OPINION | L’affaire Tata: Much ado about an evolutionary thing

The Tata Group’s current phase is not one of crisis but of transition.

The Tata Group’s governance architecture has long been admired for its blend of commercial acumen and philanthropic stewardship. At the heart of this dual mandate lies the Tata Trusts, which hold a majority stake in Tata Sons and have historically shaped the group’s strategic direction.

For decades, this structure was harmonized under the quiet authority of Ratan Tata, whose simultaneous chairmanship of Tata Sons and Tata Trusts offered coherence and continuity.

Today, as the group transitions into a more codified governance model, it faces both scrutiny and opportunity, especially in the absence of a unifying figure.

The legitimacy and legacy of dual chairmanship

Ratan Tata’s dual leadership was not anomalous. It was valid under the governance norms of the time and consistent with fiduciary principles. His stewardship allowed for seamless alignment between the group’s commercial and philanthropic arms, enabling decisions to flow through confidence rather than rigid procedure.

The arrangement reflected a leadership style rooted in trust, where personal credibility substituted for formal checks and balances.

Subsequent structural refinements, most notably the separation of chairmanships, were preventive, not corrective. These changes were designed to institutionalize governance, limit the concentration of authority, and align with evolving standards of corporate accountability.

They represent a natural evolution toward codified checks and balances, reflecting a maturing governance architecture rather than any retrospective critique of Tata’s leadership model.

Post-Tata Transition: From consensus to codification

With Tata’s withdrawal from active oversight, the Trusts are recalibrating. What may appear as discord among trustees is better understood as a manifestation of institutional independence. Routine deliberations, once guided by instinctive consensus, are now shaped by formal processes under the Companies Act, 2013, and the Indian Trusts Act, 1882. This visibility is not a symptom of dysfunction—it signals a shift from personality-driven alignment to process-based governance.

The absence of a unifying figure has made decision-making more structured and, at times, more visible. But this visibility should not be mistaken for vulnerability. The so-called cracks in the Trusts’ structure are signs of evolution, an enduring institution adapting to new norms of accountability and self-governance.

Transparency: A new regulatory imperative

During Tata’s active years, the Trusts operated under a wide umbrella of public confidence. His personal integrity and the Tata legacy inspired faith that decisions were guided by prudence and fairness. In such a climate, external scrutiny was neither demanded nor deemed necessary. The Mistry episode, an isolated governance dispute, briefly brought internal processes into public discussion but did not fundamentally alter public trust.

Today, however, regulatory and societal expectations have shifted. The call for granular transparency is not a critique of the past but a reflection of the present, a move toward global standards of disclosure and institutional clarity. The emphasis on transparency is now embedded in the broader corporate ecosystem, driven by SEBI norms, stakeholder activism, and evolving jurisprudence on fiduciary accountability.

Implications of a potential Tata Sons listing

The possibility of a Tata Sons listing adds another layer to this transformation. If pursued, such a listing would subject the company to the regulatory framework of the Securities Contracts (Regulation) Act, 1956 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This would enhance disclosure norms and minority shareholder protections, introducing new layers of scrutiny and compliance.

However, a listing would not automatically alter the balance of rights embedded in the existing Articles of Association. Any modification to governance provisions or shareholder powers would require due process, including requisite approvals under the Companies Act, 2013. The Tata Trusts’ established shareholding would continue to anchor the group’s stewardship, ensuring continuity alongside compliance.

Conclusion: Resilience through reform

The Tata Group’s current phase is not one of crisis but of transition. The shift from personality-led stewardship to institutional accountability reflects resilience, not rupture. As the Trusts and Tata Sons navigate this new terrain, they do so with the benefit of legacy and the imperative of reform. The journey ahead will be shaped not by the absence of a leader, but by the strength of the institutions he helped build.

(Yash B. Joglekar is Counsel, Bombay High Court.)

Views are personal and do not represent the stand of this publication.