Tata Trusts: Dispute among directors flares; Vice-Chair Vijay Singh exits

Tata Trusts Vice-Chairman (VC) Vijay Singh abruptly resigned from the board of Tata Sons just a day before the holding company’s directors were scheduled to meet, according to a report by The Times of India.

 

Meanwhile, The Economic Times reported that Singh’s decision to step down may have been triggered by differences among board members over exercising the power to appoint a nominee director on the Tata Sons board and over how charities should exert control on India’s largest diversified business conglomerate.

 

In October 2024, when Noel Tata was appointed chairman shortly after the demise of Ratan Tata, the trustees passed a resolution that Trust-nominated directors on Tata Sons' board would have to be renewed every year after turning 75 years of age.

 

Singh was up for reappointment

According to the report, Vijay Singh, 77, who has served as a nominee director on the Tata Sons board since 2013 and as a trustee of Tata Trusts since 2018, required annual reappointment to the board.

 

However, four trustees—Mehli Mistry, Pramit Jhaveri, Jehangir Jehangir, and Darius Khambata—opposed his reappointment. Following this, Singh tendered his resignation from the Tata Sons board. The report added that Noel Tata and Venu Srinivasan, also nominee directors on the board, were among the other trustees present during the decision.

 

Singh did not take part in the meeting as the agenda involved his reappointment.

Differences deepen further

One of the key levers of control available to the trustees is the power to appoint nominees to the board of Tata Sons. According to Article 121 of the Tata Sons Articles of Association, the nominee directors hold a veto power on key decisions.

 

According to ET, differences widened further after the four trustees who opposed Singh’s reappointment tried to nominate one of them—Mehli Mistry. Srinivasan and Tata opposed the move, insisting that due process be followed. Dismissing a member and appointing another was a move by some trustees to seize power in Tata Trusts and thereby Tata Sons, the report added.

 

A senior official told ET, "There is an impasse now, and we will all have to try to resolve it. Currently, it is three trustees against four. We will see what has to be done in the future.” For now, Tata Sons will have two Trust nominees on board until a solution is worked out.

 

The trust may appoint a professional search firm to shortlist candidates, and trustees will be able to put themselves up for consideration, the report added.

Information sharing is a key issue

The report added that trustees who are not on the Tata Sons board feel information shared by the nominee directors is insufficient. This has been one of the key reasons for growing friction in recent months, and at least one trustee has accused nominee directors of keeping the rest of them in the dark, it said.

 

Meanwhile, trustees, who are directors, feel they are only required to share important decisions with other trustees as they have fiduciary responsibilities as board members of a large and influential company, where business-sensitive information is shared.

 

Moreover, since many Tata Sons subsidiaries are big listed companies, their board members must also follow the rules set by the stock market regulator.

 

According to the report, some trustees argue that it isn’t right for nominee directors to take board fees from Tata Sons, because their role is to represent the Trusts and keep an eye on the company, not earn from it.