Posts division: Tata may not have to make changes

Mumbai: Tata Trusts, the majority owners of Tata Sons, may not need to change its trust deeds to include a clause that prevents concentration of leadership and powers, mandating separate heads for the philanthropic trust establishments and the principal holding company of the nation's most valued conglomerate.

Since Tata Sons has already amended its Articles of Association (AoA) to ensure separate executives for the two entities, legal experts said the amendment is applicable to Tata Trusts as well. Tata Trusts has been consulting legal experts to examine the possibility of including a clause in the trust deeds to enforce the condition while honouring the wills of the founders.

Changing trust deeds is a complex issue and a tedious, long-drawn legal process "Tata Trusts has been discussing this legally, but there will not be any issue in terms of implementation in both the institutions," an official in the know said. Tata Trusts and Tata Sons did not respond to ET's queries on the subject.

Last August, Tata Sons unanimously passed a resolution at its annual general meeting (AGM) amending Article 118 of the AoA to ensure that the same person heading Tata Sons doesn't head the Tata Trusts - the biggest shareholder in Tata Sons.

About 66% of the equity capital of group holding company Tata Sons is with the philanthropic trusts endowed by members of the Tata family. The biggest of these are the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust.

Ratan Tata, chairman emeritus of Tata Sons, heads the Tata Trusts. He is keen the long-term interests of both institutions, the Tata Trusts and Tata Sons, are protected. He was the last person to be chairman of both Tata Sons and the Tata Trusts after JRD Tata.

Lengthy Process

Amending the trust deeds will be a long procedure involving shareholders, trustees and various regulators. The group is consulting lawyers to iron out all issues before formally initiating changes. Sudip Mahapatra, partner at S&R Associate, said that since the AoA of Tata Sons already enshrines the principle, a change in the trust deeds of Tata Trusts to reflect the same amendment is not necessary.

"The Tata Trust would have also voted in favour of such an amendment to the articles of association," said Mahapatra. "Even with the changes at one of the entities, the group will be able to achieve the same," he said.

Tata Sons had passed a special resolution amending the AoA at the meeting that approved a fresh five-year term for chairman N Chandrasekaran in February 2022. Ratan Tata, chairman emeritus of Tata Sons, had attended the meeting as a special invitee.

"It would be advisable to incorporate a suitable change under the trust deed in addition to the articles of association of the holding company to cover all scenarios," said Ketan Mukhija, partner at Link Legal.