Board-level developments unfolding in Tata Sons, the unlisted holding company of the sprawling Tata Group, have cast an unfavourable light on the state of corporate governance in India, apart from raising uncomfortable questions about regulatory autonomy. These developments have long-term repercussions for India’s reputation as an investment destination.
The Tata Sons board, on September 17, through a contentious process that is sure to invite legal action, decided to reappoint N Chandrasekaran as chairman for a third five-year term. Even more curious was Chandrasekaran’s decision to accept the nomination, reversing his earlier decision to not seek re-appointment. The voting on the resolution was not only odd in its final outcome, but was also conducted by disregarding the rights of the majority shareholder—Tata Trusts, representing Sir Dorabji Tata Trust and Sir Ratan Tata Trust, which collectively own over 65 percent in Tata Sons.
In an earlier board meeting, Noel Tata, nominee director of the majority shareholder Tata Trusts on the Tata Sons board, had dissented against the board’s decision to re-appoint Chandrasekaran; the extant rules provide paramount weightage to this veto power. Chandrasekaran had also announced he would be stepping down. The subsequent volte-face by Tata Sons directors and Chandrasekaran is like an open rebellion against the majority shareholder.
The board used the casting vote of an officiating chairman, emboldened by a debatable legal opinion, for pushing through Chandrasekaran’s re-appointment. Additionally, the directors in favour of the re-appointment included the company’s chief finance officer, who effectively reports to the chairman. At the very least, to avoid any future complications, the gentleman should have recused himself.
The end result is a cringe-worthy spectacle of board directors wilfully abandoning their fiduciary duties, failing to stand up for the right thing and accepting an outcome that smacks of opportunism and vaulting personal ambitions.
The questionable behaviour by the Tata Sons independent directors did not end with Chandrasekaran’s re-appointment. They also resolved to meekly heed a directive issued by the Reserve Bank of India that instructs Tata Sons to list its shares publicly. This was again a mystifying somersault: the same directors had unanimously passed a resolution in March 2024, ratified by Tata Trusts in July 2025, to stay unlisted.
There were no attempts to put the RBI imprimatur under expert scrutiny or test its legal validity; there was only craven acceptance. There was also no explanation forthcoming for this strange about-turn in their collective stance, and this has further strengthened speculation about the real motive behind the directors’ action.
The speculation gains further credence when examining RBI’s directive, which, when combined with the Mumbai charity commissioner’s stand, seemed to have created an enabling environment for the Tata Sons directors to rebel against the majority shareholder. It is unlikely that the regulators are acting in concert or have non-regulatory goals in mind, but the tenor of their action breeds reservations and anxieties.
The RBI’s diktat to Tata Sons to go public has multiple intriguing aspects to it. The central bank came out with a list of upper-layer non-banking financial companies in September 2022, which included holding companies of two industrial groups—Tata Group and Sun Pharma. These companies were instructed to list within three years.
Both the holding companies immediately paid down their outstanding debts. Sun Pharma’s holding company Shanghvi Finance applied to the RBI in February 2023 to surrender its registration which the central bank promptly accepted, making the company an unregistered core investment company and exempt from the listing requirement.
Tata Sons also applied in March 2024, but the RBI strangely sat on the application for more than two years. In the interim, in April 2026, the RBI shifted the regulatory goalposts and in September 2026 rejected the Tata Sons’ application for deregistration.
Simultaneously, in May, the Mumbai charity commissioner, acting on a complaint, forbade Sir Ratan Tata Trust from holding any board meetings while ordering an enquiry into the trust’s workings. The trust was also not allowed to convene a meeting to nominate a representative for the Tata Sons annual general meeting which, in the absence of a quorum, had to be deferred. An AGM would have allowed the majority shareholder to exercise its legitimate rights. But a prolonged regulatory hiatus has put the trusts’ operations in limbo which seems uncannily convenient for the independent directors.
Two conclusions arise from the sordid, unseemly developments at Tata Sons. One, the independent directors have clearly not acted in the interests of the company, as the Companies Act bids them to do. A director is expected to act in good faith that will protect and enhance the interests of shareholders, the company, its employees, its broader universe of stakeholders (such as consumers or vendors) and the community.
An utter disregard for the majority shareholders in pursuit of a public listing which will benefit only one particular shareholder is downright antithetical to global best practices. These developments not only contravene capitalism’s basic ethics but also bode ill for the development of India’s corporate governance standards.
Tata Sons, once the exemplar for value-based corporate stewardship and Corporate India’s moral compass for inter-generational trusteeship of industrial wealth, may now become a model for aberrant corporate practices in a somewhat perverse turn of events.
The second conclusion has far-reaching consequences. The precedent set by Tata Sons directors, combined with inexplicable regulatory actions, comes at a time when foreign investor interest in India is waning and government representatives have been struggling to sell India as an investment destination.
Foreign investors have been complaining about India’s discretionary and unstable regulatory environment for a while now. Rules change overnight, competitive fields get skewed in favour of some domestic corporate behemoth or the other. JP Morgan chairman Jamie Dimon has highlighted in numerous press interviews that India must get its regulatory act together if it wants foreign investment.
The indecorous spectacle of Tata Sons—with a group turnover of `15.3 trillion and representing 4.6 percent of India’s gross domestic product in 2024-25—being destabilised by independent directors and disputable regulation will always remain an unattractive invitation card for foreign investors.
Rajrishi Singhal | Senior journalist and author of Slip, Stitch and Stumble: The Untold Story of India’s Financial Sector Reforms
(Views are personal)
(On X @rajrishisinghal)