Tata Sons AGM postponed after quorum falls short, Chandrasekaran’s position in focus

The Tata Sons annual general meeting (AGM) scheduled for Tuesday was adjourned and deferred after the meeting failed to meet the required quorum, marking the first such instance in the history of the Tata group holding company.

The AGM was convened at Bombay House in Mumbai, with some stakeholders participating virtually. Tata Sons Chairman N Chandrasekaran and a few board directors attended in person, while Noel Tata and Mehli Mistry joined the meeting online.

The chairman is expected to consult the board before deciding on a fresh date for the AGM, officials familiar with the matter said.

Tata Trusts issue triggers quorum problem

The immediate hurdle was linked to the participation of the two principal controlling trusts of Tata Sons — Sir Dorabji Tata Trust (SDTT) and Sir Ratan Tata Trust (SRTT).

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SDTT had informed Tata Sons that a joint representative could not participate in the AGM because the Maharashtra Charity Commissioner had not approved participation by SRTT. As a result, the required quorum for the meeting was not available.

Officials close to Tata Trusts said the trusts had already informed Tata Sons about the quorum issue, although they could not direct the company to cancel the AGM.

“They can convene it by law but will have to adjourn anyway,” an official aware of the developments said.

SRTT and SDTT together hold 51.54% of Tata Sons. SRTT holds about 23.5%, while SDTT has around 28%.

The Charity Commissioner’s restrictions on SRTT stem from complaints concerning the composition of its board and alleged non-compliance with Section 30A(2) of the Maharashtra Public Trusts Act. The provision deals with the permissible number of perpetual or life trustees on the board.

What happens to Chandrasekaran?

The failed AGM has also raised questions about the position of Chandrasekaran, who is liable to retire by rotation.

Officials familiar with Tata Sons’ Articles of Association said that if the AGM could not be validly constituted because of the lack of quorum, Chandrasekaran would continue as a director until a valid AGM is held and his reappointment can be considered.

Under the Companies Act, a director liable to retire by rotation remains in office until the relevant AGM, when shareholders are required to either reappoint the director or fill the vacancy. However, the law does not specifically spell out what happens when an AGM itself cannot be validly held because of a quorum shortfall.

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The interpretation of Tata Sons’ Articles and the legal consequences of Tuesday’s development are therefore being examined, people familiar with the matter said.

Chandrasekaran joined the Tata Sons board in October 2016 and became chairman in January 2017. His continuation as chairman depends on his remaining a director.

He has already communicated that he will not seek reappointment when his current term ends in February 2027.