Tata Sons AGM deadline nears as Tata Trusts deadlock clouds voting

Mumbai: Tata Sons is closely watching developments at its two majority owners-Sir Dorabji Tata Trust (SDTT) and Sir Ratan Tata Trust (SRTT)-currently under the scrutiny of the Maharashtra Charity Commissioner to finalise the date of its annual general meeting (AGM), which has to be concluded by December, officials close to the matter said.

The AGM dispute is unlikely to be taken to the National Company Law Tribunal (NCLT) for a resolution as this redressal route is seen as complicated and lengthy, said the sources cited above.

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The evolving situation assumes significance as several resolutions at the holding company will require a shareholder majority for approval, making the voting positions within the trusts which collectively hold 66% critical to the outcome.

Darius Khambata is also slated to step down from both trusts early next month, a development that could further alter the voting dynamics within SDTT.

In the absence of unanimity the trusts, no further trustee appointments too seem feasible.

His exit could leave Noel Tata, Neville Tata and Bhaskar Bhat on one side and Vijay Singh and Venu Srinivasan on the other, creating a potential 3:2 split. The emerging arithmetic could make consensus on key decisions more challenging amid differences among trustees over Tata Sons' governance, regulatory compliance and proposed structural changes.

The AGM could, therefore, become a crucial test of the trusts' ability to bridge their differences and secure the necessary shareholder majority for key decisions at the holding company.

Tata Sons can approach the court under Section 97 of the Companies Act, 2013. However, in cases like this, approaching a tribunal is a tedious, lengthy process, as several parties also file intervention applications, which legal experts say delays the process.

Nishith Dhruva, managing partner of MDP Legal Advocates, said the company should pursue a targeted resolution of the SRTT restriction, either through clarification or modification by the charity commissioner or appropriate judicial relief. "Ultimately, the objective should be to enable Tata Sons to discharge its statutory obligations without prejudicing its shareholders' rights or creating a fresh dispute over the validity of the AGM and the resolutions passed at it," said Dhruva.

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After Tata Sons' earlier attempt to hold its AGM in August failed, the AGM was adjourned for want of quorum. Thereafter, Tata Sons applied to the registrar of companies and received a three-month extension, moving its AGM deadline to December.

Nazneen Ichhaporia, partner at law firm ANB Legal, said that with the extended AGM deadline approaching, Tata Sons will need to focus on aligning regulatory clarity on the Tata Trusts' governance deadlock and the consensus issues among the trusts.

"In my view, the immediate priority for the company would be to focus all attention and resources on ensuring the trusts' representation and voting positions are clearly established, with the charity commissioner's office's approval, enabling the company to meet its quorum requirements and successfully hold its AGM," said Ichhaporia.

"With the Trusts controlling 66% of the company, any divergence in their voting positions could complicate the passing of key resolutions. While the NCLT route remains a remote option, the legal complexity and time involved make consensus and regulatory clarity absolutely critical," she added.