N Chandrasekaran Reappointment Requires Tata Trusts Approval, Says Advocate HP Ranina

Tata Sons Chairman N Chandrasekaran cannot be reappointed without the required affirmative vote from Tata Trusts-nominated directors, senior advocate HP Ranina said.

The proposed reappointment of N Chandrasekaran as chairman of Tata Sons would require the approval of Tata Trusts, according to senior advocate HP Ranina.

In a statement on September 29, Ranina said the decision would rest with the trustees of the Sir Ratan Tata Trust and Sir Dorabji Tata Trust, rather than with any individual such as Tata Trusts Chairman Noel Tata.

According to Ranina, the trustees would provide voting instructions to their nominee directors on the Tata Sons board, including Noel Tata and Venugopal Srinivasan.

Tata Trusts Nominees and Affirmative Vote

Ranina said the Articles of Association of Tata Sons require an affirmative vote from the relevant Tata Trusts-nominated directors for certain key appointments.

He argued that both Tata Trusts nominees would need to support the appointment for the reappointment to proceed.

“Therefore, they must both agree. If one person does not agree, then the appointment cannot go through,” Ranina said.

He further referred to a Supreme Court ruling from three years ago, saying the court had upheld the validity of the affirmative-vote provision.

According to Ranina, the provision means that an appointment covered by the relevant Articles cannot proceed without the required affirmative vote from the Tata Trusts-nominated directors.

Shareholders Must Also Approve Reappointment

Ranina also said Chandrasekaran’s reappointment would require approval from Tata Sons shareholders at the company’s Annual General Meeting (AGM).

He said that even if the board-level requirements are satisfied, Chandrasekaran could not be reappointed if shareholders voted against the proposal.

The comments come as Tata Sons remains at the centre of a broader restructuring discussion involving its regulatory status and proposed corporate mergers.

Tata Trusts Propose Tata Sons Restructuring

On September 28, Tata Trusts proposed the merger of Tata Electronics Systems Solutions Pvt Ltd (TESS) and Tata Consulting Engineers (TCE) with Tata Sons.

The proposed restructuring is aimed at changing the regulatory classification of Tata Sons. Tata Trusts said the move would take the holding company outside the regulatory definitions of both a non-banking financial company (NBFC) and a core investment company (CIC).

The restructuring is also linked to the question of whether Tata Sons would have to pursue a public listing under applicable Reserve Bank of India requirements.

Ranina said that if the proposed merger results in Tata Sons no longer meeting the definition of an NBFC, the company would have to notify the Reserve Bank of India (RBI) and seek the corresponding regulatory change.

He also referred to the income-based criteria used in determining whether a company falls within the NBFC framework.

Tata Sons Listing Debate

The restructuring proposal comes amid a wider debate over the future structure of Tata Sons and whether the holding company should remain unlisted.

Tata Trusts is the majority shareholder of Tata Sons. The proposed merger is intended, according to the Trusts, to alter the company’s regulatory position and address the requirements associated with its classification.

The final outcome will depend on the necessary corporate and regulatory approvals, including the applicable board and RBI processes.

For Chandrasekaran’s reappointment, the specific voting requirements under Tata Sons’ Articles of Association and the shareholder approval process will remain important factors.