MUMBAI: In an unprecedented break with its principal shareholders, Tata Sons’ board Thursday voted to reappoint N Chandrasekaran as executive chairman for another five years, defying Tata Trusts, which called the resolution “a legal nullity”, exposing a split over leadership and strategy at India’s largest conglomerate.A Tata Sons statement after the board meeting said, “Chandra acceded to the board’s request to reconsider his decision”, capping a dramatic about-turn by the chairman who had ruled himself out about a month back for lack of unanimous board-level support. The board voted by four votes to one to reappoint him. Noel Tata, chairman of Tata Trusts, cast the sole dissenting vote while Chandra abstained.The vote exposed differences among Trusts’ own nominee directors. Article 121A of Tata Sons’ articles requires a majority of nominee directors to back a chairman’s reappointment. Trusts vice-chairman Venu Srinivasan voted in favour; Noel voted against. That deadlock left Harish Manwani, the independent director (ID) who chaired the meeting for this proposal, to cast the deciding vote, resulting in the resolution being approved 4-1 (Anita George, an ID, and Saurabh Agrawal, group CFO & exec director, voted for Chandra).A question mark hangs over the chairmanship though, as reappointment needs to be confirmed by shareholder approval at the next AGM.The board also resolved to begin complying with RBI’s upper-layer NBFC rules, including a mandatory listing, and said it would seek guidance from the Trusts and other stakeholders on the issue.Trusts, however, said they would press ahead with identifying a successor to Chandra and explore other options to avoid listing. Trusts also said they would push for a selection panel that would proceed under Tata Sons’ Articles of Association as part of an “orderly and timely leadership transition.”Tata Trusts argued that the articles demand both nominee directors’ approval and that Noel Tata’s dissent rendered the resolution “legally void and without any basis”.The fight is far from over. The reappointment still needs shareholder approval, and Trusts, which own 66% of Tata Sons, can block it. But a shareholder meeting cannot be currently convened. The Sir Ratan Tata Trust (SRTT), which holds 24% of Tata Sons, remains under a regulatory ban by the charity commissioner, and Article 86 requires a jointly nominated representative from the two main trusts, Sir Dorabji Tata Trust and SRTT, for the AGM to be held. If no meeting happens before Feb 20, 2027, when Chandrasekaran’s current term ends, he ceases to be chairman by default.His underlying directorship is itself unresolved for the same reason. Noel Tata told the board the chairmanship question could not be separated from that uncertainty: “We cannot put the cart before the horse.” A resolution on the chairmanship, he said, rested “upon a foundation which has not yet been laid.”He also cautioned against conflating the succession fight with Tata Sons’ separate, pending matter before the RBI. “It would not serve the company for a regulatory development to determine the outcome of a succession process, and it would not serve the company for a succession process to shape its regulatory posture,” he said, warning that a chairmanship decision taken now could expose the company to legal challenge “at a moment when it has matters of far greater consequence pending before its regulator.”The chairman’s office has been a battleground before. Ratan Tata spent his early years dismantling the satraps, the executives who ran individual Tata companies with near-total autonomy. Towards the end of his tenure he ousted Cyrus Mistry, the successor he had handpicked in 2011, and chose Chandrasekaran to replace him in 2017. Now Noel, who became Trusts chairman after Ratan Tata’s death in October 2024, faces a challenge of his own after failing to stop the board from reversing Chandrasekaran’s own decision to step down and backing him for a third term instead.The stand-off marks an about-turn by Chandrasekaran. Trusts said he told the board on Aug 12 that he would not seek reappointment, a decision it called “freely taken,” “clearly expressed” and “not the outcome of any process of review.” Trusts accepted it and told Tata Sons to begin selecting a successor. Noel Tata argued that a fresh reappointment resolution meant the board unwinding three things at once: Chandrasekaran’s own decision, Trusts’ acceptance of it, and the succession process already underway.He told the board the finality of Chandrasekaran’s original decision could not be undone once made public. “The Group’s employees, its lenders, its counterparties and the market have all proceeded upon it,” he said. “So has the majority shareholder. The page has turned.”Tata Sons told a different story. It said the Trusts itself passed a unanimous resolution in July 2025 backing a further term for Chandrasekaran, and the board agreed in principle to extend his tenure. The proposal stalled in Feb 2026 for lack of unanimity and stayed stuck through subsequent meetings, with Noel Tata the lone holdout. Only then, Tata Sons said, did Chandrasekaran step back in August. On Sept 3, the board’s nomination and remuneration committee urged him to reconsider, citing his record and the group’s “larger interests.” He agreed on Sept 17 and the board voted him back in the same day.However, Noel is unlikely to budge. “The chairman has conveyed his decision; the shareholders have conveyed their acceptance (of his decision to step down),” he said. “It is now time to move on.”
