N Chandrasekaran's Reappointment As Tata Sons Chairman Illegal: Tata Trusts

A major divide has emerged in the Tata ecosystem over reappointing N Chandrasekaran as Tata Sons chairman. While the Tata Sons board has backed a five-year extension, Tata Trusts has contested it.

"Tata Trusts maintains that the resolution to reappoint N Chandrasekaran as Chairman, Tata Sons, is illegal," a statement said.

Chandrasekaran had announced his decision to step down on August 12, ending a career spanning four decades.

Read Full Text Of Tata Trusts Statement

Tata Sons said a majority vote held today favoured his reappointment. But Tata Trusts, the largest shareholder in Tata Sons with about 66% equity, argued that the vote was legally void since the Trust's nominee director Noel Tata vetoed the proposal.

The page has turned and it is time to move on, the Trusts' Chairman Noel Tata asserted.

What Tata Sons Said

Tata Sons said its board had agreed in principle in 2025 to reappoint Chandrasekaran as Executive Chairman for five more years, but it could not pass a resolution this February due to a lack of unanimity.

In view of this, Chandrasekaran opted not to seek reappointment after his current term expires on February 20, 2027.

The Nomination Remuneration Committee (NRC) of the board of Tata Sons met on September 3 to discuss Chandrasekaran's resignation and discuss his reappointment as executive chairman, according to the holding company.

Read: Tata Sons Board Backs N Chandrasekaran As Chairman, Noel Tata Disagrees

"After due deliberation and in recognition of his contributions and the larger interests of the Tata Group, the NRC unanimously resolved to request him to reconsider his decision and to recommend him for reappointment at the next Board meeting," Tata Sons added.

The company pointed out that the Tata Sons board met today for the first time after Chandrasekaran decided to quit public life, and he accepted their request to reconsider his decision.

Thereafter, the board resolved by a majority vote to reappoint him for five more years after his current tenure. In the voting, four directors voted in favour, while Tata Trusts' Noel Tata voted against.

Tata Trusts Contest Move

Tata Trusts pointed out that when Chandrasekaran decided not to offer himself for reappointment, the decision was made public without intimating or deliberating with the company's shareholders.

Once such a decision is publicly communicated, it has consequences that cannot be afterwards undone, it said.

Noel Tata reiterated this position during today's meeting.

"The resolution seeking to reappoint N Chandrasekaran in the Board meeting today, with four directors voting in favour, and Noel Tata against, was a legal nullity in view of the provisions of the Articles of Association of Tata Sons," the Trusts said in a statement.

Read: Tata Sons Board Approves Public Listing, To Seek RBI Guidance

The Trusts argued that the process for appointing a chairman under the Article of Association requires a majority of the Trusts' nominee directors voting in favour of the resolution and that this applies to a first appointment and reappointments alike.

"The board cannot lawfully hold a meeting or pass a resolution on the chairman's appointment or reappointment unless both nominee directors are present and cannot validly pass such a resolution unless both nominee directors vote in favour," it asserted.

Since Noel Tata, one of the Trusts' nominee directors, voted against the proposal, the Trusts said the resolution to reappoint Chandrasekara was rendered legally void and without any basis.

At the meeting, Noel Tata affirmed that Chandrasekaran's decision was not the outcome of any review but one that was freely taken. The Trust, it said, had accepted Chandrasekaran's intimation and that it was time to move on.