Renewal of trustees' term in focus at Tata Trusts amid ongoing tension

A trustee of Tata Trusts must be reappointed once his term concludes, to be eligible for lifetime trusteeship, according to top sources. The matter assumes significance at a time when Tata Trusts — which holds 66 per cent in Tata Sons — is facing a power struggle.

 

With some trustees’ tenures up for renewal end of this month, lawyers are learnt to be studying the fineprint of clauses linked to lifetime trusteeship.  

 

Tata Trusts had approved lifetime trusteeship at a meeting held shortly after Ratan Tata’s passing last year. However, sources pointed out that the term of a trustee has to be renewed prior to getting a lifetime trustee status. The renewal of term has to be through a consensus mechanism. Trustees at Dorabji Tata Trust, the key trust which along with Sir Ratan Tata Trust own a majority of share in Tata Sons, have had a three-year term.  

 

Emails sent to Tata Trusts did not elicit any response. 

 

Legal sources said lifetime trusteeship would depend upon the Tata Trusts deed and that several trusts do have the provisions of lifetime trusteeship.

 

Tata Trusts, currently led by Noel Tata, is facing an internal rift. Four trustees — including Mehli Mistry, Pramit Jhaveri, Darius Khambata, and Jehangir H Jehangir — voted to remove former defence secretary and vice-chairman of Tata Trusts, Vijay Singh, from the Tata Sons board in September, intensifying the divide at the Trusts. Subsequently, Mistry’s appointment to the Tata Sons board was blocked by some of the trustees.

 

The proposed listing of Tata Sons is another area of dispute. Tata Trusts had recently advised Tata Sons chairman N Chandrasekaran to be engaged with the Reserve Bank of India (RBI) to prevent listing of the group’s holding company.  

 

The government also stepped in to resolve the tussle at the centre of a leading business house. Home Minister Amit Shah and Finance Minister Nirmala Sitharaman held meetings with the top representatives of Tata Sons and Tata Trusts last week.

 

Following the intervention, the next Tata Trusts meeting turned out to be a muted affair, with trustees focusing on allocations to the healthcare sector instead of contentious governance issues.

 

Coinciding with all these developments, Shapoorji Pallonji (SP) Group — which holds 18.4 per cent stake in Tata Sons — recently reiterated the importance of Tata Sons listing. That would be an opportunity for the SP Group to unlock value and pare down its high-cost debt.