Tata Sons reappoints N. Chandrasekaran as chairman amid dispute with Tata Trusts

Tata Trusts, a group that owns 66% of Tata Sons, says the appointment is 'illegal', potentially triggering another crisis in one of India's most storied family firms.

Tata Sons back Chandrasekarans reappointment listing plan Trusts may challenge

Mumbai: Tata Trusts has declared the Tata Sons board resolution seeking to reappoint N Chandrasekaran as chairman illegal, opening a leadership battle at India’s conglomerate.The Trusts said Chandrasekaran’s decision not to seek another term after his tenure ends on February 20, 2027, had been accepted and could not be reversed.Earlier reports claimed the Tata Sons board had supported a five-year term for Chandrasekaran and approved the company’s long-pending listing plan.Decision had attained finalityAccording to the statement, Chandrasekaran informed the Tata Sons board on August 12 that he would not offer himself for reappointment. Tata Trusts described it as a voluntary decision, rather than the outcome of any review.The Trusts said the announcement was made public without prior consultation with shareholders. Once communicated, the decision carried consequences because employees, lenders, counterparties, the market and the majority shareholder had acted on it. Tata Sons Reverses Course On Leadership, N Chandrasekaran Gets Fresh Five-Year TermTata Trusts accepted his decision the next day and advised Tata Sons to constitute a selection committee to identify a successor under the company’s Articles of Association.Why resolution is disputed?At Thursday’s board meeting, four directors supported Chandrasekaran’s reappointment, while Noel Tata voted against it.Tata Trusts argued that the board cannot discuss or approve the chairman’s appointment or reappointment unless both Trust nominee directors are present and vote in favour.Since Noel Tata, one of the nominee directors, opposed the proposal, the Trusts said the resolution became legally void and had no basis. He also placed before the board a legal opinion from former Chief Justice of India DY Chandrachud supporting the Trusts’ position.Listing pressure growsThe confrontation comes amid pressure over Tata Sons’ proposed listing. The Reserve Bank of India classified the company as an upper-layer non-banking financial company in 2022, bringing it under mandatory listing requirements. Reports said the RBI recently rejected efforts to avoid that obligation and directed Tata Sons to proceed with the listing, deepening uncertainty.

Tata Trusts argued that the vote to reappointment Chandrasekaran was legally void since the Trust's nominee director Noel Tata vetoed the proposal.

Tata Trusts, the majority shareholder of Tata Sons, has called the reappointment "illegal", indicating uncertainty ahead.

The Tata Trusts formally placed on record their acceptance of the decision the following day and advised Tata Sons to initiate the process for setting up a Selection Committee for appointing a successor, in accordance with the Articles of Association of Tata Sons, the Tata Trusts said in a statement