Tata Sons Board Approves Chandrasekaran’s Reappointment for Five Years

The board of Tata Sons has approved a five-year extension for N Chandrasekaran as Chairman of the Tata Group holding company, allowing him to continue in the role, according to people familiar with the matter.

Noel Tata, chairman of Tata Trusts, was the only board member to vote against Chandrasekaran’s reappointment, the people said. The Tata Sons board also discussed a potential listing of the holding company, although no resolution was passed on the matter, according to a news source.

People close to Tata Trusts have questioned the legality of the decision, saying Noel Tata has formally recorded his dissent. One source said Noel Tata is expected to seek Chandrasekaran’s removal at the company’s Annual General Meeting (AGM). Both sides have reportedly obtained legal opinions on the matter.

Chandrasekaran’s reappointment will require ratification by Tata Sons shareholders at the AGM.

“At the meeting of the Board, Chandra acceded to the Board’s request to re-consider 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 in a statement after the conclusion of the board meeting.

On the Tata Sons IPO, statement added that, "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."

The Reserve Bank of India (RBI) rejected Tata Sons’ application to surrender its Core Investment Company registration. The decision effectively closed the holding company’s attempt to avoid a mandatory stock-market listing. The RBI communicated its decision to Tata Sons’ company secretary and chief financial officer on September 12.

On August 12, Chandrasekaran had announced that he would not seek a third term after his current tenure ends on February 20.

It is earlier reported that Noel Tata opposed Chandrasekaran’s proposed third term when the matter was discussed at a board meeting in February. According to people familiar with the matter, Noel continues to support a leadership transition.

Tata Trusts collectively hold around 66% of Tata Sons. People close to the matter have said the majority shareholder ultimately has a significant role in the selection of the company’s top management, including its chairman and managing director. Tata Trusts’ majority stake is represented by Noel Tata in his capacity as chairman of the trusts.

Sir Dorabji Tata Trust (SDTT), one of the two principal Tata Trusts, has also publicly said it respects Chandrasekaran’s decision not to offer himself for reappointment and has initiated the process of constituting a selection committee to recommend the next chairman.