Tata Sons’ shareholders approved a resolution that prevents a person who is the chairman of either of its two trusts from being eligible to head the company’s board.
The shareholders’ approval means that the trusts – Sir Dorabji Tata Trust and Sir Ratan Tata Trust – the two controlling shareholders of the company, and Tata Sons (the holding company of all Tata Group firms) will have separate individuals as chairman.
The shareholders approved the motion at the company’s annual general meeting held on Tuesday.
Earlier in its annual report, Tata Sons said it had received a request from Sir Dorabji Tata Trust and Sir Ratan Tata Trust to make an amendment in its Articles of Association (AoA). The shareholders have asked to insert a clause that ‘a person who is the chairman of either of the trusts or of both will not concurrently be eligible to be the chairman of the company’s board’.
Since 2012, following the appointment of Cyrus Mistry as chairman of Tata Sons, Ratan Tata has been the head of the trusts. Tata, who is the chairman emeritus of Tata Sons, continued to head Tata Trusts after N Chandrasekaran took over as the chairman of the holding company in 2017.
“Now this has become legally binding, and the trusts and Tata Sons will continue to be chaired by two different individuals,” a source close to the development said.
Nearly 66% of Tata Sons’ stake is held by philanthropic trusts of the group and Sir Dorabji Tata Trust alongwith Sir Ratan Tata Trust are the biggest among these.
Further all the resolutions of Tata Sons that came up for voting at its AGM were also approved, despite the motions were voted against by certain shareholders.
These included reappointment of Ajay Piramal and Anita George as independent directors under special business and reappointment of Venu Srinivasan and Bhaskar Bhat as directors. Tata Sons had put a total of nine resolutions, including the AoA and reappointment of directors among others, to vote at the AGM.
In its EGM convened in April, the shareholders had voted for the reappointment of Chandrasekaran as executive chairman for a further period of five years from February 21, 2022, to February 20, 2027.
Chandra, as he is popularly known in the industry, was designated chairman in January 2017 and later took charge on February 21, 2017, following the ouster of former chairman Mistry. His five-year tenure came up for renewal in February this year.
The privately-held Tata Sons, the investment-holding arm of Tata group companies, had posted a 164% rise in net profit at Rs 17,171 crore for the financial year 2022, buoyant on gains from share buyback and dividends. In comparison, the firm had posted a net profit of Rs 6,512 crore in the previous fiscal.
The holding company’s net profit on a consolidated basis rose to Rs 40,437.75 crore from Rs 19,379.08 crore posted during the same year-ago period, according to its annual report for FY22.