Tata Sons Extends Chandrasekaran’s Term as Trusts Dispute Voting Process

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Tata Sons has reappointed N. Chandrasekaran as executive chairman for another five-year term, reversing his decision last month to step down and opening a direct governance confrontation with Tata Trusts, its controlling shareholder.

The Tata Sons board voted 4-1 on Thursday, 17 September, to give Chandrasekaran a third term after his current tenure ends on 20 February 2027.

Noel Tata, chairman of Tata Trusts, voted against the resolution.

Tata Trusts, which owns about 66% of Tata Sons, immediately challenged the decision, calling the resolution “illegal” and a “legal nullity” under the holding company’s Articles of Association.

The dispute unfolded during a consequential board meeting at Bombay House that also addressed pressure from the Reserve Bank of India over Tata Sons’ regulatory status, the possibility of a stock-market listing and a proposal that could allow the Shapoorji Pallonji Group to sell part of its roughly 18% holding without an initial public offering.

Taken together, the decisions expose an unusually public divide between the board of the holding company and the charitable trusts that control it.

Tata Sons said Chandrasekaran had agreed to reconsider his August decision not to seek another term after its nomination and remuneration committee unanimously asked him to stay.

The roots of the dispute go back further.

Tata Trusts had unanimously resolved in July 2025 that Chandrasekaran should receive another five-year term, and the Tata Sons board agreed in principle that September. Formal approval was to follow in February 2026.

But the proposal failed to secure unanimity in February and remained unresolved at board meetings in May and June.

Chandrasekaran then wrote to the board on 12 August saying he would not offer himself for another term when his current tenure expired.

Tata Trusts publicly accepted the decision on 13 August and said the Sir Dorabji Tata Trust would begin setting up the selection committee required under Tata Sons’ Articles to identify a successor.

That process has now been disrupted.

On 3 September, Tata Sons’ nomination and remuneration committee unanimously recommended that Chandrasekaran reconsider.

On Thursday, he agreed, and the board approved his reappointment by majority vote.

Tata Trusts argues that a simple board majority is not enough.

Article 121 of the Tata Sons Articles of Association gives directors nominated by Tata Trusts special voting rights while the Trusts retain at least 40% of Tata Sons. Matters requiring a board majority must also receive the affirmative vote of a majority of Trust-nominated directors present at the meeting.

Noel Tata maintains that his opposition means this condition was not satisfied.

The Trusts said Chandrasekaran’s August decision had also already been accepted and acted upon by the majority shareholder and other stakeholders and could not simply be reversed.

“The page has turned,” Noel Tata told the board in arguing against reopening the appointment.

The Tata Sons board took a different view and formally approved the new term.

The dispute may therefore shift from the boardroom to questions over interpretation of Tata Sons’ Articles and ultimately shareholder approval. Tata Trusts controls about two-thirds of the equity in Tata Sons.

The disagreement over Chandrasekaran comes as Tata Sons faces a potentially still larger structural decision over whether it must become a publicly traded company.

The RBI identified Tata Sons as an upper-layer non-banking financial company under its scale-based regulatory framework. The framework requires an NBFC placed in the upper layer to list within three years of its identification.

Tata Sons had sought to surrender its registration as a core investment company, which could have helped it avoid the listing requirement. The RBI rejected that request in a communication dated 11 September.

Tata Sons said after Thursday’s meeting that its board had resolved “to initiate steps to comply with the applicable RBI Guidelines” and would seek guidance from the RBI, Tata Trusts and other stakeholders on the requirements.

Tata Trusts gave a more qualified account of what the board decided. It said the board agreed that all available options, “and not listing alone”, would be assessed immediately before a separate board meeting determines the course of action.

Noel Tata remains firmly opposed to an IPO.

The Trusts said the Tata Sons board had unanimously decided in March 2024, while Ratan Tata was still alive, that the company should remain private. The Sir Dorabji Tata Trust and Sir Ratan Tata Trust reiterated that position through unanimous resolutions in July 2025.

Noel Tata argued on Thursday that the RBI’s 11 September communication rejected the surrender of Tata Sons’ registration but did not necessarily establish that a stock-market listing was the only possible route to compliance.

“A listing will destroy its character and strike at the heart of this principle,” Noel Tata said, referring to the Tata structure in which charitable trusts control the group’s holding company and receive dividends that fund philanthropic work.

The Trusts said they want Tata Sons to continue engaging with the RBI and examine other lawful options.

The RBI’s underlying regulation, however, is explicit that an upper-layer NBFC “shall be mandatorily listed within 3 years of identification as NBFC-UL”, making the scope for an alternative dependent on whether Tata Sons can obtain a different regulatory treatment or other relief from the central bank.

Tata Sons was included in the RBI’s upper-layer NBFC list as a core investment company.

The listing question is also intertwined with the position of the Shapoorji Pallonji Group, Tata Sons’ largest minority shareholder.

At Thursday’s meeting, Noel Tata tabled a proposal from the SP Group to monetize part of its Tata Sons holding. The plan calls for Tata Sons shares held by Sterling Investments Corp. and Cyrus Investments to be purchased in a transaction generating at least ₹25,000 crore, or about $2.7 billion, in gross proceeds for the SP Group.

The proposed buyout would be conducted in two tranches over 18 months through a selective capital reduction requiring approval from the National Company Law Tribunal. The Tata Sons shares would be valued under the fair-value provisions of India’s income-tax rules.

Noel Tata proposed several possible ways for Tata Sons to fund the transaction, including internal cash flows, sales of listed investments, bringing outside investors into newer group businesses or selling shares through public offerings of some businesses.

He asked the board to begin the NCLT process and authorize Tata Sons and Tata Trusts executives to continue discussions with the SP Group and its bankers.

The proposal provides a possible route to address one of the pressures behind calls for a Tata Sons listing. The SP Group has long sought liquidity from its closely held Tata Sons stake.

It does not, however, resolve the RBI issue.

The meeting ended with Chandrasekaran restored as the board’s choice to lead Tata Sons until 2032, but with his appointment disputed by the company’s controlling shareholder and the future ownership structure of Tata Sons still unsettled.

Chandrasekaran has led Tata Sons since February 2017, taking over after the bruising battle surrounding the removal of Cyrus Mistry. His second five-year term began in February 2022 after receiving unanimous board approval.

This time, the process is markedly different.

Tata Sons’ board wants continuity under Chandrasekaran as it navigates major investments in aviation, semiconductors, batteries, digital businesses and other new ventures. Tata Trusts is asserting the governance powers that come with its controlling shareholding and special rights under Tata Sons’ Articles.