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Tata Sons Reappoints N Chandrasekaran (Img: Pinterest)
Mumbai: The Tata Sons' board on Thursday voted to reappoint N Chandrasekaran for a third five years term as Chairman, weeks after he told directors he did not intend to seek reappointment. A reversal driven by regulatory pressure on the group's holding company.
This shift follows the Reserve Bank Of India's rejection last week of Tata Sons' application to surrender its registration as a non-banking financial company a decision that revives the prospect of a stock listing the company had spent more than a year trying to avoid, including by repaying more than Rs 21,000 crore in debt.
Board members reasoned that continuity of leadership would reassure prospective investors ahead of any listing process, sources said. Potential investors typically seek assurance on management continuity once a company embarks on an initial public offering.
Tata Sons' Nomination & Remuneration Committee will formally ask Chandrasekaran, 63, to reconsider the decision he communicated to the Board in August a decision made before the RBI's ruling and under a different set of assumptions about the company's regulatory path.
Noel Tata, Chairman of the Tata Trusts, which together with affiliated trusts controls about 66 per cent of Tata Sons, voted against the reappointment, but the resolution carried on a majority vote.
Noel Tata has opposed a listing since at least February, when the position was reportedly among the conditions he attached to backing Chandrasekaran previous term renewal.
Shapoorji Pallonji Group, which holds roughly 18 per cent of Tata Sons and was founded by Noel Tata's father-in-law, has favoured a listing.
