Tata Sons board meeting on September 17: RBI ruling, Chandrasekaran succession and Trusts row in focus

The Tata Sons board is set to meet in Mumbai on September 17, with the Reserve Bank of India’s rejection of the holding company’s request to surrender its NBFC registration likely to be a key issue. The meeting also comes amid uncertainty over chairman N Chandrasekaran’s succession and a continuing governance impasse at Sir Ratan Tata Trust.

According to PTI, the RBI last week rejected Tata Sons’ application to surrender its registration as a non-banking financial company (NBFC). Tata Sons had applied in March 2024 after strengthening its balance sheet, including repaying more than ₹21,000 crore of debt, in a bid to exit the regulatory framework that could otherwise require it to list on stock exchanges.

The RBI’s decision has altered the dynamics around the long-running Tata Sons listing issue and could be discussed at the September 17 board meeting, people familiar with the matter told PTI.

Tata Trusts collectively control about 66% of Tata Sons, while the Shapoorji Pallonji Group holds around 18% and has favoured a listing. Noel Tata, chairman of Tata Trusts, has opposed a potential listing and had reportedly made his position one of the conditions for supporting Chandrasekaran’s renewal earlier this year.

Following the RBI’s decision, the listing question could effectively become moot unless the Trusts decide to challenge the regulator legally, sources said.

Chandrasekaran succession in focus

The leadership question adds another layer of uncertainty. Chandrasekaran informed the Tata Sons board in August that he would not seek a third term when his current tenure ends in February 2027. His decision came before the RBI ruling.

With the regulatory position now changed, an investment banker said continuity of the management team could become important if Tata Sons were to pursue a listing. Potential investors would seek greater certainty over leadership, the banker said.

The Nomination & Remuneration Committee could also potentially ask Chandrasekaran to reconsider his decision and seek another term. The September 17 meeting could therefore discuss both the RBI directive and the chairman’s future.

Succession faces Trusts roadblock

The process of finding Chandrasekaran’s successor is also complicated by a dispute at Sir Ratan Tata Trust (SRTT), one of the two principal Tata Trusts.

Sir Dorabji Tata Trust, which owns 27.98% of Tata Sons, said on August 13 that it respected Chandrasekaran’s decision and had begun the process of constituting a selection committee.

SRTT, which holds about 23.56%, is currently unable to convene trustee meetings because of proceedings before the Maharashtra Charity Commissioner. The Charity Commissioner has restrained the trust from conducting meetings following complaints received by the office.

The dispute has already affected Tata Sons’ governance. Its August 18 annual general meeting was adjourned after the two principal Trusts could not jointly nominate a representative.

Under Tata Sons’ Articles of Association, the chairman selection committee has five members, including three jointly nominated by SDTT and SRTT. The continuing impasse could therefore delay the succession process.

The September 17 meeting comes as these regulatory, leadership and governance issues converge, potentially shaping the future direction of Tata Sons.

With inputs from PTI