InvestorQ : Can you tell me about the restructuring that the Tata group is planning in the Tata Sons management?
Lavanya Subramanian made post

Can you tell me about the restructuring that the Tata group is planning in the Tata Sons management?

Anamika Sodhani answered.
2 months ago

The primary holding vehicle of the Tata group, Tata Sons, has made a significant amendment to the articles of association regarding leadership. The Tata group has total sales in excess of $130 billion and has over 17 listed companies and scores of unlisted companies. Currently, close to 66% of the Tata group companies are held jointly by Tata Sons and Tata Trusts. As per the new amendment, both Tata Sons and Tata Trusts must have separate chairmen. It will be unlike the situation till 2012 when both positions were held by Ratan Tata.

There is a history to this amendment. In 2012, the chairmanship of Tata Sons was handed over to Cyrus Mistry, who was forced to resign late 2016. Subsequently, N Chandrasekharan of TCS took charge as the chairman of Tata Sons in 2017 and he has been re-elected to the position in 2022 for another five years. Ratan Tata continues to hold the chairmanship of the Tata Trusts. Interestingly, the Mistry family holds 18.5% stake in Tata Sons and that has been the bone of contention between the Tata family and the Mistry family in recent times.

While the Tata group has refused to give any official comment, the importance of the AGM is evident from the fact that both Ratan Tata and N Chandrasekaran were present at the AGM in Mumbai. In addition, the resolutions also renewed the directorships of Ajay Piramal and Venu Srinivasan, while Anita George was approved to be appointed as the independent director. This amendment means that a person who is chairman of either Sir Dorabji Tata Trust or Sir Ratan Tata Trust will not concurrently be eligible to be chairman of Tata Sons.

It may be recollected that Tata Sons has now converted into a private limited company. Any alteration to the articles of association requires the approval of 75% of shareholders present in the meeting and by passing a special resolution. Despite the protests from the Mistry family holding 18.5%, Tatas had enough votes to push the resolution through. The chairman of Tata Sons and his removal will be decided by a 3 member committee jointly nominated by the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust and two others.