The boardrooms of India's most influential philanthropic trusts are preparing for a critical meeting on May 8. The Sir Dorabji Tata Trust (SDTT) and Sir Ratan Tata Trust (SRTT), which together hold a 52% controlling stake in Tata Sons, will convene to review their nominee directors on the holding company's board, among other agenda items.
Nominee Directors Under Scrutiny
The two current nominee directors on Tata Sons are Noel Tata and Venu Srinivasan, who also serve as chairman and vice chairman respectively of both trusts. Their predecessor, Vijay Singh, who was also vice chairman of SDTT and SRTT, was effectively removed last September after non-nominee directors blocked his reappointment under an internal rule requiring trustees who reach the age of 75 to face a review.
With Srinivasan turning 75 in December and Noel, at 69, holding the top position, the grounds for a review are not immediately apparent. However, sources suggest that differing views on whether Tata Sons should remain private may be a key topic of discussion.
IPO Debate Divides Trustees
Noel Tata is opposed to a Tata Sons IPO, while Srinivasan supports the idea. Noel's opposition stems from concerns that a listing would dilute the trusts' control over the holding company and critically render Article 121 redundant. This provision requires strategic decisions to have the affirmative vote of a majority of trust-nominated directors. A 1-1 split would neutralize it. If a nominee director is removed by a majority vote, the trusts can nominate a replacement aligned with Noel's views, restoring their majority say on strategic matters.
Sources indicate that some trustees who previously supported a resolution opposing a Tata Sons IPO are now backing one. SDTT and SRTT regard this as misconduct and sufficient grounds for review. The debate is further complicated by new RBI rules for non-banking financial companies, effective July, which are seen as unfavorable to Tata Sons remaining private and may push it to list.
An email sent to Tata Trusts seeking comment did not elicit a response. Both Srinivasan and Singh have publicly backed a Tata Sons IPO. The Friday meeting could result in an attempted ouster of Srinivasan from the Tata Sons board.
TEDT Circular on Trustee Reappointments
The tensions extend beyond SDTT and SRTT. At the Tata Education and Development Trust (TEDT), a circular issued on Sunday calls on its trustees to vote on renewing the terms of Srinivasan and Singh, both due to expire on May 10. TEDT holds no stake in Tata Sons, but its Rs 5,600 crore corpus makes it the wealthiest trust in the Tata constellation.
Renewals require unanimous approval, but recent voting patterns suggest these trusteeship extensions are no longer a formality, as they were during Ratan Tata's chairmanship. The other trustees of TEDT are Noel, Mehli Mistry, and Jehangir Mistry, with Noel and Mehli serving as permanent trustees and Jehangir as a term trustee whose tenure ends next year.
The development places the spotlight on Mehli, who is widely expected to oppose the reappointments. Mehli's reappointment at SDTT and SRTT was blocked after Noel, Srinivasan, and Singh voted against it.
Legal and Structural Implications
Under Maharashtra's revised Public Trusts Act, TEDT can have only one permanent trustee. The trust is said to be compliant as it believes the rule is prospective, meaning its current two permanent trustees, Noel and Mehli, are grandfathered in. No new perpetual trustees can be added.
The internal divisions at SDTT and SRTT became public after non-nominee directors blocked Singh's reappointment on the Tata Sons board and proposed Mehli as his replacement. Noel refused. Singh, 77, subsequently resigned.
