A statutory filing by Tata Sons on the reappointment of N Chandrasekaran as executive chairman does not cite Article 118 of its Articles of Association, the provision at the centre of its dispute with majority shareholder Tata Trusts.
The certified copy of the board resolution, passed on September 17 and filed with the Registrar of Companies in Form MGT-14 on October 15, states that Chandrasekaran has been reappointed “pursuant to the Articles of Association of the Company.” It does not name any specific article.
This marks a departure from the resolution passed at the board meeting of February 11, 2022, when Chandrasekaran was reappointed for his second term. That resolution, reviewed by CNBC-TV18, states the reappointment was made “pursuant to Article 105 and Article 118” of the Articles of Association.
The two resolutions are otherwise identical. Both cite Section 196 of the Companies Act, 2013, appoint Chandrasekaran as executive chairman “with substantial powers of management” for 5 years, and are signed by company secretary Suprakash Mukhopadhyay.
Under the new resolution, Chandrasekaran’s third term will run from February 21, 2027 to February 20, 2032.
Why Article 118 matters
Article 118 lays down the process for selecting the chairman of Tata Sons. It requires a 5-member selection committee, 3 of whom are nominated jointly by Sir Dorabji Tata Trust and Sir Ratan Tata Trust. The same process applies to the removal of a chairman.
Tata Trusts chairman Noel Tata has argued that the board should have followed Article 118 for the 2026 reappointment. He has pointed to the 2022 board minutes, which he says show the previous reappointment was carried out under the article.
Tata Sons has rejected this. In a September 24 letter to Noel Tata, the company said the procedure under Article 118 relates to the first appointment of a new chairman and not the reappointment of an existing one. It said the board had taken legal advice on the interpretation.
The Tata Sons board approved Chandrasekaran’s reappointment by a 4 to 1 vote on September 17. Noel Tata voted against the resolution, while the Trusts’ other nominee director, Venu Srinivasan, voted in favour.
Tata Trusts, which hold about 66% of Tata Sons, have said the resolution was not validly passed and has no legal effect. They have also cited Article 121, which gives directors nominated by the Trusts special voting rights on certain decisions.
The board meeting came days after the Reserve Bank of India rejected Tata Sons’ application to surrender its core investment company registration, a move that would have allowed it to stay unlisted. At the same meeting, the board decided to take steps towards a listing.
What next
Tata Sons has received an extension from the Registrar of Companies to hold its annual general meeting by December 31. The vote of Tata Trusts, as the majority shareholder, will be closely watched.
CNBC-TV18 has reached out to Tata Sons and Tata Trusts for comment. The story will be updated if they respond.