Key facts
- Tata Sons' board reappointed N. Chandrasekaran as chairman for a five-year term.
- Chandrasekaran had previously indicated he would not seek reappointment.
- Tata Sons will consider a public listing, a move opposed by Tata Trusts.
- Noel Tata declared the reappointment 'illegal' due to lack of unanimous support from Trust nominee directors.
The board of Tata Sons has approved a new five-year term for its chairman, N. Chandrasekaran, reversing his earlier indication that he would not seek reappointment. This decision sets the stage for a potential conflict with Tata Trusts, the charitable arm that owns 66% of Tata Sons and prefers the company remain unlisted.
Chandrasekaran had stated last month that he would not seek reappointment after the board could not reach a resolution on his extension. However, on Thursday, the board announced he had agreed to its request to reconsider his decision. The reappointment was reportedly supported by four directors, but opposed by Noel Tata, chairman of Tata Trusts and a nominee director.
Noel Tata declared the reappointment 'illegal' and a 'legal nullity,' citing the company's articles of association which require unanimous support from Trust nominee directors for such decisions. This indicates significant governance challenges ahead for the conglomerate.
In addition to the chairman's tenure, the Tata Sons board also agreed to comply with a recent Reserve Bank of India directive classifying the company as an 'upper-layer' non-banking financial company, which mandates a listing within three years. Tata Sons' prior application to deregister as an NBFC was rejected by the RBI earlier this week.
Experts suggest Chandrasekaran's continued leadership is crucial for navigating the listing process, a move Noel Tata has opposed. The Tata Group, valued at $300 billion, includes Air India, Jaguar Land Rover, and iPhone manufacturing for Apple.