Tata Sons Board Reappoints Chandrasekaran, Tata Trusts Calls Resolution Illegal

Tata Sons’ boardroom crisis deepened after the company’s directors voted to reappoint N Chandrasekaran as executive chairman for another five-year term, while Tata Trusts rejected the resolution and termed it a “legal nullity”.

Chandrasekaran, who has led Tata Sons since 2017, had earlier informed the board that he would not seek another term after his current tenure ends on February 20, 2027. However, following a request from the board, he agreed to reconsider his decision.

Tata Sons said the board subsequently approved his reappointment by a majority vote. Four directors backed the resolution, while Noel Tata, chairman of Tata Trusts, voted against it.

Tata Trusts, which along with affiliated trusts controls around 66 per cent of Tata Sons, challenged the validity of the decision. It argued that the company’s Articles of Association require support from both Trust-nominated directors for a chairman appointment. The Trusts said Noel Tata had presented a legal opinion from former Chief Justice of India DY Chandrachud supporting its position, but alleged that the board did not take the opinion into account.

The dispute has also become intertwined with Tata Sons’ regulatory status. The Reserve Bank of India recently rejected Tata Sons’ request to surrender its core investment company registration, potentially reviving pressure for the conglomerate to pursue a stock-market listing.

Tata Trusts said all options should be examined following the RBI decision and reiterated its earlier position that Tata Sons should remain unlisted. Noel Tata has argued that a listing could affect the company’s charitable purpose and its ability to support institutions through dividend income.

The latest confrontation also involves the Shapoorji Pallonji Group, which holds about 18 per cent of Tata Sons. Noel Tata placed before the board an SP Group proposal aimed at raising at least Rs 25,000 crore through a potential transaction involving its stake.

The Chandrasekaran dispute could now intensify as his reappointment is expected to require shareholder ratification, while another board meeting is likely to consider Tata Sons’ listing options.