1 week ago
Tata Trusts Dividend Delay May Cost Rs 56 Lakh Daily
Tata Sons planned to pay a large dividend to its shareholders, including Tata Trusts.
The meeting needed to approve the payment was delayed because not enough people attended.
Tata Trusts may receive about Rs 2,900 crore from the dividend.
If that money were invested, it might earn about Rs 56 lakh each day.
The longer the payment is delayed, the more potential income the Trusts could miss.
The Trusts use investment income to support charitable work.
Separately, about Rs 400 crore for Sir Ratan Tata Trust programmes is also unavailable.
The Trusts have asked Maharashtra’s charity commissioner for help but are currently waiting instead of going to court.
Tata Sons’ annual general meeting was adjourned on August 18 for lack of quorum.
A proposed Rs 4,479-crore dividend includes about Rs 2,900 crore attributable to Tata Trusts.
At a presumed 7% annual return, the unavailable funds could represent Rs 55.6 lakh in potential daily income.
About Rs 400 crore belonging to Sir Ratan Tata Trust remains unavailable for charitable programmes.
The Trusts favor waiting for the charity commissioner’s decision rather than immediately approaching the Bombay High Court.
- Who
- Tata Trusts, Tata Sons and the Sir Ratan Tata Trust are central to the matter; the Maharashtra charity commissioner is handling a related request.
- What
- Approval and payment of Tata Sons’ proposed Rs 4,479-crore dividend have been delayed, while restrictions have left some Sir Ratan Tata Trust funds unavailable.
- Where
- The related proceedings are before the charity commissioner of Maharashtra, with possible relief considered from the Bombay High Court.
- When
- The Tata Sons annual general meeting was adjourned on August 18; the proceedings may also have been delayed by about two months after an official’s transfer.
- Why
- The delay may reduce potential investment income and limit funds available for charitable programmes, while the Trusts are concerned that court action could prolong the process.
Wait for Administrative Relief
Pursue Court Relief
Preferred legal strategy
Wait for Administrative Relief
The Tata Trusts are understood to favor a wait-and-watch approach and believe there has been no indication of a negative outcome.
Pursue Court Relief
A court approach could seek relief from the restriction and protect access to funds, although the Trusts have not indicated that they will immediately pursue it.
Effect on timing
Wait for Administrative Relief
Waiting could avoid drawing the issue into a longer legal process, and the Trusts may send another letter to the Maharashtra charity commissioner.
Pursue Court Relief
The Bombay High Court might examine the matter afresh, potentially extending the process by as much as another six months.
Impact on charitable work
Wait for Administrative Relief
The Trusts’ position is that the existing administrative process should continue while funds remain delayed.
Pursue Court Relief
People familiar with the matter have raised concerns that unavailable dividend income and about Rs 400 crore held by the Sir Ratan Tata Trust could affect charitable programmes.
Key facts
- Proposed dividend
- Rs 4,479 crore
- Tata Trusts’ estimated share
- About Rs 2,900 crore
- Estimated daily potential income
- Rs 55.6 lakh at an assumed 7% annual return
- Potential income foregone after 60 days
- About Rs 33.4 crore
- Separate unavailable SRTT funds
- About Rs 400 crore
- Charitable uses
- Water and sanitation, education and feeding
- AGM status
- Adjourned on August 18 for want of quorum
Quotes
A person with knowledge of the matter
Individual with knowledge of the proceedings
“For the Trusts, the loss is not merely an accounting cost. The income from their investments is used to fund philanthropic activities.”
financialexpress.com
“There has been no indication of a negative outcome and so, the Trusts would rather wait than go to the High Court at this point.”
financialexpress.com
Sources
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