Tata Consultancy Services (TCS) share price fell over 3% in early trade on Friday, in line with weakness across several Tata Group stocks, amid a fresh governance standoff at Tata Sons. The IT stock declined as much as 3.64% to Rs 2,116 apiece on the BSE.
The fall in TCS share price today came after Tata Trusts opposed the Tata Sons board's decision to reappoint N Chandrasekaran as executive chairman for another five-year term and disagreed with the move to initiate the process for the holding company's proposed IPO.
At its September 17 board meeting, Tata Sons, by majority decision, approved Chandrasekaran's reappointment for a further five years after the completion of his current term.
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The decision was opposed by Noel Tata, chairman of Tata Trusts, which represents several charitable trusts that collectively hold about 66% of Tata Sons' equity.
Following the board meeting, Tata Trusts said it considered the reappointment resolution “illegal” and maintained that the Trusts' nominee directors must approve the appointment of the Tata Sons chairman.
The development comes days after the Reserve Bank of India rejected Tata Sons' request to retain its status as a private, unlisted company.
Tata Trusts said the Tata Sons board discussed the RBI's communication at its September 17 meeting and agreed that all available options—not just a listing—should be thoroughly explored and assessed on an immediate basis.
“The Board agreed that all available options, and not listing alone, should be thoroughly explored and assessed on an immediate basis,” Tata Trusts said in its statement.
Noel Tata has also reiterated the Trusts' position of preserving the Tata Group's more-than-century-old structure.
He said Tata Sons is fundamentally different from a conventional holding company, given that around 66% of its equity is held by the Tata Trusts and dividends from operating companies ultimately support charitable activities. According to him, the commercial enterprise and philanthropy are closely integrated within the group's existing structure.
At 9:45 AM, TCS share price was trading 2.70% lower at Rs 2,136.65 apiece on the BSE.
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