Tata Trusts explore legal options to clear N Chandrasekaran's succession process

Tata Trusts are exploring legal options to ensure the succession process at Tata Sons can proceed after N Chandrasekaran decided to not seek a reappointment at the helm of the Tata Group, sources told CNBC-TV18.

The trusts are seeking an urgent hearing before the Maharashtra Charity Commissioner, sources said. The next step being explored is to move the Bombay High Court, which is the appellate authority on orders passed by the Charity Commissioner.

The move comes after trustees of the Sir Dorabji Tata Trust (SDTT) met on Thursday and passed a resolution taking N Chandrasekaran's decision on record.

Chandrasekaran has decided not to seek another term as chairman of Tata Sons when his current term ends on February 20, 2027, setting the succession process in motion.

He said he had decided after the board had not reached a resolution on his proposed continuation and that he wanted the succession process to begin soon to ensure a proper transition.

SDTT has also resolved to constitute a Selection Committee for the succession process. However, no joint nominee could be appointed by SDTT and the Sir Ratan Tata Trust (SRTT) for the Tata Sons AGM.

In his letter to the Tata Sons board, Chandra indicated that Tata Trusts — the philanthropic entities that collectively possess a majority share in Tata Sons — had unanimously endorsed him for a third term. Nevertheless, one board member opposed the recommendation, and due to the lack of unanimous support, he opted to postpone the decision.

The Succession Problem

Article 118 of the Tata Sons Articles of Association provides for a five-member Selection Committee.

Three members are to be jointly nominated by SRTT and SDTT, with the chair of the committee to be chosen from among those three nominees. SDTT has resolved to move legally as it seeks to ensure that the succession process can proceed.

Chandrasekaran's current term ends on February 20, 2027, leaving six months for the succession process to be completed.

 

Also Read: Chandra's exit revives questions over Tata's governance structure