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Drama at Tata Sons: Chandra gets fresh term; Tata Trusts calls it 'illegal'
While Noel Tata had voiced his objection to Chandrasekaran's reappointment as chairman in February, the Tata Sons board on Thursday relied on a resolution sent in by Tata Trusts last year to grant an extension
Bengaluru/Mumbai : An unprecedented revolt at Tata Sons has pushed India’s largest conglomerate into a high-stakes governance crisis, after directors voted to grant chairman N Chandrasekaran a five-year extension in the face of objections by Noel Tata, who chairs the charitable trusts holding a majority share of the company. Tata termed the decision a "legal nullity" and vowed to press on with the search for a successor, opening up a chasm between the holding company and its majority-owner that lawyers expect to play out in courts.
After a meeting that ran close to four hours, the six-member board reappointed Chandrasekaran as executive chairman for five more years when his current term ends on 20 February, 2027. Four directors voted in favour, while Tata voted against. Trustee-nominee Venu Srinivasan sided with the majority, splitting the two Trusts' nominees and setting stage for the battle that awaits the group.
In its statement, Tata Sons said: "At the meeting of the board on September 17, 2026, Chandra acceded to the board's request to reconsider 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." The company 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 boardroom conflict holds deep implications for Tata Sons' mandate to go public, the Shapoorji Pallonji Group's hopes to reduce debt, and future relationship between the philanthropic bodies and the business conglomerate.
Tata Trusts, whose statement came around the same time, termed the resolution illegal.
"The resolution seeking to reappoint Mr. N. Chandrasekaran in the board meeting today, with four directors voting in favour, and Mr Noel Tata against, was a legal nullity in view of the provisions of the Articles of Association of Tata Sons," it said.
The Trusts said the process "requires a majority of the Trusts' nominee directors voting in favour of the resolution," and "applies equally to a first appointment and to reappointing someone who already holds the office." The board, it argued, "cannot lawfully hold a meeting or pass a resolution on the chairman's appointment or reappointment unless both nominee directors are present, and cannot validly pass such a resolution unless both nominee directors vote in favour. Given that Mr Noel Tata, being one of the Trust nominee directors, voted against the proposal, it was rendered legally void and without any basis."
In a detailed statement he read out to the board, Noel Tata cast the reappointment as an attempt to reverse a settled decision. He said Chandrasekaran had written to the board on 12 August that he would not seek a further term — "That was his own decision”.
Tata Sons rested its case on a Tata Trusts document from last year. It said the board had received the Trusts' "unanimous resolution dated July 28, 2025 expressing their appreciation of the chairman of Tata Sons… for his stewardship of the group from 2017 onwards," recommending a fresh term, and had "agreed in principle" in September 2025. But "in February 2026, in the absence of unanimity, the resolution was deferred for decision," and in "May 2026 and June 2026, this matter was discussed but was not resolved", tracing a feud already hardening.
“How do you expect to fight with the largest shareholder and operate your businesses effectively?” wondered Amit Tandon, founder and managing director at Institutional Investor Advisory Services (IiAS), a proxy advisory firm. “Multiple decisions would need the approval of Trusts. The appointment of chairman as director, the capital allocation policy, the remuneration of Tata Sons chair, and so on.”
“There has to be alignment between the executive management and the owner. In the context of Tata, there is an even greater risk of an impact on the performance of the Tata Group operating companies,” said Tandon.
Some found merit in the independent directors' decision to back a third term for Chandrasekaran.
“I assume that the independent directors of Tata Sons took this decision in the interest of the company and the Tata Group. Noel Tata has not explained how his decision is for the broader good of the company and the group. So, it seems like the wishes of one person. It is a good thing that the directors have stood up to the promoter's wishes,” said Sanjay Kallapur, professor of accounting, Indian School of Business (ISB), and an independent director on the board of IDBI Bank. “It is a sign of maturing corporate governance in India”.
The deadlock could hardly come at a worse time. On 11 September, the RBI rejected Tata Sons' bid to shed its core-investment-company tag and reaffirmed its upper-layer NBFC status, which casts a listing mandate. A holding company that cannot lawfully confirm who leads it cannot file a prospectus, and the central bank's next move is unclear.
Anxiety runs deepest at the Shapoorji Pallonji Group, Tata Sons' largest minority holder with about 18.4% stake. The Mumbai-based group is scrambling to service crushing debt — some ₹3,500 crore due by end-September and roughly ₹11,275 crore over 24 months — and is banking on a listing or a negotiated liquidity event to unlock a stake it cannot otherwise sell. A leaderless, litigating Tata Sons pushes that lifeline further out of reach — even as the AGM that would confirm the very directorship at issue stays stalled, deferred on 18 August for want of quorum and now to be held before 18 November.
"The conflict will unfortunately lead to a governance issue because personalities and conflicts will tend to overshadow the interests of the companies below and obviously, minority shareholders holding shares in those companies will be impacted," said Ketan Dalal, the managing partner at Katalyst Advisors LLP, a boutique business advisory and structuring firm. Dalal explained how Tata Sons' funding to privately held businesses, including Air India and the semiconductor business, would get impacted.
"The fact that TCS, which has been a jewel and a cash-generating machine for many years, has been undoubtedly impacted by AI and could be impacted even further, will certainly not help," said Dalal.
Nehal Chaliawala in Mumbai contributed to this story.
Varun Sood has been a business journalist writing on corporate affairs for the past 17 years. He currently oversees corporate coverage, including information technology (IT) services, aviation, auto, metals and mining, and conglomerates at Mint. He started as a reporter at Business Standard in 2005, after a short internship at the Economic and Political Weekly. Having worked across newsrooms in Delhi and Mumbai, including at DNA, the Financial Times, and the Economic Times, he is now based in Bengaluru. He is most proud of his work over the last decade at Mint, including writing about the rise and fall of some CEOs at Infosys, TCS, Cognizant, and Wipro. His first book, “Azim Premji: The Man Beyond the Billions”, was published by HarperCollins in October 2020. These days, he is spending more time reading annual reports and analysts' transcripts. Varun’s two pet peeves are access journalism and the dying art of interviews with business leaders. If you think there is something wrong inside your company or there are problems with corporate governance that you'd like to highlight, email him at varun.sood@livemint.com.
Satish John serves as the Managing Editor at Mint, bringing over 30 years of experience in business journalism. He began his career in 1996 as a reporter at the Telegraph after a brief stint in the corporate sector. During his three decades of journalism, Satish has written on almost all sectors, including conglomerates, power, metals and mining, aviation and auto. Before joining Mint in 2022 (this is his second stint with the paper after earlier working from 2008 to 2011), Satish worked at The Economic Times and DNA. At Mint, Satish oversees the corporate, banking and markets coverage. One of his key roles is to manage news reporting teams and ensure their coordination across cities. The other important role he plays is in helping the paper get big news scoops and stories. His colleagues say he is a great raconteur and always has some interesting stories about promoters and companies. These days, Satish is exploring podcasts and AI tools to better tell stories and reach a wider audience. Inside the newsroom, reporters and editors continue to ideate with Satish to better their stories.