After Chandrasekaran’s Exit, Tata Trusts Explore Legal Route For Succession

Tata Trusts is exploring legal options to ensure the succession process at Tata Sons can move ahead after N Chandrasekaran decided not to seek reappointment as chairman, accroding to a CNBC-TV18 report.

Tata Trusts is considering an urgent hearing before the Maharashtra Charity Commissioner. If required, it could also approach the Bombay High Court, which is the appellate authority for orders passed by the Charity Commissioner, according to the report.

The development comes after trustees of the Sir Dorabji Tata Trust (SDTT) met on Thursday and took Chandrasekaran’s decision on record. SDTT has also resolved to constitute a Selection Committee for the succession process.

SRTT Restrictions Create Roadblock

The immediate challenge is the inability of the Sir Ratan Tata Trust (SRTT) to fully participate in key decisions. According to The Economic Times (ET), SRTT is currently operating under restrictions imposed by the Charity Commissioner, limiting its ability to take certain decisions.

SRTT and SDTT, the two principal Tata Trusts, have to jointly nominate three members to the Selection Committee that will help identify Chandrasekaran’s successor. The restrictions on SRTT could therefore delay the formation of the committee.

The ET reported that Tata Trusts is considering an urgent legal move to enable SRTT to participate in critical meetings under the trusts’ rules. The issue has also gained importance ahead of the Tata Sons annual general meeting (AGM) scheduled for August 18.

Succession Process Now In Focus

Article 118 of the Tata Sons Articles of Association provides for a five-member Selection Committee. Three members are to be jointly nominated by SRTT and SDTT, while the chairperson will be selected from among those three nominees.

Chandrasekaran told the Tata Sons board on Wednesday that he would not seek another term when his current tenure ends on February 20, 2027. He said the decision followed the board’s inability to reach a resolution on his proposed continuation and that he wanted the succession process to begin early.

The Tata Trusts collectively hold around 66% of Tata Sons through their charitable entities, according to ET. With Chandrasekaran’s departure triggering the search for his successor, resolving the SRTT participation issue is likely to be an important first step in the succession process.