Tata Sons' board voted to reappoint N. Chandrasekaran as executive chairman for another five-year term, a decision that has sparked a significant power struggle within India's largest conglomerate. This move directly defied Tata Trusts, the majority shareholder (owning approximately 66% of Tata Sons), and its chairman, Noel Tata, who labeled the reappointment a "legal nullity." The board's vote was 4-1 in favor of Chandrasekaran, with Noel Tata casting the sole dissenting vote, while Chandrasekaran himself abstained. This decision came after Chandrasekaran had previously indicated he would not seek reappointment, a decision the Trusts had reportedly accepted.
The board's decision also included a resolution to comply with the Reserve Bank of India's (RBI) upper-layer NBFC rules, which require a mandatory listing of Tata Sons. This, too, was opposed by Tata Trusts, which stated it would explore other options to avoid a listing. The Trusts argue that the reappointment is legally void because, according to Tata Sons' Articles of Association (AoA), a majority of the nominee directors from the Trusts must support such a resolution. Since Noel Tata, one of the two nominee directors, voted against it, the Trusts contend the resolution is invalid.
The conflict underscores deep disagreements over leadership and strategic direction, including the contentious issue of a public listing for Tata Sons. The Trusts had already begun the process of identifying a successor for Chandrasekaran following his earlier decision not to seek reappointment. Legal opinions were presented by the Trusts to the board, arguing against the validity of the reappointment. This boardroom battle is now anticipated to potentially move to the courts, highlighting significant reputational risks for the Tata Group, which has a $300 billion empire and owns major entities like Air India, Jaguar Land Rover, and Tata Steel.
