Tata Sons extends Chandrasekaran's term as chairman but a battle looms

**Tata Sons extends Chandrasekaran's term as chairman but a battle looms**

Tata Sons said N Chandrasekaran will be reappointed as chairman “for a further term of five years,” setting up a confrontation between the board and its majority shareholder.

Last month, Chandrasekaran said he would not pursue reappointment when his term ends in February, after the company’s board failed to reach a decision on extending his tenure.

On Thursday, the board said in a statement that Chandrasekaran had agreed to its “request to re-consider his decision” and would be reappointed after his term expires.

But Noel Tata, chairman of Tata Trusts, which holds 66% of Tata Sons, described the reappointment as “illegal,” signaling uncertainty ahead for the vast group.

News of Chandrasekaran’s reappointment pushed shares of listed Tata companies sharply higher.

Tata Group, one of India’s most admired conglomerates, has a sprawling $300bn empire. It owns Air India, Jaguar Land Rover and Tata Steel, and manufactures iPhones for Apple.

The group has a distinctive structure in which Tata Trusts, its charitable arm, owns 66% of parent company Tata Sons. That arrangement has provided tax and regulatory benefits and enables charitable work, but experts say its mix of non-profit and commercial aims has at times created governance problems.

Tata Trusts has three nominees on the Tata Sons board. For months, reports have said board members have been split over matters including board nominations, funding approvals and the public listing of Tata Sons.

That dispute surfaced publicly in Chandrasekaran’s candid statement in August. When the proposal to extend his term was placed before the board in February this year, he said one board member did not back it.

He said he postponed the decision “in the absence of unanimous support,” and later chose to step down when there was still no resolution six months on.

On Thursday, the board also said it had approved a public listing of Tata Sons, another issue that has divided shareholders.

Noel Tata’s statement said that although four directors voted for Chandrasekaran’s reappointment, he voted against it, making it “a legal nullity” because the company’s articles of association require a majority of the Trusts’ nominee directors to support it.

“The Board, accordingly, cannot lawfully hold a meeting or pass a resolution on the Chairman’s appointment or reappointment unless both nominee directors are present, and cannot validly pass such a resolution unless both nominee directors vote in favour. Given that Mr Noel Tata, being one of the Trust nominee directors, voted against the proposal, it was rendered legally void and without any basis,” he said.