A major governance dispute has erupted within the Tata Group after Tata Trusts objected to the reappointment of N Chandrasekaran as Tata Sons chairman, calling the board’s decision “illegal” and a “legal nullity”.
The Tata Sons board on Thursday approved a fresh five-year term for Chandrasekaran, whose current tenure is scheduled to end on February 20, 2027. The decision came weeks after Chandrasekaran had reportedly informed directors that he did not intend to seek another term.
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Tata Trusts, which control about 66% of Tata Sons along with affiliated trusts, has challenged the validity of the board resolution. The Trusts said Noel N Tata, chairman of Tata Trusts and one of its nominee directors on the Tata Sons board, voted against Chandrasekaran’s reappointment.
According to the Trusts, Tata Sons’ Articles of Association require the majority of its nominee directors to support the appointment or reappointment of a chairman. The Trusts also contend that both nominee directors must be present for such a resolution and that both must vote in favour for it to be valid.
The Trusts said Chandrasekaran had communicated his decision to step down on August 12 and that the decision had subsequently been accepted. It said it had advised Tata Sons to begin the process of selecting a successor.
The dispute comes days after the Reserve Bank of India rejected Tata Sons’ application to surrender its registration as a core investment company. Tata Sons had been classified as an “upper layer” non-banking financial company in 2022, a status that required it to list within three years.
The RBI decision revived the possibility of a stock-market listing for Tata Sons. Following the regulatory development, the Tata Sons board also agreed to move ahead with the listing, according to people cited in the report.
The listing issue has become another point of disagreement between Noel Tata and other stakeholders. Noel Tata opposed the listing, while the Shapoorji Pallonji Group, which holds roughly 18% of Tata Sons, has favoured one.
There have also been differences within the Tata Trusts over the proposed listing. The Sir Dorabji Tata Trust had sought to bind nominee director Venu Srinivasan to vote against the listing, but Srinivasan declined, citing his independent responsibilities as a director.
Meanwhile, the succession process that had begun after Chandrasekaran indicated he would step down now faces uncertainty. Names including Tata Steel chief executive TV Narendran, Tata Sons group CFO Saurabh Agrawal and NSE chief executive Ashish Chauhan had reportedly been discussed as potential successors.
Chandrasekaran has headed Tata Sons since February 2017 and was unanimously reappointed for a second five-year term in 2022.
The latest dispute could therefore shape both the leadership transition at Tata Sons and the future of its listing plans. The Tata Trusts, however, said its selection committee would continue working in accordance with the company’s Articles of Association and stressed the need for an orderly leadership transition.
