Why transfer of Ratan Tata's stocks to charity is delayed
What's the story
The transfer of 3,368 Tata Sons shares owned by the late Ratan Tata to two charitable entities has been delayed. The delay comes after a complaint questioning the ownership of some of these shares was filed with the Maharashtra Charity Commissioner. The complaint challenges a 1989 transaction in which 833 Tata Sons shares were transferred from the Navajbai Ratan Tata Trust (NRTT) to Naval H. Tata, Ratan's father.
Legal challenge
Allegations yet to be adjudicated
The complaint alleges that the 1989 share transfer didn't meet legal requirements for a public charitable trust.
It also claims that the transaction violated provisions of the Maharashtra Public Trusts Act and Companies Act at the time.
The allegations are yet to be adjudicated and have been strongly denied by Tata Trusts.
Transfer postponement
Executors have deferred transfer of shares
The executors of Ratan's will have deferred the transfer of shares to the Ratan Tata Endowment Foundation (RTEF) and Ratan Tata Endowment Trust (RTET).
This is until the ownership issues raised in the complaint are resolved.
The executors include Shireen Jejeebhoy, Deanna Jejeebhoy, former Advocate General of Maharashtra Darius Khambata, and Mehli K. Mistry, a long-time Tata Group insider.
Complaint details
Entire holding was transferred to Naval Tata personally: Complaint
The complaint alleges that the shares were transferred without valid consideration, requisite trustee approval, and proper transfer documentation.
It further claims that after Naval resigned as a trustee of NRTT in January 1989, the entire holding was transferred to him in his personal capacity.
The allegations are yet to be tested before the Charity Commissioner.
Trust response
Tata Trusts reject allegations
Tata Trusts has categorically rejected the allegations made in the complaint.
The Trusts said that the 1989 transfer was lawful, undertaken for valid consideration, and approved after obtaining appropriate legal advice from eminent jurist Nani A. Palkhivala.
They also said that the transaction had been duly approved by the then Board of Tata Sons and completed through a valid transfer instrument bearing requisite stamp duty.
Inquiry proceedings
Charity Commissioner awaits submissions
The Charity Commissioner has sought a detailed explanation and supporting documents from Noel Tata, Chairman of Tata Trusts and a trustee of the Navajbai Ratan Tata Trust.
The regulator will decide whether to order a formal inquiry after examining the submissions placed on record.
Meanwhile, neither RTEF nor RTET is itself the subject of these proceedings before the Maharashtra Charity Commissioner.