Put to a vote or reconsider? N Chandrasekaran’s exit divides Tata Sons board

N Chandrasekaran steps down: The Tata Sons board is reportedly divided over how to formally respond to chairman N Chandrasekaran’s decision not to seek reappointment, with some directors favouring a vote on the matter while others believe he should be asked to reconsider.

The debate comes ahead of the Tata Sons annual general meeting scheduled for August 18, as stakeholders grapple with a leadership transition that has unfolded more abruptly than expected.

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According to a report in The Economic Times, Sir Dorabji Tata Trust (SDTT), one of the two principal trustee shareholders of Tata Sons, is understood to have written to the board asking it to take note of Chandrasekaran’s decision and begin the process of constituting a selection committee to identify his successor.

An official close to SDTT told the financial daily that since Chandrasekaran had voluntarily decided not to seek reappointment, the directors’ fiduciary duty should now 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. Others believe his decision is personal and should not be put to a vote, the report added.

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The six-member Tata Sons board includes two Trust nominees and the chairman. Board-level voting on Chandrasekaran’s proposed 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 five-year term.

Meanwhile, the Tata Sons AGM could itself face a quorum problem. Sir Ratan Tata Trust (SRTT) has been unable to jointly nominate a representative with SDTT, and officials said the meeting could therefore be called off despite other stakeholders joining online. If it happens, it would be the first such instance in Tata Sons’ history.

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The uncertainty has also fuelled speculation over separate meetings by Tata Trusts chairman Noel Tata and Chandrasekaran with a cabinet minister in New Delhi.