Tata Sons gets 3-month AGM extension relief after quorum issue
Tata Sons received a three-month extension for its annual general meeting. The meeting was deferred due to restrictions on the Sir Ratan Tata Trust. This prevented a quorum, impacting the company's governance. The extension protects minority share...
Bombay House, global headquarters of the Tata Group
Mumbai: Tata Sons received a three-month extension from the Registrar of Companies to hold its annual general meeting, after the AGM on August 18 was deferred for want of a quorum, people familiar with the matter said.
This was the first time in the history of the group holding company that an extension was sought after an AGM was deferred.
The meeting could not be held as the Maharashtra Charity Commissioner did not lift restrictions on Sir Ratan Tata Trust (SRTT), one of the two trusts that together own a majority stake in Tata Sons, to hold meetings or make decisions. As a result, a jointly appointed nominee by SRTT and the Sir Dorabji Tata Trust (SDTT) could not take part, resulting in the lack of quorum.
With little visibility on when restrictions on SRTT would be lifted, the company sought deferment of its AGM, officials aware of the matter said. Tata Sons did not comment. An AGM can be held sooner if the charity commissioner lifts the freeze on SRTT, one of the officials said.
The commissioner restrained SRTT pending an inquiry into alleged violations of the provisions on the composition of its board of trustees and other regulations under the Maharashtra Public Trusts Act.
Tata Trusts has sought relief from the commissioner to participate in the AGM and also set up a selection committee to search for a successor to N Chandrasekaran, who has said he would not seek reappointment as Tata Sons chairman when his term officially ends in February 2027. “The (Registrar of Companies) decision was essential to protect the interests of minority shareholders of Tata Sons,” said Ashish K Singh, managing partner at law firm Capstone Legal. The Registrar has to assess each application on its merits, and given the circumstances involving Tata Trusts, the extension was expected, he said.
Chandrasekaran, who was liable to retire as a director by rotation at the meeting, would ordinarily continue as a director until his reappointment could be considered at a valid AGM, subject to Tata Sons’ articles of association and the manner in which the meeting was adjourned, said Ruchi Khatlawala, partner at law firm Little & Co.
“Where the meeting has not been validly constituted to consider the relevant business, the question of reappointment remains open for consideration at the properly convened or adjourned AGM,” she said. The postponement should also not create a vacancy in the chairmanship, as the position is dependent on Chandrasekaran’s continuing as a director, Khatlawala said.
