A latest Maharashtra authorities rule capping the variety of lifetime trustees is anticipated to have direct implications for Tata Trusts and different main public charitable trusts. In keeping with a report in The Financial Occasions, the Maharashtra Public Trusts (Modification) Ordinance, 2025, notified in September, restricts perpetual trustees to one-fourth of a belief’s whole board power. This challenges a decision handed by Tata Trusts in October 2024, which acknowledged that each one present trustees would have their phrases renewed for all times after their present tenures ended.
The brand new ordinance introduces a major shift in governance constructions for trusts holding substantial property and affect, requiring a cautious reconsideration of board composition insurance policies.
As per the report, the ordinance creates two courses of trustees — perpetual or lifetime trustees and tenure-term trustees. The principle Tata trusts, Sir Ratan Tata Belief (SRTT) and Sir Dorabji Tata Belief (SDTT), at present have six trustees every, following the non-renewal of Mehli Mistry’s time period. Underneath the brand new rule, solely one-fourth of board members could be perpetual trustees, that means a most of 1 or two lifetime appointments per board at present composition. That is anticipated to impede Tata Trusts’ latest coverage to nominate trustees for all times upon their reappointment.
The ordinance additionally establishes new procedures for appointing and reappointing tenure-based trustees. The place the founding belief deed doesn’t specify a tenure, “present trustees could appoint replacements for phrases of as much as 5 years at a time”, the report acknowledged. In observe, trusts should now choose fastidiously who will obtain lifetime appointments, as exceeding the one-fourth cap just isn’t permitted underneath the brand new regulation.
A key concern for Tata Trusts is the reappointment of Venu Srinivasan. He was made a perpetual trustee of SDTT on October 20, earlier than the brand new guidelines have been dropped at the eye of the board. Sources advised the monetary day by day, “The trustees, sources stated, weren’t conscious of the brand new ordinance when the reappointment occurred.” This has created uncertainty relating to the validity of latest board appointments and the standing of trustees appointed for all times within the interim interval.
Noel Tata’s personal renewal for all times as chairman of Tata Trusts and SDTT occurred in January, previous to the ordinance coming into pressure. Throughout his appointment as chairman, the decision for lifetime reappointments was additionally handed. The SDTT board now includes Noel Tata, Venu Srinivasan, Vijay Singh, Pramit Jhaveri, and Darius Khambata.
With Tata Trusts (together with SDTT and SRTT) holding about 51 per cent of Tata Sons, the holding firm of the Tata Group, these modifications are set to impression the governance construction of entities controlling important company property.
