Tata Sons Ltd’s board on Thursday approved a five-year extension for N Chandrasekaran as chairman of the Tata Group holding company, allowing him to continue leading the group, people familiar with the development said.

Noel Tata, chairman of Tata Trusts, was the only member who voted against the resolution to reappoint Chandrasekaran. The Tata Sons board also considered listing the company, but no resolution was passed, the people cited above told Moneycontrol, requesting anonymity.

Sources close to Tata Trusts say the decision is illegal, and that Noel Tata has recorded his dissent. Noel Tata will seek to oust Chandrasekaran at the AGM, according to a source.

Both sides had obtained legal opinions on the matter.

Chandrasekaran's appointment must be ratified by the annual general meeting (AGM).

“At the meeting of the Board, Chandra acceded to the Board’s request to re-consider his decision. The Board thereafter resolved by a majority vote to re-appoint him as Executive Chairman for a further term of five years upon the expiry of his current tenure," Tata Sons said in a statement after the conclusion of the board meeting.

On the Tata Sons IPO, statement added that, "The Board also resolved to initiate steps to comply with the applicable RBI Guidelines and will seek guidance from RBI, , Tata Trusts and other stakeholders on applicable compliance requirements."

On September 12, the Reserve Bank of India rejected Tata Sons' application to surrender its Core Investment Company registration, effectively closing the Tata Group holding company’s attempt to avoid a mandatory stock-market listing. The Reserve Bank of India conveyed the decision in a letter to Tata Sons' company secretary and chief financial officer on Saturday.

On August 12, Chandrasekaran announced that he would not seek a third term when his current tenure ends on February 20.