The first change that has been implemented as part of the exercise was barring the Tata Trusts chairman from becoming the chairman of Tata Sons. Shareholders of Tata Sons last week approved changing the articles of association of the group holding company for this.
The Tata Trusts are consulting legal experts to examine the possibility of including a specific clause in the trust deeds to the effect that the same person cannot head them as well as Tata Sons.
The wills left by members of the founding Tata family have no such stipulation. Both JRD Tata and Ratan Tata had held the posts simultaneously.
Amending the trust deeds will be a long procedure, involving shareholders, trustees and various regulators.
The former advocate general of Maharashtra is an authority on the Constitution of India, corporate laws and taxation. He was a trustee of one of the trusts, Sir Dorabji Tata Trust, but quit in 2016 citing increasing professional commitments. That was also when the dispute between the Tata Trusts and the Shapoorji Pallonji Group had just begun.
When contacted, Khambata declined to comment. The Tata Trusts did not comment.
The developments at Tata Trusts are part of a significant corporate governance exercise, which includes succession planning, the people said. About two-thirds of the equity capital of group holding company Tata Sons is with the philanthropic trusts endowed by the members of the Tata family. The biggest of these are the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust.
“It is not enough that the letter of law be complied, but also the intention and spirit. Avoidance of concentration of power and decision-making abilities in an individual is one of the key principles of corporate governance,” said Vineetha MG, a cofounder of law firm Samvad Partners. “Especially in India, where businesses are usually promoter-driven, conscious segregation of the two roles (albeit titular roles) is hugely demonstrative of the growth-driven focus of the Tata Group rather than retention of shareholder control.”
Khambata, a senior lawyer, had represented a government agency in the Adarsh Housing scam and also argued for the environment ministry against Lavasa Corp. He had represented Sebi against Jignesh Shah-promoted MCX-SX in the Bombay High Court, where the erstwhile promoter of the exchange had sought to get a licence for equity and debt trading platforms from the market regulator.
He had represented Madhu Kapur, the wife of Yes Bank’s late cofounder Ashok Kapur, and her daughter in the Bombay High Court, where he successfully convinced the court that Kapur had the right to jointly nominate directors on the board of the lender.
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