N Chandrasekaran is to continue as Chairman of Tata Sons, after the board of Tata Group’s holding company approved his reappointment for another five years according to sources, CTV-TV18 reported. His current term ends on 20 February 2027, but the latest board decision may extend his position as chairman of the conglomerate well beyond that date.
The development comes weeks after Chandrasekaran said he would not seek a third term. Tata Sons chairman had said earlier this month he would step down after completing his current term. But the company’s regulatory position has now changed since then, with the RBI decision of the non-banking financial company registration of Tata Sons.
According to the report, the Nomination & Remuneration Committee will present Chandrasekaran to Chandrasekaran and request him to reconsider the resignation decision communicated to the board in August. The change in circumstances is connected to the RBI's recent ruling which has altered the regulatory considerations around Tata Sons and its future plans.
Chandrasekaran became chairman of Tata Sons in 2017, after Ratan Tata had been removed from the position. He has been in charge of all Tata group operations and has been in the position for a long time in terms of the transformation of several Tata Group businesses: technology, manufacturing, electric vehicles, aviation and digital. A continuation would provide a leadership continuity of Tata Sons as well as at a time when there are a number of strategic and regulatory questions at stake and hence a constant stream of management succession would be at the group’s holding company.
The board resolution was reported to have one dissenting vote. Noel Tata (chairman of Tata Trusts and member of Tata Sons board) was the only director who voted against the plan for Chandrasekaran to be reappointed.
This is closely linked to Tata Sons’ long-running debate over a stock market listing. Noel Tata has opposed a listing, and the Shapoorji Pallonji Group, which owns around 18 per cent of Tata Sons, has supported the prospect of a listing. The Shapoorji Pallonji Group is headed by Noel Tata’s father-in-law.
Tata Sons has been trying to avoid a potential listing for over a year. In order to change its regulatory position, the company had repaid more than Rs 21,000 crore in debt. The company also wanted to surrender the NBFC registration to the RBI which needed to be done to be recognized by the company and be listed.
But this week, the RBI rejected Tata Sons’ application. This decision has once again put on the table a stock market listing of Tata Sons. The regulatory situation could affect the future corporate structure and the relations between different stakeholders to the Tata group.
The board’s reported approval of Chandrasekaran’s reappointment will have implications for the chairman selection process that had already been initiated by the Sir Dorabji Tata Trust. With Chandrasekaran now being considered for another five-year term, that process will be paused or halted if he agrees to continue in the position.
Even now, neither Tata Sons nor Tata Trusts has commented on the outcome of the board meeting. Chandrasekaran's continued chairmanship will then also depend on the formalization process and his response to the demand to reconsider his earlier decision of not going.
For the Tata group at this time there is a real opportunity in line, with the regulatory issues about Tata Sons, the possibility of a listing and the future of holding company leadership as well as how the Tata group is structured. Chandrasekaran’s five-year extension would give continuity to the company in terms of succession at the top and remain with the group through all this.
