorised representative jointly nominated by SRTT and SDTT.

Together, the two trusts own about 66% of Tata Sons. Their ability to nominate a representative is therefore central to the company meeting the quorum requirement and proceeding with the AGM.

The meeting also comes at a sensitive point for Tata Sons. It will be the first shareholder meeting since Chandrasekaran announced his decision to leave the chairmanship after differences with Noel Tata over several matters. These included the proposed listing of Tata Sons, facilitating the Shapoorji Pallonji Group’s exit, and the performance and strategy of the group’s newer businesses.

The Charity Commissioner’s September 2 order involving NRTT, however, is separate from the SRTT issue. The Commissioner dismissed a complaint filed in June by NRTT trustee Vijay Singh seeking an inquiry into the 1989 transfer of the 833 shares to Noel Tata.

After reviewing the complaint, NRTT’s response and supporting documents, the Commissioner concluded that the transaction was carried out to meet statutory requirements and was properly documented. The valuation had been agreed upon by the Commissioner of Wealth Tax, while the trust received adequate consideration and reported a profit from the transaction in its March 31, 1989, balance sheet.

The transfer also included a condition restricting any subsequent sale to a third party, keeping the shares within the Tata family.

The transaction had its origins in January 1989. Noel Tata had ceased to be a trustee from January 1, 1988. A December 1988 legal opinion by Nani A. Palkhivala found no legal bar to his purchasing the shares after his resignation and advised that the transaction be completed after a year, with safeguards to retain the shares within the family.

The Commissioner consequently found no basis for initiating further proceedings under the Maharashtra Public Trusts Act, 1950.