Tata Sons chairman succession: Board to weigh Chandrasekaran's exit as AGM remains adjourned

A succession in motion

Tata Sons Chairman N Chandrasekaran's decision not to seek a third term has set in motion a succession process that the company's board is expected to take up at a meeting likely on September 17, according to a Moneycontrol report. Chandrasekaran announced on August 12 that he would step down when his current tenure ends on February 20, 2027, and would not seek reappointment.

A day later, the Sir Dorabji Tata Trust (SDTT) formally began the process of constituting a selection committee to recommend a successor, as reported by Moneycontrol. The SDTT, which holds a 98% stake in Tata Sons, said it would support an orderly transition.

Under Tata Sons' Articles of Association, the five-member selection committee will comprise three nominees from the Tata Trusts and two representatives from the Tata Sons board. The formal constitution of the committee requires participation from the Sir Ratan Tata Trust (SRTT), the other principal trustee shareholder, which is currently under regulatory restrictions.

A quorum crisis

The urgency around succession is compounded by an unresolved annual general meeting. Tata Sons' AGM, scheduled for August 18, was adjourned after the company failed to achieve the required quorum. The meeting could not proceed because the Sir Ratan Tata Trust was barred from holding meetings by the Maharashtra Charity Commissioner and could not nominate a joint representative, as required under Article 86 of the Articles of Association.

Under the article, a quorum requires at least five members present in person, including a representative jointly nominated by the SDTT and SRTT. With SRTT unable to convene or take decisions, that joint nomination could not go through.

The adjournment has pushed back several matters that typically get cleared at the AGM, including the finalisation of Tata Sons' FY26 accounts, the declaration of a dividend of Rs 4,474 crore, and the reappointment of Chandrasekaran as a director retiring by rotation. The company has filed an application under Section 96(1) of the Companies Act, 2013, and the Registrar of Companies has granted Tata Sons relief until December to hold its AGM, beyond the usual September deadline.

Board divides

The Tata Sons board, which includes Chandrasekaran, Tata Trusts Chairman Noel Tata, trustee Venu Srinivasan, Saurabh Agrawal, Harish Manwani, and Anita M George, is likely to meet on September 17. While Chandrasekaran's decision is not specifically on the circulated agenda, directors could discuss it during the meeting, the Moneycontrol report said.

Opinions among directors differ on how to handle the chairman's decision. An official close to SDTT said that since Chandrasekaran had voluntarily decided not to seek reappointment, the directors' fiduciary duty should focus on succession planning. However, some directors believe the board should not simply accept the decision and should instead seek to persuade Chandrasekaran to reconsider, while others believe his decision is personal and should not be put to a vote, as reported by The Economic Times.

Board-level voting on Chandrasekaran's exit would be unusual, with officials saying the board had nearly come to a vote over the issue in February and June. Chandrasekaran had informed the board that he would not seek another term, citing a lack of unanimous support for his reappointment following a prolonged standoff over his proposed third term.

Legal uncertainty

The inquorate AGM has also raised legal questions about Chandrasekaran's directorship. Legal experts are divided on whether he remains a director after the adjourned meeting. A partner at a leading law firm said, "The question of the tenure status of retiring directors in the absence of a timely AGM remains a grey area under the Indian corporate laws. Courts have taken divergent views: one line of authority holds that directors cannot benefit from their own failure to convene meetings, while another prioritizes business continuity and management stability."

Others take a more definitive view. Krishnava Dutt, founder and managing partner at Argus Partners, said, "The adjournment has created a governance impasse, not a vacancy." Rohit Jain, managing partner at Singhania & Co, concurred that since the resolution proposing Chandrasekaran's reappointment was never considered, his directorship does not lapse.

The issue matters because the law requires a company's chairman to be a director on its board, and Chandrasekaran's directorship was due for renewal at the August 18 AGM. The board will need to address the unfinished business at a fresh meeting.

The road ahead

The selection committee, once formed, is expected to steer the succession process. Under Tata Sons' Articles of Association, any reappointment of the chairman and managing director requires backing from a majority of Trust-nominated directors. Tata Trusts collectively own around 66% of Tata Sons.

The two principal Tata Trusts had unanimously supported another five-year term for Chandrasekaran in July 2025. However, at a February 2026 board meeting, Noel Tata reportedly raised concerns about losses and capital allocation at certain group businesses and sought clarity on Chandrasekaran's position regarding a potential Tata Sons listing.

The selection committee could take about one-and-a-half to two months to identify a successor, though SRTT's participation remains crucial. An earlier request by SRTT for permission to hold an emergency meeting was not granted before the August 18 AGM. According to people familiar with the matter, SRTT may not immediately pursue further legal action and could wait for the regulatory issue to be resolved.

The uncertainty has also fuelled speculation over separate meetings by Noel Tata and Chandrasekaran with a cabinet minister in New Delhi, as reported. Chandrasekaran's departure comes as Tata Group seeks to turn around loss-making ventures such as Air India and Tata Digital, and as Tata Sons deals with uncertainty surrounding Reserve Bank of India requirements relating to a potential listing.

With Chandrasekaran's tenure ending in February 2027, the group is expected to have enough time for the transition, provided procedural hurdles are resolved.