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

Tata Sons’ board meeting on September 17 may bring back discussions over whether Chairman N Chandrasekaran should reconsider his decision to step down after his current term ends in February 2027.

According to a report by Moneycontrol, some directors could raise the possibility of extending Chandrasekaran’s tenure, citing the need for leadership continuity after the Reserve Bank of India rejected Tata Sons’ request to surrender its Core Investment Company (CIC) registration.

However, there is no confirmation that the issue will be formally discussed at the meeting. It also remains uncertain whether any discussion, if initiated, would lead to an official proposal.

RBI decision adds pressure on succession plans

Those supporting Chandrasekaran’s continuation believe that a possible Tata Sons listing would be a complicated process involving regulators, shareholders and group companies. They argue that a leadership change during such a period could create additional challenges.

The RBI’s rejection of Tata Sons’ application has brought renewed focus on the listing requirement applicable to upper-layer NBFCs. Tata Sons had sought deregistration after becoming debt-free, but the central bank’s decision means the listing issue remains unresolved.

Chandrasekaran had earlier decided against seeking a third term as chairman. Reports suggest some directors believe the RBI decision has altered the circumstances surrounding the leadership transition.

Tata Trusts succession stance remains key

Any move to retain Chandrasekaran could reopen differences between Tata Sons and its controlling shareholder, Tata Trusts. Noel Tata, chairman of Tata Trusts and a Tata Sons director, had reportedly opposed a third term for Chandrasekaran earlier and continues to favour a leadership transition.

Tata Trusts owns around 66% of Tata Sons, making its position crucial in deciding the company’s future leadership. Sir Dorabji Tata Trust, one of the key Tata Trusts, has already acknowledged Chandrasekaran’s decision and started the process of forming a selection committee for the next chairman.

A disagreement at the board level would be unusual for Tata Sons, where leadership appointments have traditionally been decided through consensus, except during the 2016 dispute involving Cyrus Mistry.