India's most storied conglomerate, Tata Sons, is heading into a period of turmoil after its board defied the company's largest shareholder this week by reappointing N Chandrasekaran as chairman and endorsing plans for a stock market listing.

Tata Trusts, which controls 66% of Tata Sons, branded the board's move "illegal" under the company's articles of association and said it also rejects the listing plan, setting up what could become a lengthy legal fight at Bombay House, the 158-year-old firm's headquarters. Tata Sons owns well-known British names including Jaguar Land Rover and Tetley Tea, and the group is no stranger to internal power struggles.

The reappointment, though cleared by the board, may still be overturned at the company's annual general meeting, since Tata Trusts is expected to vote against it. That meeting must be held by 31 December after an earlier attempt was adjourned due to insufficient quorum, though no fresh date has been set. Corporate lawyer Nitin Potdar told the BBC the Nomination and Remuneration Committee only had power to recommend the reappointment, not approve it, and noted the move breaches governance rules requiring executives to retire at 65 — a threshold Chandrasekaran, granted a fresh five-year term, will hit in 2028.

Tata Group shares swung sharply as the standoff unfolded, mirroring investor uncertainty over leadership and the fate of costly ventures in semiconductors and aviation.

The listing question looms even larger, according to Nirmalya Kumar, a former Tata Sons strategy chief, who called a public offering "increasingly inevitable." The Reserve Bank of India designated Tata Sons an "upper layer" non-banking financial firm in 2022, triggering listing requirements. After a two-year wait, the RBI this month rejected the company's bid to escape that classification. Tata Trusts insists it is examining "all available options and not a listing alone," though Potdar expects the ruling to be challenged in court — a fight the RBI has pre-empted by asking to be heard first.

Opponents, including the late Ratan Tata and veteran director NA Soonawala, warn a listing could strip Tata Trusts of its influence and divert dividend income away from the charities' hospitals and universities toward shareholder returns. Soonawala also flagged poor timing, citing Air India's turnaround costs and losses at newer ventures. Supporters, however, argue that with listed Tata firms worth over $260bn and 17.7 million retail investors exposed indirectly to Tata Sons' decisions, greater transparency is overdue, according to advisory firm InGovern. Analysts expect further twists as the dispute continues.

Source: BBC

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