No clarity in will: Arbitrator could take important call on future of Tata’s fortune – The Times of India
In light of uncertainty regarding trustee appointments to the Ratan Tata Endowment Foundation (RTEF), Tata stakeholders are considering opting for an arbitrator. A retired Supreme Court chief justice is likely to be approached to determine whether the authority to appoint trustees rests with Ratan Tata’s will executors, the Tata family, or Tata Trusts members, according to sources close to the matter.
In 2022, Ratan Tata established two entities to manage his personal wealth: the RTEF under Section 8 of the Companies Act 2013 and the Ratan Tata Endowment Trust, both dedicated to charitable and philanthropic endeavours.
His direct ownership in Tata Sons, the group’s holding company, stood at 0.83%, with a net worth of Rs 7,900 crore according to the Hurun India Rich List of August 2024. The RTEF additionally holds minor stakes in Tata Digital and Tata Technologies.
Sources told ET that his wealth exceeds Rs 15,000 crore. Officials familiar with the situation confirm Ratan Tata intended the foundation to operate independently from Tata Trusts, which holds a 66% stake in Tata Sons.
Laying the foundation
His vision included allocating a substantial portion of his wealth towards charitable causes. The foundation is expected to manage the majority of his assets, whilst the trust oversees the remaining portion.
His personal vehicle collection, including a Ferrari and Maserati, may be sold at auction with proceeds directed to the foundation. During his lifetime, Ratan Tata appointed RR Shastri and Burjis Taraporewala as RTEF holding trustees and Jamsheed Poncha as CEO, whilst expressing his preference for Tata Sons Chairman N Chandrasekaran as managing trustee, according to informed sources.
The authority for RTEF trustee appointments remains unclear. The will’s executors include Darius Khambata, Mehli Mistry, and Shireen and Deanna Jejeebhoy. Although Khambata serves as senior counsel and will executor, stakeholders may need guidance from a more senior legal expert. The Jejeebhoys are Ratan Tata’s half-sisters, whilst Mistry, a close associate, serves as board trustee for the Sir Dorabji Tata Trust and Sir Ratan Tata Trust.
Following the execution of probate, the foundation will receive substantial funding through Ratan Tata’s holdings in Tata Sons and associated group companies.
Rata, Tata envisioned RTEF’s mission to address novel and underserved philanthropic areas, advance research in contemporary technologies for modern India, and support enduring initiatives aimed at creating meaningful social impact across the country. The foundation operates under board management, adhering to its charitable objectives.
According to Ajay Khatlawala, managing partner at Little & Co., executors typically manage the deceased’s estate as per their wishes when specific instructions are not provided in the will.
“However, as RTEF is a company incorporated under Section 8 of the Companies Act 2013, it will be governed by the provisions of its Memorandum of Association, Articles of Association and the provisions of the Companies Act,” said Khatlawala. “The issue of appointment of trustees or directors of RTEF will therefore be governed by the provisions contained in its Articles of Association.”
Khatlawala noted that this situation could establish a benchmark for legacy foundation governance in India.
“It will affirm the need and importance of clear, written instructions in the will to avoid disputes and ambiguity amongst stakeholders after the passing away of the founder,” Khatlawala added.
Regarding private trusts, Shrenik Gandhi, managing partner at Chambers of Shrenik Gandhi, explained that under the Indian Trust Act, 1882, trustees accept the trust author’s confidence. “The author of the trust may provide for the roles, responsibilities and powers of the trustees and may also appoint a person as a ‘managing trustee’ or ‘holding trustee’ with certain additional powers,” said Gandhi. “If the instrument of trust grants powers to any trustee to appoint anyone at a key position in the trust, such power may be exercised. However, the ultimate responsibility of the trustee is to realise, and protect the benefit of the trust property.”
