The board of Tata Sons, an Indian conglomerate, has reappointed N Chandrasekaran as chairman and supported a public listing of the holding company. This decision defies its largest shareholder, Tata Trusts, which owns 66% of Tata Sons.
Tata Trusts has called the board's decision "illegal" under its articles of association and also opposes the listing. This sets the stage for potential prolonged upheaval and a legal dispute at the company's headquarters.
The resolution to reappoint Chandrasekaran, though approved by the board, could be challenged at the company's Annual General Meeting, as Tata Trusts is expected to vote against it. A prominent Mumbai-based corporate lawyer, Nitin Potdar, stated that the Nomination and Remuneration Committee (NRC) of the Board of Tata Sons lacked the power to make this decision, as they can only make recommendations.
India's central bank, the Reserve Bank of India (RBI), classified Tata Sons as an "upper layer non-banking financial company" in 2022, creating a listing obligation. The RBI rejected Tata Sons' application to avoid this classification earlier this month, pushing the group closer to a stock market debut. Tata Trusts has reiterated its opposition to going public, stating that "all available options and not a listing alone" are being explored.