N Chandrashekharan: A significant leadership conflict has erupted at Tata Sons after the chairman of Tata Trusts, Noel Tata, heavily criticized the process involved in the reappointment of N Chandrasekaran as the company’s chairman for another five years.
How did the leadership dispute between Tata Sons started?
At the Tata Sons board meeting held on September 17, the board decided to continue the reappointment of N. Chandrasekaran as the chairman of the company for another five years. Nevertheless, Noel Tata, who is the chairman of Tata Trusts, opposes this decision.
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Why has Noel Tata objected?
Noel Tata believes that the process by which voting for the reappointment took place did not conform to the company’s Articles of Association. In the letters written subsequent to the board meeting, he mentioned that the voting process was not in line with the provisions of the company and termed the resolution as one without any legal force.
Dispute over the casting vote
Another major point of disagreement is whether Harish Manwani’s casting vote could settle the split among the directors. Tata Trusts has argued that the required affirmative support from its nominee directors was not obtained and that a casting vote could not overcome that condition. The Trusts have therefore challenged the validity of the resolution. Noel Tata has also said the board had agreed to obtain a legal opinion on key questions surrounding the appointment before the matter was finalized.
Tata Trusts’ objection to the decision
N Chandrashekharan: The conflict has crossed the boardroom and gone public. Tata Trusts’ position is that the September 17 decision was not valid since the condition mentioned in the Articles had not been met. Tata Trusts objected to the use of the casting vote to settle the disagreement between their two nominee directors on the question of whether Mr. Chandrasekaran will serve his third term as chairman. Under the Reserve Bank of India regulations, Tata Sons is listed as an upper-layer non-banking financial company, which brings some requirements regarding the listing process.
