1st time in group's history: Tata Sons AGM deferred

In a historic first for the Tata group, the Annual General Meeting (AGM) scheduled for Tuesday was abruptly adjourned and deferred due to an insufficient quorum, according to wire material. Chairman N Chandrasekaran and select board members attended the meeting in person, while Noel Tata and Mehli Mistry joined virtually. The chairman intends to reconvene the AGM, pending consultation with the board, according to officials.

The AGM, held at Bombay House, was attended by some stakeholders online. Sir Dorabji Tata Trust (SDTT), one of the two primary controlling trusts of Tata Sons, informed the company that a joint representative could not participate in the AGM due to the absence of the Maharashtra Charity Commissioner's approval for the Sir Ratan Tata Trust (SRTT), thus falling short of the necessary quorum. SDTT, the other principal controlling trust of Tata Sons, had previously notified Tata Sons of the lack of required quorum for the AGM.

The Maharashtra Charity Commissioner has not lifted the restrictions on SRTT, a principal trust that holds a majority stake in Tata Sons, casting doubt on the August 18 AGM of the holding company of India's largest conglomerate. Officials close to the Tata Trusts revealed they informed Tata Sons of the quorum issue but could not compel the company to cancel the AGM. "They can convene it by law but will have to adjourn anyway," a source familiar with the developments explained.

This uncertainty surrounding the AGM has also brought attention to the future of Tata Sons chairman N Chandrasekaran, who is subject to rotation-based retirement. According to individuals familiar with the Articles of Association, if the August 18 meeting could not be legally constituted due to the lack of quorum, Chandrasekaran would retain his directorship until a valid AGM is held, where his reappointment can be discussed.

Some trustees of the Tata Trusts have requested relief from the Charity Commissioner as individuals, presumably due to the belief that SDTT cannot seek such relief on behalf of SRTT. SDTT and SDTT jointly own 51.54% of Tata Sons, with SRTT controlling approximately 23.5% and SDTT about 28%.

The Charity Commissioner had imposed the restraint under Section 36A(1) of the Maharashtra Public Trusts Act following concerns about the composition of the SRTT board and alleged non-compliance with Section 30A(2) of the Act. Section 30A(2) governs the permissible number of perpetual or life trustees on the board, with a recent amendment introducing a statutory cap on the number of perpetual trustees.

Chandrasekaran's position remains uncertain under the Companies Act, as a director liable to retire by rotation continues serving until the relevant AGM, where shareholders must either reappoint the director or fill the vacancy. The legal implications of an AGM failing to meet the required quorum are currently being examined.