Tata Sons AGM deferred for lack of quorum, first in group’s history

Mumbai: The Tata Sons AGM scheduled for Tuesday has been adjourned and deferred for lack of quorum, marking the first such instance in the history of the Tata group holding company. Chairman N Chandrasekaran and few board directors attended in person while Noel Tata and Mehli Mistry, attended the meeting online. The chairman will seek a fresh date For the AGM after consulting the board, officials said.

The AGM was convened at Bombay House, with some stakeholders joining online. Sir Dorabji Tata Trust (SDTT), one of the two principal controlling trusts of Tata Sons, had informed the company that a joint representative could not participate in the AGM in the absence of the Maharashtra Charity Commissioner’s approval for Sir Ratan Tata Trust (SRTT), leaving the meeting without the required quorum.

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SDTT, the other principal controlling trust of Tata Sons, had earlier informed Tata Sons that the Trusts did not have the required quorum for the AGM.

The Charity Commissioner has not lifted the curbs on SRTT, one of the two principal trusts that together hold a majority stake in Tata Sons, putting in jeopardy the August 18 annual general meeting of the holding company of India’s biggest conglomerate.

Officials close to Tata Trusts said they had informed Tata Sons about the lack of quorum but could not mandate the company not to hold the AGM. “They can convene it by law but will have to adjourn anyway,” an official aware of the developments said.

The uncertainty over the AGM has also brought into focus the position of Tata Sons chairman N Chandrasekaran, who is liable to retire by rotation.

Officials familiar with the Articles of Association said that if the August 18 meeting could not be validly constituted because of lack of quorum, Chandrasekaran would continue as a director until a valid AGM is held at which his reappointment can be considered.

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Some trustees of Tata Trusts have approached the Charity Commissioner in their individual capacities seeking relief, officials said. The move is understood to stem from the view that SDTT cannot seek such relief on behalf of SRTT.

SRTT and SDTT together hold 51.54% of Tata Sons, with SRTT holding about 23.5% and SDTT about 28%.

The Charity Commissioner had issued the restraint under Section 36A(1) of the Maharashtra Public Trusts Act following complaints regarding the composition of the SRTT board and alleged non-compliance with Section 30A(2) of the Act.

Section 30A(2) deals with the permissible number of perpetual or life trustees on the board. A recent amendment to the law introduced a statutory cap on the number of perpetual trustees who can serve on a public trust board.

Chandrasekaran’s position

Under the Companies Act, a director liable to retire by rotation continues in office until the relevant AGM, where shareholders are required to either reappoint the director or fill the vacancy. The law, however, does not expressly detail the consequences where an AGM itself cannot be validly convened because of lack of quorum.

The interpretation of Tata Sons’ Articles and the legal implications of an AGM that fails to meet the prescribed quorum are consequently being examined, people familiar with the matter said.

Chandrasekaran joined the Tata Sons board in October 2016 and became chairman in January 2017. He requires reappointment as a director to continue on the board, with his position as chairman legally contingent on his continuing as a director.

Chandrasekaran has already communicated that he will not seek reappointment when his current term ends in February 2027.