Tata Sons Board May Revisit N Chandrasekaran’s Exit Plan After RBI Rejects Listing Exemption

Tata Sons’ board is set to convene on September 17, potentially reigniting debates surrounding Chairman N Chandrasekaran’s planned exit. Moneycontrol reports that certain directors may advocate for extending Chandrasekaran’s tenure, citing the need for leadership continuity following the RBI’s rejection of Tata Sons’ application for listing exemption.

However, it remains unclear whether the board will formally address this matter during the meeting. The RBI’s decision adds pressure to Tata Sons’ succession plans, as a potential listing would be a complex process involving various stakeholders. Proponents of Chandrasekaran’s continued leadership argue that a transition during this period could exacerbate challenges.

The RBI’s rejection has reignited interest in the listing requirement for upper-layer NBFCs. Despite Chandrasekaran’s earlier decision against seeking a third term, some believe the RBI’s ruling has shifted the dynamics surrounding his departure. The Tata Trusts’ stance could complicate any decision to retain Chandrasekaran, as Tata Trusts, which controls around 66% of Tata Sons, opposes a third term for the chairman.

Noel Tata, chairman of Tata Trusts, had previously voiced opposition to Chandrasekaran’s third term and continues to favor a leadership transition. Tata Trusts’ key constituent, Sir Dorabji Tata Trust, has already initiated the process of forming a selection committee to determine the next chairman. A disagreement at board level is unprecedented for Tata Sons, typically resolved through consensus, except for the 2016 dispute involving Cyrus Mistry.