Tata Sons has told the Tata Trusts’ chairman Noel Tata that its decision to reappoint N Chandrasekaran as chairman was legally valid and consistent with the company’s internal governance framework, according to two people with direct knowledge of the letter, as cited by Reuters.The letter marks the conglomerate’s first formal response to questions raised by the Tata Trusts, which collectively control the majority stake in Tata Sons.It comes after a week of public statements and interviews from both sides over Chandrasekaran’s reappointment for another five-year term.The dispute has triggered competing claims over the decision-making process within the 158-year-old Tata group and has developed into its most significant internal crisis in recent years.
Tata Sons cites legal opinions
In its response to allegations from the Tata Trusts that Chandrasekaran’s reappointment breached Tata Sons’ internal governance rules, the company cited three legal opinions supporting its position, including opinions from lawyers and former Supreme Court judges, the two sources told Reuters.Tata Sons also told Noel Tata that the board directors had acted in accordance with their responsibilities to the company while taking the decision on Chandrasekaran’s appointment, according to the sources.The Tata Trusts’ legal team is now examining the response, one of the sources said.Tata Sons and Tata Trusts did not immediately respond to requests for comment outside business hours.The dispute centres on the role of the Tata Trusts in the appointment process. The charities collectively own 66% of Tata Sons and have argued that Chandrasekaran’s reappointment was not valid without majority support from their nominee directors.
Chandrasekaran’s directorship remains key
While the Tata Sons board has reappointed Chandrasekaran as chairman for a third five-year term, his continuation depends on a separate vote on his reappointment as a director.The chairmanship itself does not require shareholder approval, but director reappointment does. Tata Sons’ annual general meeting, originally scheduled for August, was adjourned after the required quorum was not available.The company has received an extension from the Registrar of Companies to hold the AGM by December.If Chandrasekaran is reappointed as a director, his chairmanship would run until February 21, 2032. If he is not reappointed, his term at Tata Sons would end immediately.A circular resolution is also expected to be considered by the six directors, with each given seven days to vote on the matter.The quorum issue remains a complication. Tata Sons’ Articles of Association require a joint nominee from the Sir Dorabji Tata Trust and Sir Ratan Tata Trust as part of the five-shareholder quorum.The Sir Ratan Tata Trust is currently under restrictions imposed by the Maharashtra charity commissioner, preventing it from holding board meetings and consequently from deciding how to vote.
Voting arithmetic could determine outcome
A shareholder holding even one Tata Sons share can approach the National Company Law Tribunal under Section 97 of the Companies Act to seek a court-ordered AGM. Such a meeting could override the company’s quorum requirement.However, the voting requirement for Chandrasekaran’s reappointment as a director would remain. The resolution needs a majority of votes cast in favour.The Sir Dorabji Tata Trust and other Tata Trusts entities together hold about 42% of Tata Sons and are expected to vote against the resolution.The Sir Ratan Tata Trust holds about 24% but is unable to decide its voting position because of the regulatory restrictions.The Shapoorji Pallonji Group holds about 18% and is expected to support the resolution or abstain, while Tata group companies hold about 13%. How the Tata companies will vote remains unclear.
