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The chairman of Tata Trusts, which owns roughly 66% of Tata Sons, Noel Tata, is expected to be named to the latter company’s board.
NEW DELHI: The chairman of Tata Trusts, which owns roughly 66% of Tata Sons, Noel Tata, is expected to be named to the latter company’s board. He will be the only founding family member of the Tata Group to be appointed to the boards of Tata Sons and Tata Trusts.
With Noel’s appointment, the Trusts will have three nominees on the Tata Sons board: vice-chairmen Vijay Singh and Venu Srinivasan.
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When Ratan Tata announced his retirement from Tata Sons in 2012, Noel Tata was originally thought to be a possible successor. Instead, Cyrus Mistry, his brother-in-law, was selected for the position. After a disagreement with Ratan Tata in 2016, Mistry lost his position as chairman and was succeeded by Natarajan Chandrasekaran. In 2022, Mistry perished in a vehicle accident.
The immediate appointment of Noel Tata to the position of chairman of Tata Trusts has sent both clear and indirect implications. The protection of the Tata group’s reputation as a Parsi corporate empire is foremost among them.
With a Tata in charge, the company is perceived as having a distinctive corporate character and ethic, which has helped it overcome numerous governance difficulties and scandals without tarnishing its impeccable reputation.
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Observers of the Tata Group had anticipated this move because he had previously been thought of as a possible chairman candidate. When he became a trustee of the Sir Ratan Tata Trust in 2019 and the Sir Dorabji Tata Trust in 2022, there were rumours that he would succeed Ratan Tata as chairman of Tata Sons in 2011. He was also inducted into the Tata Sons board. However, his brother-in-law Cyrus Mistry and later TCS veteran N Chandrasekaran took over as chairman.
Noel has now been appointed to the Tata Sons board as a director, While Chandrasekaran will continue to serve as the leader of the business being the chairman. To mitigate any conflicts of interest, Tata Sons modified its articles of association (AoA) to prohibit an individual from serving as both Tata Sons and Tata Trusts’ chairman at the same time.
This rule essentially keeps Noel, from rising to the position of Tata Sons chairman. The last individual to occupy both roles at the same time was Ratan Tata himself.
Trusts are thinking of designating one-third of the directors on the board of the holding company, as long as they own at least 40% of the business, according to Tata Sons’ AoA. The directors of the Trusts can also veto decisions made by the board.
