Between Philanthropy and Business, Tata’s need to Draw a Line of Control

Credit By: ZAHID MAQBOOL

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• 03 Apr 2026

Tata Trusts can continue to act as custodians. Tata Sons can continue to operate as the holding company. But the relationship between the two needs clearer definition

The current debate around the Tata Group is not about performance or leadership. It is about clarity on who exercises control and under what responsibility. A recent point of view by leading industry observer was that Tata Trusts are custodians, not owners. This distinction is important because it defines the legal and governance framework of the group.

Tata Trusts are public charitable trusts governed by the Maharashtra Public Trusts Act. Their role is to hold assets and use them for charitable purposes. Trustees are expected to act in the interest of beneficiaries linked to these objectives. They are not promoters in the conventional corporate sense.

At the same time, Tata Trusts hold a majority stake in Tata Sons. This gives them significant influence over key decisions, including board appointments and leadership choices. This influence is exercised through rights embedded in the company’s Articles of Association.

This creates a situation where control and ownership are not aligned in the usual way it operates in corporate India. Tata Trusts influence decisions but again they are not classified as promoters. Their fiduciary duty is towards charitable objectives, not towards all shareholders of Tata Sons.

This is where the governance question arises. As a veteran Indian corporate honcho and independent director points out, if the Trustees of Tata Trusts are not accountable to anyone, apart from a certain set of principles, there remains a wide freedom for interpretation of what those principles may stand for.

On the other hand the board of Tata Sons is responsible for running the company and is accountable to its shareholders. However, when a majority shareholder is a charitable trust with a different fiduciary framework, the lines of accountability become less clear.

This is not a question of legality. The structure is valid under existing law. The rights of Tata Trusts are defined in the Articles of Association, and these have been upheld in past legal proceedings. The issue is about how this structure works in practice.

As corporate lawyer Zia Mody has noted in discussions on such frameworks, trustees are bound by fiduciary duties to their beneficiaries, not to corporate shareholders. This creates a difference between the objectives of the trust and the objectives of a commercial enterprise.

In the Tata case, this difference becomes important because the same entity that holds controlling power is guided by a separate legal obligation. Decisions taken at the group level may therefore reflect a balance between charitable intent and business priorities, but this balance is not formally defined.

This leads to a gap in governance clarity. There is no explicit framework that sets out how far the Trusts should be involved in operational matters, or how disagreements between the Trusts and the board should be resolved.

The absence of such clarity can create uncertainty. Leadership decisions can become subject to differing interpretations of authority. Strategic choices can be influenced by multiple centres of decision-making without a clearly defined hierarchy.

This is not unique to the Tata Group, but the scale and visibility of the group make the issue more important. It raises a broader question for corporate governance in India: how should the law and regulatory frameworks deal with structures where control is exercised through trusts rather than traditional promoters. The answer does not require a change in ownership. It requires clarity in roles. One can argue here that business roles, must have the freedom to take business decisions.

Tata Trusts can continue to act as custodians. Tata Sons can continue to operate as the holding company. But the relationship between the two needs clearer definition. This includes the scope of influence, the process of decision-making, and the framework of accountability. Without this clarity, the distinction between custodianship and control will remain blurred.

(The author is a communication professional)