Tata Trusts said on Thursday that Tata Sons’ decision to approve Chandrasekaran’s reappointment as Chairman is ‘illegal’.
Earlier, Tata Sons Board had approved Chandrasekaran’s re-appointment as Chairman for another five-year term, sources had told ANI.
Chandrasekaran had earlier said that he did not intend to seek a third term. But, according to ANI, Tata Sons stated on Thursday that at the meeting “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.
If Chandrasekaran had expressed desire to leave, then why was his re-appointment approved?
Sources said to news agencies that Tata Sons board members reasoned that continuity of leadership would reassure prospective investors ahead of any listing process. Potential investors would seek assurance on management continuity once a company embarks on an IPO.
Noel Tata vs N Chandrasekaran
Noel Tata, chairman of Tata Trusts, which along with affiliated trusts controls about 66% of Tata Sons, voted against the reappointment but the resolution was carried by a majority, sources said.
RBI had filed a caveat in Bombay HC
Earlier, after rejecting Tata Sons application to surrender its NBFC registration, the Reserve Bank had filed a caveat in the Bombay High Court, in an attempt to ensure that it is heard before any order is passed in the matter by the judiciary in the high-stakes battle, sources said to PTI.
Tata Trusts was reluctant for Tata Sons IPO
The RBI’s rejection of the March 2024 application compels the holding company to list on the bourses, and many parties including the Tata Trusts, its largest shareholder owning over two-thirds, is reluctant to go for the listing.
In a scenario when any petitioner approaches the court, the caveat ensures that the central bank s side is heard before any order, including even a stay on the order, is passed, said PTI.
RBI clarifies Tata Sons is NBFC
The central bank ended months-long suspense by rejecting Tata Sons plea, after which it is classified as an upper-layer non-bank finance company (NBFC) and must list.
Tata Sons is worth $170 billion
The $170 billion Tata Sons is still facing leadership challenges and a divided board, which led chairman N Chandrasekaran to opt out of reappointment when his term ends in February next year.
