Tata Sons vs Tata Trusts: How a boardroom war erupted over N Chandrasekaran’s reappointment

A boardroom war has erupted in one of India’s biggest, best-known companies — the Tatas.

On Thursday, at a crucial meeting at its headquarters, Bombay House, the Tata Sons board approved the reappointment of N Chandrasekaran as executive chairman, almost a month after he announced in August that he would not seek reappointment when his term ended in February.

However, hours after the meeting where it was also agreed upon to initiate the process for listing Tata Sons, Noel Tata, who is the Tata Trusts chairman, opposed both moves, terming the decisions taken as “illegal.”

Are you confused about what’s going on at the Tata Group? We explain it all.

What happened at the Tata Sons board meeting?

On Thursday (September 17), the much-anticipated board meeting of Tata Sons took place at Bombay House in Mumbai.

At the meeting, which lasted for around three hours, two key decisions were taken that could impact the future of the holding company, Tata Sons. One was about mandatory listing of Tata Sons and another dealing with the appointment of the company’s top leadership.

In a 4-1 decision, the board approved a resolution to give a third five-year term to Chairman Natarajan Chandrasekaran. Earlier in August, the 63-year-old had shocked many by announcing that he would not seek reappointment when his term ended in February 2027 after the company’s board could not resolve his extension.

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According to Tata Sons, “Chandra acceded to the Board’s request to reconsider his decision”, adding, “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.”

Simply put, upon completing his tenure on February 20, 2027, Chandrasekaran will be reappointed as executive chairman for another five years.

Tata Sons said that N Chandrasekaran will be reappointed as chairman for a further term of five years. File image/Reuters

One of the main reasons for the board seeking Chandrasekaran’s leadership is that he would be able to steer the company in the listing process, which was also discussed at the Thursday meeting.

The Tata Sons agreed to comply with a recent Reserve Bank of India (RBI) directive that effectively calls for a mandatory listing of the company, a move resisted by the group so far.

This decision comes after the RBI rejected the group’s application to deregister as a non-banking financial company (NBFC) earlier in the week.

Why has Noel Tata opposed both these moves?

However, Noel Tata, the chairman of Tata Trusts, which owns 66 per cent of Tata Sons, called the reappointment “illegal” and opposed the IPO move.

On the issue of Chandrasekaran’s appointment, Noel Tata made two observations in a statement. He noted that the decision to not seek another term was the chairman’s own. “On August 12, 2026, the chairman wrote to this Board stating that he would not offer himself for a further term upon the conclusion of his present tenure on February 20, 2027. That was his own decision. It was freely taken and clearly expressed. It was not sought from him by this Board, it was not the subject of any resolution of this Board, and it was not the outcome of any process of review,” said Noel.

He further added, “That letter was thereafter placed in the public domain. It was released without prior deliberation with the shareholders of this company, and in particular without deliberation with the Tata Trusts, which hold approximately 66 per cent of its equity…

“… The Group’s employees, its lenders, its counterparties and the market have all proceeded upon it. So, has the majority shareholder. The page has turned.”

Noel Tata said Tata Trusts accepted N Chandrasekaran’s decision to step down and that the “page has turned”. File image/Reuters

He further noted that the process for appointing a chairman requires a majority of the Tata Trusts’ nominee directors on the Tata Sons board voting in favour of the resolution. “Given that Noel Tata, being one of the Trust nominee directors, voted against the proposal, it was rendered legally void and without any basis,” the Tata Trusts statement read.

In an interview with Moneycontrol, Noel Tata stated that the Tata Sons board decision to re-appoint N Chandrasekaran was “illegal”. “I voted against Chandra’s appointment as chairman. My veto was wrongfully overridden based on a legal opinion. The decision is illegal. I recorded my dissent,” said Tata.

But that wasn’t the only issue. Noel Tata has also opposed the decision on the company’s listing.

He stated, “This Board has already considered this question and reached a conclusion. In March 2024, under the guidance of the late Mr Ratan Tata, it resolved, unanimously, that the Company should remain unlisted.”

Noel Tata also added, “The RBI communication of September 11, 2026, declines an application for voluntary surrender of registration. On my reading, it does not say that listing is the only option. Considerable room remains, and this board should occupy that room rather than concede it.”

He urged Tata Sons to engage with the RBI further to ensure it remains privately held. According to him, Tata Sons should ask the regulator for three more years, till September 2029, for any compliance measure.

The decisions taken on Thursday have significant implications for the future of the holding company. File image/Reuters

What comes next for the Tata Group?

Now, the battle over leadership of Tata Sons and its listing heads to the company’s Annual General Meeting (AGM).

For Chandrasekaran to serve as chairman, he will need to be reappointed at the AGM, where the majority owner, Tata Trusts, holds the cards. According to a Moneycontrol report, Noel is planning to oust Chandrasekaran at the next AGM of Tata Trusts, which has to be held before December 31.

Harsh Kumar, founding partner at Kaizen Law, was quoted telling Hindu Business Line, “Tata Sons’ board approving Chandrasekaran to continue as chairman may not, by itself, secure him a fresh five-year term. He also needs to continue as a director of Tata Sons, and that will be tested at the shareholder or AGM level. If the Tata Trusts, with their controlling shareholding, vote against his reappointment as a director, he cannot continue as chairman.”

The dispute exposes the huge rift between Tata Sons and Tata Trusts. Since the death of Ratan Tata, the chairman emeritus of Tata Sons and the Tata group, in October 2024, the conglomerate has been in the middle of infighting.

It’s to be seen if this battle stops here or does it move to the courtrooms like it did in 2016 when the board of Tata Sons removed Cyrus Mistry as chairman.

With inputs from agencies