TCS, Tata Chemicals, other Tata stocks tumble up to 8% as Tata Trusts calls Chandrasekaran’s tenure extension illegal
In today’s session, Tata Chemicals declined 8% to its day’s low of Rs 719, while Tata Investment Corp declined 5% to Rs 683 per share on the BSE. India’s largest IT services provider, TCS, slipped 3.5% to Rs 2,118 apiece. Tata Motors, Tata Elxsi, and Tata Tech slipped up to 3% on Friday.
The decision, however, faced opposition from Noel Tata, chairman of Tata Trusts, the umbrella organisation for several charitable trusts that collectively own a majority stake in Tata Sons. Noel Tata was the only director to vote against the resolution. After the meeting, Tata Trusts said publicly that it considered the board’s decision to reappoint Chandrasekaran for another five years to be illegal.
RBI rejects Tata Sons requests, pushes for listing
The board meeting came days after the Reserve Bank of India rejected Tata Sons’ request to remain private and unlisted. The central bank also clarified that its rules for shadow banks of a certain size, which require them to be publicly held, would apply to Tata Sons. Shortly after the meeting, Tata Sons said its board had, by majority decision, resolved to reappoint Chandrasekaran as executive chairman for five years after the completion of his current term.
Also read: All-Out War at Tata
Tata Trusts, however, maintained its opposition. “The Trusts’ position remains unchanged, as a considered judgement of a majority shareholder,” it said in a statement. The trust said its position had been reiterated at the board meeting by its chairman. According to the statement, four directors voted in favour of Chandrasekaran’s reappointment while Noel Tata voted against it. Tata Trusts said the resolution was a legal nullity because of provisions in the Articles of Association of Tata Sons.
Tata Trusts vs Tata Sons on IPO plans
Tata Trusts controls 66% of Tata Sons through the Sir Ratan Tata Trust and the Sir Dorabji Tata Trust. In July 2025, Tata Trusts passed a resolution seeking to keep Tata Sons privately owned. The Shapoorji Pallonji Group, which holds an 18.37% stake and is the largest minority shareholder in Tata Sons, considers a listing the most practical route to unlocking value.On the listing question, Noel Tata has maintained that Tata Sons could meet the RBI’s requirements without making an explicit commitment to a public listing. He suggested that structural alternatives could be explored to satisfy the regulator while allowing Tata Sons to remain privately held.
Noel also proposed creating a committee or team with representatives from Tata Trusts and Tata Sons to jointly examine the options and determine how the company could comply with the RBI directive.
Tata Sons AGM is due
The public opposition from Tata Trusts also makes Tata Sons’ deferred and overdue Annual General Meeting particularly significant. Chandrasekaran needs to be reappointed as a director at the AGM to continue as chairman, and Tata Trusts, as the majority shareholder, holds the decisive position at the meeting.
However, one of the two trusts that together hold a majority of Tata Sons, the Sir Ratan Tata Trust, is currently barred by the Maharashtra charity commissioner from making decisions and therefore cannot participate in the AGM. As a result, the meeting has had to be deferred because of a lack of quorum.
The dispute has also brought renewed attention to the mechanism through which Tata Trusts exercises control over Tata Sons. Under a provision known as the assenting vote, directors nominated by the trusts have a role in approving key decisions. Tata Sons’ Articles of Association state that important decisions at the board require the assenting vote of a majority of trust nominees. In case of a tie, the chairman of the board can exercise a casting vote.
At present, only two trust nominees, Noel Tata and Venu Srinivasan, serve on the Tata Sons board. Both voted in opposite directions on the two resolutions considered on Thursday, bringing the tie-breaker mechanism into focus.
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The Tata Sons board, supported by legal opinion, has taken the view that the chairman of the session can use a casting vote to resolve the tie. Since Chandrasekaran was not eligible to vote on his own reappointment, Harish Manwani, who was asked to chair the session, exercised the casting vote, according to multiple people familiar with the developments.
Tata stocks that have stake in Tata Sons
Tata Chemicals holds a 2.53% stake in Tata Sons, while Tata Investment Corporation holds a significant stake in Tata Sons. Others such as TCS, where Chandrasekaran earlier served as the CEO, Tata Motors PV, Tata Elxsi, Tata Tech and Tata Steel will also be in focus on Friday.
Chandrasekaran resigned in August as Tata Sons chairman after his reappointment decision was deferred by the Tata Sons board. Tata Trusts raised reservations about the performance of the new businesses. Noel Tata was also in favour of a two-year executive term for Chandrasekaran, in line with the group’s retirement age of 65 for executive roles, ET reported earlier.
Disclaimer: This article has been written by Veer Shamra, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.
