Tata Sons plans to hold its annual general meeting (AGM) within a month, according to The Economic Times. Shareholders need to consider N Chandrasekaran’s reappointment as a director. However, restrictions on the Sir Ratan Tata Trust (SRTT) could prevent the company from meeting its quorum requirement again.
Shareholders must vote on Chandrasekaran’s reappointment as a Tata Sons director at a valid AGM. Tata Sons received a three-month extension from the Registrar of Companies after it could not complete its August 18 meeting. The company has yet to announce a new date.
Executives familiar with Tata Sons’ rules told The Economic Times that Chandrasekaran would remain a director if a lack of quorum prevents the AGM from taking place. His reappointment would then await a valid meeting and shareholder vote.
The proposed meeting also follows a disagreement at a Tata Sons board meeting last week. According to reports, Tata Trusts chairman Noel Tata opposed Chandrasekaran’s reappointment as chairman and a proposed listing of Tata Sons. Other directors supported both proposals. The chairman proposal and the shareholder vote on Chandrasekaran’s directorship are separate matters.
Tata Sons’ rules require at least five members to attend a general meeting in person. They also require an authorised representative jointly nominated by SRTT and the Sir Dorabji Tata Trust (SDTT), provided the Tata Trusts together hold at least 40% of the company’s paid-up ordinary share capital.
SDTT holds 27.98% of Tata Sons, while SRTT holds 23.56%. Their combined stake of 51.54% places the joint representative requirement above the stated threshold. The Maharashtra Charity Commissioner has restricted SRTT from holding meetings or making decisions. The trusts therefore could not jointly nominate a representative for the August AGM, and the meeting was adjourned.
The restriction remains in place, according to reports. Unless SRTT can make the nomination, Tata Sons could face the same quorum problem when it reconvenes the AGM. The company did not comment on the reported plan.
Tata Sons may ask the National Company Law Tribunal (NCLT) for directions if it cannot meet the quorum requirement, people familiar with the matter told The Economic Times. Section 97 of the Companies Act allows the tribunal to direct that an AGM be held and set out how the company must conduct it. Tata Sons has not announced an application to the tribunal.
Lawyers quoted by the newspaper differed on how far such an order might go. Shafaq Uraizee Sapre said the NCLT could deem one member present sufficient for the meeting, but its order would not lift the Charity Commissioner’s restrictions on SRTT. Shreni Shetty said she considered it ‘extremely unlikely’ that the tribunal would override a shareholder’s quorum rights under Tata Sons’ rules.
Vimal Taparia, a partner at Morphis Management Services, raised a further doubt. He said that an affected shareholder could challenge an AGM held under such an order or the resolutions passed there. For now, both the meeting date and the route to a valid shareholder vote remain unsettled.
Also Read: Tata Sons IPO: Why SP Group Prefers Listing & Noel Tata Doesn’t