Tata Sons' Tuesday AGM faces uncertainty as SDTT flags lack of quorum

The Maharashtra Charity Commissioner has not lifted curbs on the Sir Ratan Tata Trust (SRTT), one of the two principal trusts that majority-own Tata Sons, putting in jeopardy the Tuesday annual general meeting (AGM) of the holding company of India’s biggest conglomerate, people aware of the developments told ET.

Sir Dorabji Tata Trust (SDTT), the other principal controlling trust of Tata Sons besides SRTT, has informed Tata Sons that the Trusts do not have the required quorum for the AGM.

Officials close to Tata Trusts said it has informed Tata Sons about the lack of quorum but can’t mandate Tata Sons to not hold the AGM.


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“They can convene by law but will have to adjourn anyway,” an official aware of the developments said.

Top officials close to the matter said even if the AGM isn’t held for a lack of quorum, exiting Tata Sons chairman N Chandrasekaran could continue as a director until a valid AGM is held.

SDTT has no plans to approach the Bombay High Court for relief and will wait for the charity commissioner to grant relief to SRTT, officials close to the Trusts said.

Tata Trusts and Tata Sons did not comment.

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.

The regulator had also directed the SRTT board to postpone its May 16 meeting and refrain from convening such meetings until submission of an Inspector’s report.

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 that can serve on a public trust board. Section 36A(1) empowers the commissioner to pass directions on a trust.

Chandrasekaran’s Position

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 Tuesday meeting cannot 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.

Prem Rajani, managing partner of law firm Rajani Associates, said that unless the Articles of Tata Sons expressly require the presence of representatives of SDTT and SRTT to constitute the quorum, under the Companies Act, Tata Sons may proceed with the AGM so long as the requisite quorum under the Companies Act is present.

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“Nevertheless, during the pendency of the order of the charity commissioner, Tata Sons may consider seeking approval of the Registrar of Companies for an extension of convening the AGM for another three months, unless SRTT receives permission from the charity commissioner to participate in the Tata Sons AGM..., or the order of the charity commissioner is set aside by an appropriate authority,” he added.

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 by Tata Trusts, 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.

Regulator’s Stand

SRTT had approached the Maharashtra Charity Commissioner seeking easing of the curbs. The letter also stated that the Trust retained the right to challenge the commissioner’s order, if deemed necessary.

People in the know said the charity commissioner’s office had not responded to the request as of August 14.

The communication seeking relief did not specifically mention SRTT’s participation in the Tata Sons AGM on Tuesday, the people said.

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“The charity commissioner’s office has also not been apprised of some subsequent developments, including the stepping down of trustees (Vijay Singh) or the resignation of Chandra. Under the Maharashtra Public Trust Act, the charity commissioner acts as a guardian to the trusts and all the decisions are taken keeping (in mind) the interest of the trusts,” explained an official.

The Bombay High Court is the appellate authority for orders passed by the Maharashtra Charity Commissioner.

1989 Share Transfer

Separately, the charity commissioner’s office in June received an email from Vijay Singh, who stepped down as a trustee of SRTT, seeking an inquiry into allegations concerning the transfer of 833 Tata Sons shares from Navajbai Ratan Tata Trust to Naval H Tata in 1989.

The charity commissioner subsequently sought a response from Noel Tata, chairman of Tata Trusts, and a trustee of Navajbai Ratan Tata Trust. Tata is understood to have replied last week, denying the allegations.

The charity commissioner’s office is examining the response and the material placed before it before deciding on the next course of action, people familiar with the matter said.