Multiple options exist post the deferment of Tata Sons' AGM, say legal experts

With Tata Sons, the holding company of the eponymous conglomerate, getting an extension from the Registrar of Companies (RoC) to hold its annual general meeting (AGM) by end-December, it now opens up multiple possibilities. The AGM scheduled to be held on August 18 was adjourned on the back of lack of quorum.

This comes on the back of the inability of Sir Ratan Tata Trusts (SRTT), which holds a 23.56% stake in Tata Sons, to nominate its representative for the meeting. The issue relates to SRTT’s board composition and, more specifically, the proportion of permanent trustees. A valid quorum at the meeting mandatorily requires the attendance of at least five members and must include a representative jointly nominated by two trusts – Sir Dorabji Tata Trust (SDTT) and SRTT – that together hold a 52% stake in Tata Sons. Eminent lawyer, Homi Ranina says the RoC has the power to give an extension. “Tata Sons is not a listed entity and the reason to grant it is genuine,” he adds.

As reported by Business Today on August 19 – N Chandrasekaran exit: Uncertainty looms over Tata AGM; here's what experts say -- the annual general meeting for the 2026 fiscal must be held no more than 15 months after the last meeting,” he points out. Given that the last one was held on August 14, the deadline is mid-November this year. Now, it transpires that Tata Sons has secured an extension from the Registrar of Companies to hold the meeting by the end of December.

The AGM is to held for a few reasons – the reappointment fo N Chandrasekaran as Tata Sons’ Director, finalising Tata Sons’ accounts and declaring a dividend. Earlier this month, N Chandrasekaran, Tata Sons, said he was not offering himself for a third term. He took charge in 2017 and is in the midst of his second five-year term.

That was followed by a statement from SDTT saying that it had passed a resolution to initiate the setting up of a selection committee to recommend a person as the new Chairman. In line with Tata Sons’ Articles of Association, both SRTT and SDTT will jointly nominate three members to a five-member selection committee. One member each will come from Tata Sons and one external member.

Ashish Kumar Singh, Partner at Capstone Legal points to three scenarios playing out from this point onward. “One is a straightforward resolution to the issue. The other possibility is for any of the interested parties, including the minority shareholders, to take the issue to NCLT (National Company Law Tribunal),” he says. In the case of the latter, it is likely to go back to the Charity Commissioner of Mumbai to request it to allow holding a meeting of Sir Ratan Tata Trust. “If that does not take place, the option to take it to the Bombay High Court exists,” says Singh. In line with Article 226 and 227 of the Indian Constitution, every High Court has the power to issue writs, orders and direction to protect one’s rights or the power to oversee all lower courts and tribunals in its local area.

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