**Tata Trusts launched a sharp attack on Tata Sons chairman N Chandrasekaran on September 20, calling the interpretation of the company's Articles of Association being used to support his reappointment **'untenable' and warning that attempts to pull apart the existing Tata structure amounted to 'taking a sledgehammer to crack a nut'. According to Moneycontrol, Tata Trusts said it was 'unfortunate that the Chairman of Tata Sons, a Company renowned for setting high standards of corporate governance, is contending reappointment on such an untenable interpretation of the Articles'. The Trusts argued that pulling apart a hundred-year-old structure to fill an imaginary gap is taking a sledgehammer to crack a nut, marking a further escalation in the confrontation over Chandrasekaran's reappointment and the governance structure of Tata Sons.
Senior advocate Harish Salve, legal adviser to Tata Sons Executive Chairperson N Chandrasekaran, has questioned the true agenda behind the Tata Trusts' opposition to the company's listing. Speaking to NDTV, Salve said the focus had shifted to the board meeting instead of the concerns articulated by the Tata Trusts in a letter to Sir Dorabji Tata Trust Vice Chairperson and Tata Sons Director Venu Srinivasan. 'In their words, ''''You are supportive of the listing of this company, the Tata Trusts are against the listing of the company. You, Mr Srinivasan, are, therefore, conflicted,'''' the former Solicitor General of India stated. Salve described this as a 'good forensic ploy to obtain legal advice' and questioned 'Which is the true agenda? Why is this company listing?' when asked how the board could go against shareholders regarding Chandrasekaran's reappointment.
Tata Trusts has challenged the validity of the resolution reappointing Chandrasekaran, arguing that the Articles require the affirmative support of a majority of the Trusts' nominee directors. As per Moneycontrol, there are two Tata Trusts nominee directors on the Tata Sons board. The Trusts argue that a majority among two requires the support of both and, since one nominee voted against the resolution, the condition prescribed under the Articles was not satisfied. The chairman's casting vote, it said, is available only when there is equality of votes at the overall board level and cannot be used to overcome the absence of the required support among Trust nominee directors. Tata Trusts has maintained that the resolution reappointing Chandrasekaran was not validly passed and has 'no legal effect', describing it as void ab initio.
On September 17, Noel Tata placed a fresh SP Group proposal before the Tata Sons board that offers an alternative to the public listing. Under the proposal, enough Tata Sons shares would be monetised to generate at least ₹25,000 crore of gross proceeds for the SP Group. The transaction could take place in two tranches over 18 months and potentially involve Tata Sons undertaking a selective capital reduction through the National Company Law Tribunal process. This proposal is financially important because it potentially creates another route for SP Group liquidity without requiring an immediate public listing. However, it would raise questions about where the cash comes from, the valuation used for the transaction and how Tata Sons' ownership structure changes afterward. The market is no longer pricing only a possible IPO but must consider several possible outcomes, each producing different valuations and ownership structures.
The Reserve Bank of India (RBI) rejected Tata Sons' application for voluntary surrender of its Certificate of Registration (CoR) to be classified as an unregistered Core Investment Company (CIC), paving the way for a public listing. This development comes days after the RBI's communication that required companies with assets exceeding ₹1 lakh crore to be listed. The Tata Sons board of directors approved the company's public listing on Thursday, marking a significant milestone for the conglomerate. The announcement comes alongside the 5-year extension of Chairman Natarajan Chandrasekaran, which experts note is sentimental but the listing is fundamental in nature. Tata Sons is classified as a core investment company and is subject to RBI rules for non-bank lenders that require companies with assets exceeding ₹1 lakh crore to be listed.
Tata Group stocks came under severe pressure on September 18, reversing gains from the previous session after Noel Tata voted against the resolution and questioned its validity. Tata Chemicals was the biggest decliner, falling 7.49% in early trade, while TCS slipped 3.36%, Tata Motors declined 3.18%, Tata Investment Corporation fell 3.01%, Tata Technologies dropped 2.21% and Tata Power was down 1.34%. The selling comes a day after several Tata stocks had rallied sharply on the Chandrasekaran reappointment announcement and the Tata Sons board's decision to initiate steps towards complying with applicable RBI requirements, including its potential public listing. The stocks are not falling simply because N Chandrasekaran has been reappointed, but because the bigger concern is the uncertainty created around that decision and the escalating governance conflict.
