Tata Sons Board Grants Chandrasekaran Five-Year Extension As Chairman

N Chandrasekaran will continue as Tata Sons' executive chairman for another five years, with the board approving his fresh term at a meeting on Thursday, the Economic Times reported. The same meeting also set in motion the process for listing the group's holding company.

The Tata Trusts, which hold a majority stake in Tata Sons between them, could still contest Chandrasekaran's reappointment, according to the report.

A Trust Tries To Bind A Nominee's Vote

Behind the board's decision lies a growing disagreement among the Tata Trusts over whether Tata Sons should go public. At the centre of it is Venu Srinivasan, a nominee director whom the Sir Dorabji Tata Trust wanted to stop from backing the listing.

On Wednesday night, the Trust reportedly pushed through a circular resolution to that effect. Noel Tata, who heads the Trust, and trustee Darius Khambata put their names to it. Their reasoning, the report said, rested on Srinivasan having spoken publicly in favour of listing, which they felt put him at odds with the role of a Trust-appointed director bound to protect its interests, as per another report by the publication.

Srinivasan did not accept the restriction. He pointed out that he sits on the Tata Sons board as a joint nominee of two Trusts, the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust, so neither could dictate his vote on its own, the report said.

In his response to the Trust, Srinivasan is said to have argued that his responsibilities as a company director come first, ahead of any Trust's preference. He described his role as one requiring independent judgment in the interests of Tata Sons and its stakeholders, not a fixed voting instruction from any single Trust.

Listing Driven By RBI Order

The disagreement has surfaced just as Tata Sons faces a regulatory deadline. The RBI recently turned down the company's plea to give up its registration as a core investment company, a category of non-bank lender. Firms placed by the RBI in the Upper Layer of such lenders are required by rule to list publicly.

The report added that the board is likely to fall in line with the RBI's order. Doing so would mean Tata Sons has to meet all norms that apply to upper layer non-bank finance companies, listing included, and start working toward it in the months ahead.

Should the company wish to fight the RBI's decision in court, that fight would have to be led by Tata Sons itself. The Tata Trusts, despite jointly owning over half the company, would have no standing to bring such a challenge, the report further said.