Shareholders of Tata Sons, the holding company of the $128-billion salt-to-software conglomerate, unanimously voted in favour of the amendment of Article 118 of the Articles of Association (AoA) that would ensure separate chairpersons for the company and its promoter Tata Trusts.
Two Tata Trusts-- Sir Dorabji Tata Trust and Sir Ratan Tata Trust – own nearly 66 percent of the group. Tata Sons is the holding company of all Tata Group firms.
Till 2012, Ratan Tata, who chairs Tata Trusts, was also the chairman of Tata Sons. Subsequent chairmen Cyrus Mistry and N Chandrasekaran have not chaired Tata Trusts. Chandrasekaran has been the head of Tata Sons since 2017.
Although the chairperson positions remained separate since 2012, the amendment in the company's articles of association will make the provision legally binding.
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Tata Sons' single-largest shareholder, Shapoorji Pallonji Group, abstained from voting at the AGM held on Tuesday. Shapoorji Pallonji owns an 18.4 percent stake in Tata Sons. Ratan Tata and N Chandrasekaran attended the AGM held in Mumbai.
What is the new change?
Article 118 of the Articles of Association (AoA) deals with the appointment of the chairman. According to the new AoA, a person who holds the post of the chairman of either of the two Tata Trusts will not be eligible to become the chairman of Tata Sons.
Why the change
The amended AoA will decouple ownership and management. With two separate chairpersons at the company, it will be easier to manage goals independently, according to industry observers.
Other decisions
Apart from this, the shareholders also passed resolutions to renew the directorship of Ajay Piramal and Venu Srinvasan. They also approved the appointment of Anita George as an independent director of Tata Sons. Shapoorji Pallonji Group was opposed to the appointment of Piramal and Srinivasan, Business Standard reported, quoting a source close to the development.
(Edited by : Sudarsanan Mani)
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