Tata Sons succession search stalls as regulatory hurdle blocks key trust's nominee

Succession search hits regulatory hurdle

The search for a new chairman of Tata Sons has been delayed after one of the group's key shareholder trusts was unable to join the process because of regulatory restrictions, according to a report by Bloomberg.

Sir Ratan Tata Trust (SRTT), one of the 13 charities that together form the majority shareholder in Tata Group's holding company, is currently barred from holding internal meetings because of restrictions linked to an ongoing probe, people familiar with the matter said. The restriction means the trust cannot nominate its representative to a five-member panel that will look for Natarajan Chandrasekaran's successor.

Tata Trusts, which collectively hold 66% of Tata Sons, has asked the Maharashtra Charity Commissioner to allow SRTT to appoint its representative to the panel announced by Sir Dorabji Tata Trust, according to the people, who asked not to be named because they were discussing internal matters.

The delay comes more than two weeks after Mr Chandrasekaran announced on 12 August that he would not seek another term as chairman. His current term ends in February. The unexpected announcement has raised questions about succession planning at India's largest business groups and exposed tensions between the outgoing chairman and Noel Tata, who heads the Trusts, Business Today reported.

The process has also highlighted the complex ownership structure of Tata Sons, which has previously raised concerns about governance and transparency, according to the same report. A prolonged delay could put pressure on Mr Tata to reassure investors, regulators and policymakers that the group remains capable of delivering on Prime Minister Narendra Modi's plans for manufacturing and technology.

The Economic Times reported that the Registrar of Companies has granted Tata Sons a three-month extension to hold its annual shareholders' meeting. The freeze on meetings by SRTT has already forced Tata Sons to adjourn its annual general meeting last month over lack of quorum, the outlet said. The Tata holding company's next board meeting is scheduled for Sept. 17, it added.

NewsBytes reported that the decision from the Charity Commissioner is still pending.

Representatives of Tata Sons and Tata Trusts did not immediately respond to requests for comment, Business Today reported.