Board Directorship Rules at Tata Sons Amidst Leadership Transition

In a significant development concerning the leadership of one of India’s most prominent conglomerates, Noel Tata is not eligible to hold the chairmanship of both Tata Sons and Tata Trusts simultaneously. This stipulation has its roots in reforms implemented after the controversial removal of Cyrus Mistry from the board of Tata Sons in 2017.

Questions arose regarding the governance standards of Tata Sons in relation to two key trusts—the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust. In 2022, then-chairman of Tata Trusts, Ratan Tata, instituted a mechanism distinguishing the ownership rights and operational responsibilities of Tata Sons.

During the 2022 annual general meeting, Ratan Tata expressed his intent to amend Article 118, which related to the appointment of the chairman of the board of Tata Sons. The new amendment prohibits an individual from concurrently holding the position of chairman of Tata Sons and chairman of the Sir Dorabji Tata Trust or the Sir Ratan Tata Trust.

This regulation also establishes that a selection committee will appoint the chairman of Tata Sons. This committee is composed of three members jointly nominated by the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust, with at least one member being an outsider appointed by the board.

Currently, Vijay Singh and Venu Srinivasan are key figures on the Tata Sons board, both of whom represent the executive committee of Tata Trusts. Noel Tata has recently assumed the chairmanship of Tata Sons following the death of Ratan Tata on October 9, at Breach Candy Hospital in Mumbai.