Tata in the spotlight: Two key Trust renewals this week as Srinivasan’s term ends and Mehli Mistry awaits renewal
SDTT board consists of Noel Tata, Srinivasan, Vijay Singh, Pramit Jhaveri, Mistry and Darius Khambata. Mehli Mistry’s term will be renewed in a few days.
Tata Sons, the holding company of the Tata Group, is 66% owned by Tata Trusts. SDTT and Sir Ratan Tata Trust (SRTT) are dominant, holding approximately 51% of Tata Sons. The Mistry family of Shapoorji Pallonji (SP) Group holds 18% stake in Tata Sons. According to people familiar with the matter, the government is keen on ensuring stability at Tata Sons, especially as Tata Group companies are busy with important national projects in electronics, defense and other strategic sectors.
Term renewals, which require unanimous approval, became a point of contention among the board of trustees after divisions emerged.
Sources said that for the life term to be valid, a formal reappointment must first be made. “If even one trustee doesn’t approve, the renewal doesn’t happen,” said a person familiar with the matter.
One trustee added: “A life trustee must have full legitimacy, for which unanimous consent is a necessary precondition.” Tata Trusts did not comment. “A conflict over renewals this time around seems unlikely, given the growing perception that authorities are keeping a close eye on it. But we will handle matters as they arise,” one trustee said.
Another warned that there could still be objections from some quarters. “The problem cannot be ignored; it could go either way and everyone is watching closely,” he said.
Insiders said the split within Tata Trusts had distracted the Tata Group. “Everyone is dealing with Trust issues,” said one group administrator. Noel Tata’s chairmanship of Tata Trusts and SDTT was renewed for life in January, when his three-year term as trustee ended.
TENSIONS WITHIN ME
The renewal issue caused internal tensions within the Trusts to boil over. According to one trustee, “the opposing rank and file were broken,” indicating that a conflict in September may be unlikely.
Some trustees may shy away from further conflict, opting instead to keep their distance, as the trusts prepare for what many insiders describe as a crucial test of unity and governance, insiders said. During Noel Tata’s appointment as chairman of Tata Trusts last year, a decision was passed that all existing terms would be valid for life after renewal. The credentials do not appear to offer a path towards resolving the current conflict.
The divisions at Tata Trusts came to light when four trustees – Darius Khambata, Mehli Mistry, Pramit Jhaveri and Jehangir Jehangir – broke precedent by voting to remove trustee nominee Vijay Singh from the Tata Sons board on September 11. They then suggested that Mehli Mistry be nominated to the board of Tata Sons. This was blocked by chairman Noel Tata, vice-chairman Venu Srinivasan and Vijay Singh, a trustee of Tata Trust.
Among the far-reaching consequences that could arise from the current conflict is the future status of Tata Sons. Tata Trusts had passed a resolution in July that Tata Sons should remain a private company; This stance may now be reconsidered.
