Tata Sons Extends N Chandrasekaran’s Tenure By Another 5 Years Despite Noel Tata’s Opposition

New Delhi: Tata Sons’ board on Thursday, September 17, approved the reappointment of N Chandrasekaran as chairman for another five years, extending his tenure beyond February 2027, according to people familiar with the matter. 

The resolution was passed despite Tata Trusts Chairman Noel Tata voting against it. All other members of the Tata Sons board backed Chandrasekaran’s continuation, the people said.

The decision marks a reversal from Chandrasekaran’s earlier indication that he would not seek another term after his current tenure ends in February 2027. His decision had triggered discussions within Tata Sons over succession and the future leadership of the conglomerate.

Chandrasekaran has been chairman of Tata Sons since 2017 and was previously given a second five-year term.

Chandrasekaran Stays On Despite Succession Debate

Chandrasekaran's decision not to seek another term enabled the Tata Sons board to begin the process of picking his successor.

Noel Tata, chairman of Tata Trusts, wanted the board to start the succession process and, according to sources acquainted with the situation, believed Chandrasekaran's decision to step down should hold. The Sir Dorabji Tata Trust had also suggested that a selection panel be formed to determine his successor.

The matter gained prominence after the Tata Trusts unanimously decided last year to recommend Chandrasekaran for another five-year term. At a February board meeting, four directors backed the extension, while Noel Tata opposed it.

Chandrasekaran subsequently wrote to the Tata Sons board, stating that the idea had not received broad support, with one board member opposing the extension.

Thursday's decision resolves the immediate leadership conundrum, with Chandrasekaran certain to remain in charge for another five years. During Thursday's board meeting, Noel Tata also expressed his opinions.

The Tata Sons articles of association mandate a five-member commission to select a chairman. Three members are appointed jointly by the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust, and two are nominated by the Tata Sons board. The board makes the final appointment.

Why Tata Sons’ Listing Is Back In Focus

While the board supported Chandrasekaran's reappointment, it did not propose a resolution to list Tata Sons.

The holding firm is facing further regulatory pressure after the Reserve Bank of India denied its plea for an exemption from the statutory listing requirement. The topic was thoroughly examined at Thursday's board meeting. Rather than making a formal decision on a listing, directors reviewed several options for Tata Sons to comply with RBI standards and concluded that all potential avenues should be pursued, according to persons familiar with the discussions.

Tata Sons sought an exemption from the listing requirement. A public listing would subject the holding company to increased regulatory scrutiny and more extensive disclosure obligations for its investments across the Tata Group.

For now, therefore, the board has cleared the leadership question but left the listing issue unresolved.

Shapoorji Pallonji’s 18% Stake Adds To Listing Stakes

The Tata Sons listing dispute also affects the Shapoorji Pallonji Group, which owns around 18% of the holding firm. The group has long wanted a listing for Tata Sons, which could unlock the value of its share in the Tata Group's main investment company.

Tata Trusts, meanwhile, own around 66% of Tata Sons and have long backed the group's current ownership structure. With Chandrasekaran certain to continue as chairman, the focus will be on how Tata Sons responds to the RBI's listing requirements.

According to Thursday's board deliberations, the business is looking into several compliance possibilities, although no formal decision to list Tata Sons has been made yet.