Tata Sons board approves 5-year extension for Chandrasekaran; Tata Trusts calls it 'illegal'
The board also agreed to move ahead with the listing of Tata Sons, the holding company of the salts-to-software-and-cars group
The Tata Sons Ltd’s board on Thursday (September 17) voted to re-appoint N Chandrasekaran as executive chairman for a fresh five-year term.
The Tata Trusts, which together controls about 66 per cent of Tata Sons, however, termed the reappointment as "illegal".
What Noel Tata said
“The Tata Trusts maintain that the resolution to re-appoint Mr N. Chandrasekaran as Chairman, Tata Sons, is illegal,” it said in a statement.
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“The Tata Trusts today reiterated their considered position that the decision of Mr. N. Chandrasekaran, Chairman of Tata Sons, not to offer himself for reappointment upon the conclusion of his current tenure on 20 February 2027, has been duly accepted and has attained finality,” it added.
Further, it said, "The resolution seeking to reappoint Mr. N. Chandrasekaran in the Board meeting today, with four Directors voting in favour, and Mr Noel Tata against, was a legal nullity."
Tata Trusts Chairman Noel Tata told Moneycontrol that he considered the vote “illegal”, challenging the validity of the decision.
“I voted against Chandra’s appointment as chairman. My veto was wrongfully overridden on the basis of a legal opinion. The decision is illegal. I recorded my dissent,” he said.
Meeting in Mumbai
The board's roughly three-hour meeting in Mumbai on Thursday came weeks after Chandrasekaran, 63, told directors in August that he did not intend to seek reappointment when his current term ends on February 20, 2027.
"At the meeting of the Board on September 17, Chandra acceded to the Board's request to reconsider his decision. The Board thereafter resolved by a majority vote to re-appoint him as Executive Chairman for a further term of five years upon the expiry of his current tenure," Tata Sons said.
"The Board also resolved to initiate steps to comply with the applicable RBI Guidelines and will seek guidance from RBI, Tata Trusts and other stakeholders on applicable compliance requirements," it added.
The board also agreed to move ahead with the listing of Tata Sons, the holding company of the salts-to-software-and-cars group. Both decisions will need approval at the company's AGM.
The shift in the board's position follows the Reserve Bank of India's rejection last week of Tata Sons' application to surrender its registration as a non-banking financial company - a decision that revives the prospect of a stock listing the company had spent more than a year trying to avoid, including by repaying more than Rs 21,000 crore in debt.