Shareholders may vote on splitting chairman posts at Tata Sons & Trusts

Tata Sons shareholders are expected to vote on new articles of association (AoA), seeking to separate the positions of chairman of Tata Trusts and Tata Sons soon. This will be put to vote on August 30, according to the Tata Sons an­n­ual general meeting notice.

While the two positions remained separate since 2013, a change in the AoA will make it legally binding. The move is meant for better corporate governance and decoupling of ownership from management, the source said. Ratan Tata was the last Tata Sons chairman to head the Trusts.

The Mistry family, which owns 18.5 per cent in Tata Sons Private, may support the change in the AoA, according to insiders. Mistrys did not comment on the matter.

A person who is the chairman of either the Sir Dorabji Tata Trust or the Sir Ratan Tata Trust or of both, will not concurrently be eligible to be the chairman of the Board of Directors of Tata Sons, the new AoA in the AGM notice said.  

Any alteration to the AoA will require the approval of 75 per cent of shareholders present in the meeting and by passing a special resolution, said a corporate lawyer.

According to the AoA for the purpose of selecting a new chairman of Tata Sons, a selection committee will be formed to recommend the appointment of a person as the chairman of Tata Sons. The Tata Sons board may appoint the person as the chairman of the Board of Directors, subject to Article 121, which requires the affirmative vote of all directors. The same process shall be followed for the removal of a chairman. The selection co­m­mittee will comprise three persons nominated jointly by the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust who may or may not be directors of Tata Sons, one person no­m­inated by and from amo­ngst the Board of Directors of Tata Sons and one independent outside person selected by the Board for this purpose, the new AoA said.

The chairman of the committee will be selected by the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust from amongst the nominees nominated by the Trusts.

The quorum for a meeting of the Selection Committee will be the presence of a majority of members nominated jointly by the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust. In case of any difference of opinion, the decision of the majority of the Trustees in the aggregate of the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust will prevail, the AGM notice said.