Noel Tata to step down from boards of six Tata group companies under retirement policy

Noel Tata, chairman of Tata Trusts, is set to resign from the boards of six Tata group companies. The main reason is the group's policy on the retirement of non-executive directors. Tata turns 70 on November 12.

The group runs businesses ranging from salt to software, and Tata holds key positions in several of its listed and unlisted companies. The move is therefore seen as a major change in the group's leadership.

Tata is a non-executive director at Trent, Voltas, Tata Investment Corporation, Tata International and a few other group companies. He is also vice chairman of Tata Steel and Titan Company.

Even after leaving the boards of these six operating companies, he will continue on the board of Tata Sons as a nominee director of Tata Trusts. Tata Sons is the holding company of the Tata group. Tata Trusts hold an estimated 66 per cent in Tata Sons, so his continued presence on the board will keep him in an influential role in the group's functioning and management.

He will also continue to hold his position at Trent Hypermarkets Limited, a joint venture of Trent and Tesco that runs the retail chains Star Bazaar and Star Daily.

However, a succession plan for several of his other directorships and leadership roles has not yet been formally announced. The change comes at an important time for the group, with considerable discussion under way on governance, board appointments and the future course of Tata Sons.

Tata's retirement from the boards of operating companies shows that the Tata group strictly follows its internal governance rules. Under these rules, the retirement age is 70 for non-executive directors and 65 for executive directors.

According to corporate governance experts, following such retirement rules is a sign of institutional discipline. This matters even more for large business groups, where promoter companies have a big influence on the composition of boards and on leadership decisions.

Tata is counted among the most influential people in the group. His exit from these boards will bring leadership changes at companies such as Trent, Voltas, Tata International and Tata Investment Corporation. New appointments will also have to be made to the vice chairman posts at Tata Steel and Titan.