Tata rift widens? Noel Tata-led companies appoint chairpersons without Tata Sons’ approval, says report

Some Noel Tata-led Tata group companies have appointed new chairpersons without reportedly seeking the customary approval of holding company Tata Sons, deepening the rift between Noel Tata and the N Chandrasekaran-led holding company over authority and succession decisions.

According to a report in The Economic Times, the appointments came as Noel Tata stepped down as chairman of the companies on turning 70 this month. Bahram Vakil was appointed chairman of Trent and Tata Investment Corporation, Sunil Dsouza of Voltas, and TV Narendran of Tata International, without prior approval from Tata Sons, the report stated.

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Tata Sons is likely to take up the matter at its next meeting, said people in the know to the financial daily.

The developments have raised questions over the extent to which group companies are beginning to function independently of the central leadership and governance framework. While Noel Tata controlled strategic decisions and business plans at the companies he chaired, appointments of chairpersons and chief executives had traditionally been referred to Tata Sons for approval, officials said.

However, people close to Noel Tata disputed the suggestion that the holding company had been blindsided. They said his retirement plans had been announced well in advance and questioned whether Tata Sons, as the principal shareholder, had done enough to initiate succession discussions.

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The dispute also raises questions about the legal authority governing such appointments. Under the Companies Act, 2013, a company's board chooses its chairperson from among its directors, subject to its Articles of Association and applicable regulations. Tata Sons' approval is legally mandatory only if the company's articles specifically make it a reserved matter.

Group company CEOs are meanwhile caught between the two sides, with insiders saying they are conflicted about where to show allegiance.