Tata Trusts has opposed the Tata Sons board’s decision to reappoint N. Chandrasekaran as Chairman, maintaining that the resolution is a legal nullity under the Articles of Association of Tata Sons.
The Trusts reiterated their position at the Tata Sons board meeting on Thursday, after the board approved a fresh five-year term for Chandrasekaran despite opposition from Tata Trusts Chairman Noel N. Tata. Four directors voted in favour of the resolution, while Noel Tata voted against it.
Trusts say earlier decision had attained finality
Tata Trusts said Chandrasekaran had communicated to the Tata Sons board on August 12 that he would not offer himself for reappointment when his current tenure ends on February 20, 2027.
According to the Trusts, the decision was freely taken, clearly expressed and not the outcome of a board review. The Trusts formally accepted the decision the following day and advised Tata Sons to begin the process of constituting a Selection Committee to identify his successor. Tata Trusts had publicly recorded its acceptance of Chandrasekaran’s decision on August 13.
The Trusts now contends that the decision cannot subsequently be reversed after employees, lenders, counterparties, the market and shareholders had proceeded on the basis that Chandrasekaran would step down at the end of his current term.
Dispute over Articles of Association
At the heart of the dispute is the interpretation of Tata Sons’ Articles of Association and the role of Tata Trusts’ nominee directors.
The Trusts maintains that the provisions governing appointment of the Tata Sons Chairman require a majority of the Trusts’ nominee directors to vote in favour. They argue that the requirement applies both to an initial appointment and to the reappointment of an existing Chairman.
The Trusts further contends that both nominee directors must be present for the board to consider such a resolution and that both must vote in favour for it to be valid. Since Noel Tata voted against Chandrasekaran’s reappointment, the Trusts maintain that the resolution is legally void.
Legal opinion cited by Noel Tata
Noel Tata also submitted a legal opinion from former Chief Justice of India D Y Chandrachud in support of the Trusts’ position, according to the Trusts. They said the opinion was not taken note of by the Tata Sons board.
The dispute follows the board’s reversal of the earlier succession process after Chandrasekaran had said he would not seek another term. Tata Trusts had begun the process of setting up a Selection Committee following his August announcement.
Leadership transition faces uncertainty
Tata Trusts said it remains committed to ensuring an orderly and timely leadership transition at Tata Sons and across the Tata Group.
The board’s decision has created a governance dispute between Tata Sons and its largest shareholder, with Tata Trusts collectively holding about 66% of Tata Sons.
The Tata Sons board, meanwhile, has approved Chandrasekaran’s reappointment for another five-year term. The company has also decided to move towards compliance with regulatory requirements relating to a potential listing of Tata Sons, adding another significant issue to the ongoing differences between the board and Tata Trusts.