The recent passing of Ratan Tata, a titan of Indian industry, has led to widespread speculation about the future leadership of the Tata Group. While many assume that overall control will automatically transition to his half-brother, Noel Tata, the reality is far more complex. Ratan Tata did not leave behind a clear succession plan, and he did not personally own shares in Tata Sons that he could bequeath, raising questions about the governance and direction of this illustrious conglomerate.

The Unique Structure of Tata Sons

Tata Sons, the holding company for the Tata Group, operates under a distinctive ownership model. Unlike most business entities, it is predominantly controlled by two charitable trusts: the Sir Ratanji Tata Trust and the Sir Dorabji Tata Trust. These trusts were established in memory of Sir Jamsetji Tata’s sons and have historically held a controlling interest in Tata Sons. Initially, they controlled around 66% of the company; however, the current ownership structure may have slightly changed over time. The implications of this structure are significant, as the individuals leading these trusts indirectly control the overarching business strategy and direction of the Tata Group.

Governance and Control

Ratan Tata, who served as the group’s chairperson until 2012, made several strategic changes before his retirement, including revising the Articles of Association. This move tightened the trusts’ hold over the group, granting them the authority to nominate one-third of the directors at Tata Sons and to oversee the appointment and removal of all directors. Such governance mechanisms were put in place to ensure that the Tata legacy remained aligned with the philanthropic values established by its founders.

The need for clear institutional governance was also highlighted by Cyrus Mistry, Ratan Tata’s predecessor, who argued for a structured corporate governance framework. Mistry suggested that roles within Tata Sons, the trusts, and the operating companies should be clearly defined to prevent any single individual from dominating the group. Unfortunately, discussions on this critical issue were abruptly halted when Mistry was dismissed from his position in 2016, leaving behind an unresolved governance landscape.