Tata Sons board for Chandra's reappointment, moves to list co; Trusts may challenge decision

MUMBAI: The Tata Sons Ltd's board on Thursday approved a fresh five-year term for N Chandrasekaran as executive chairman and set in motion the process to list the group's holding company, people familiar with the matter said, a twin decision that could still face a challenge from the Tata Trusts that own a majority stake in the conglomerate.

The board's roughly three-hour meeting in Mumbai on Thursday came weeks after Chandrasekaran, 63, told directors in August that he did not intend to seek reappointment when his current term ends on February 20, 2027.

After the board vote, he has been asked to reconsider the decision, according to people familiar with the deliberations.

The board also agreed to move ahead with the listing of Tata Sons, the holding company of the salts-to-software-and-cars group.

Both decisions will have to be approved at the company's AGM.

The shift in the board's position follows the Reserve Bank of India's rejection last week of Tata Sons' application to surrender its registration as a non-banking financial company - a decision that revives the prospect of a stock listing the company had spent more than a year trying to avoid, including by repaying more than Rs 21,000 crore in debt.

Board members reasoned that continuity of leadership would reassure prospective investors ahead of any listing process, according to sources.

Potential investors typically seek assurance on management continuity once a company embarks on an initial public offering.

Tata Sons' Nomination & Remuneration Committee will formally ask Chandrasekaran, 63, to reconsider the decision he communicated to the board in August - a decision made before the RBI's ruling and under a different set of assumptions about the company's regulatory path.

Chandra decided not to seek a third term amid a lack of unanimity in the board over his reappointment.

Noel Tata, chairman of Tata Trusts, voted against Chandrasekaran's reappointment, but the resolution passed by a majority vote of the board, sources said.

The Trusts, which together control about 66 per cent of Tata Sons, could still contest the decision, they added.

The listing push followed the Reserve Bank of India's rejection on September 11 of Tata Sons' application to surrender its registration as a core investment company, an exemption that would have let the company avoid a stock-market debut.

The RBI classified Tata Sons as an "upper layer" non-banking financial company in 2022, a designation that requires listing within three years; that deadline lapsed in September 2025 while the deregistration request was under review.

Tata Sons had repaid its outstanding debt in an earlier bid to qualify for the exemption.

The listing decision exposed a rift even within the Trusts.

The Sir Dorabji Tata Trust sought to bind nominee director Venu Srinivasan to vote against the listing, but Srinivasan refused, citing his independent duty as a director sitting on the board as a joint nominee, according to people familiar with the matter.

Any legal challenge to the RBI's rejection can only be pursued by Tata Sons itself, not by the Trusts directly, they added.

Chandrasekaran has led Tata Sons since February 2017, when he succeeded Ratan Tata as interim chairman after the board's ouster of Cyrus Mistry.

He was unanimously reappointed for a second five-year term in 2022.

Tata Trusts backed a third term for him as early as 2025, but the proposal stalled in February 2026 after Noel Tata raised concerns over losses at businesses like Air India and Tata Digital and set out conditions, including keeping Tata Sons unlisted, for supporting the renewal.

Thursday's vote appears to resolve the succession question that had been running in parallel: the Sir Dorabji Tata Trust had initiated a formal process to identify Chandrasekaran's replacement, with reports naming Tata Steel chief executive TV Narendran, Tata Sons group chief financial officer Saurabh Agrawal and National Stock Exchange chief executive Ashish Chauhan as contenders. That process is now expected to be paused or discontinued.

The Shapoorji Pallonji Group, which holds about 18 per cent of Tata Sons and has pushed for a listing to unlock value from its stake and support its own debt repayment.

An eventual Tata Sons listing could rank among the largest IPOs in Indian history. Even a 1 per cent stake sale has been valued at an estimated Rs 15,000–20,000 crore, implying an overall valuation near Rs 20 lakh crore - roughly USD 230 billion - for the conglomerate, which holds controlling stakes in more than a dozen listed companies across steel, automobiles, software services, hospitality and aviation.

Tata Sons and Tata Trusts did not immediately comment on the board's decision.