Chandra’s reappointment still needs shareholder nod, Trusts can block it

The vote exposed differences among Trusts’ own nominee directors.

MUMBAI: In an unprecedented break with its principal shareholders, Tata Sons’ board Thursday voted to reappoint N Chandrasekaran as executive chairman for another five years, defying Tata Trusts, which called the resolution “a legal nullity”, exposing a split over leadership and strategy at India’s largest conglomerate.A Tata Sons statement after the board meeting said, “Chandra acceded to the board’s request to reconsider his decision”, capping a dramatic about-turn by the chairman who had ruled himself out about a month back for lack of unanimous board-level support. The board voted by four votes to one to reappoint him. Noel Tata, chairman of Tata Trusts, cast the sole dissenting vote while Chandra abstained.The vote exposed differences among Trusts’ own nominee directors.

Article 121A of Tata Sons’ articles requires a majority of nominee directors to back a chairman’s reappointment. Trusts vice-chairman Venu Srinivasan voted in favour; Noel voted against. That deadlock left Harish Manwani, the independent director (ID) who chaired the meeting for this proposal, to cast the deciding vote, resulting in the resolution being approved 4-1 (Anita George, an ID, and Saurabh Agrawal, group CFO & exec director, voted for Chandra).

A question mark hangs over the chairmanship though, as reappointment needs to be confirmed by shareholder approval at the next AGM.The board also resolved to begin complying with RBI’s upper-layer NBFC rules, including a mandatory listing, and said it would seek guidance from the Trusts and other stakeholders on the issue.Trusts, however, said they would press ahead with identifying a successor to Chandra and explore other options to avoid listing. Trusts also said they would push for a selection panel that would proceed under Tata Sons’ Articles of Association as part of an “orderly and timely leadership transition.”