Tata Trusts propose merging 2 firms with Tata Sons to avoid RBI listing mandate
NEW DELHI: Tata Trusts, which hold a 66 per cent stake in Tata Sons, have proposed merging two operating companies with the Tata Group’s holding company in a move aimed at taking Tata Sons out of the Reserve Bank of India‘s regulatory framework for non-banking financial companies and core investment companies, potentially allowing it to remain unlisted.The Trusts have asked the Tata Sons board to consider merging Tata Electronics Systems Solutions Pvt Ltd (TESS) and Tata Consulting Engineers (TCE) with Tata Sons and to seek a prior no-objection certificate from the RBI for the proposed restructuring, reported PTI.The proposal comes amid a standoff between Tata Trusts and the Tata Sons board over whether the holding company should remain private or move towards a stock-market listing.“The Tata Trusts today, as majority shareholders with a 66 per cent stake in Tata Sons Private Limited (TSPL), outlined a strategic reorganisation plan for the company which, when given effect to, would ensure that the reorganised entity would neither be a non-banking financial company (NBFC) nor a core investment company (CIC),” the Trusts said in a statement on Monday.Under the proposed restructuring, TESS and TCE would be amalgamated with Tata Sons. The move would bring operating businesses and their revenues directly into the holding company, changing the composition of Tata Sons’ income and assets.The Trusts said that, based on figures as of March 31, 2026, the reorganised entity would have operating revenue of Rs 1,05,043 crore, accounting for 64.3 per cent of its total income. Income from financial assets would stand at Rs 40,072 crore.Its net assets would total Rs 2,00,158 crore, of which investments in Tata Group companies would account for Rs 1,77,120 crore, or less than 90 per cent of net assets.The proposed structure is intended to ensure that Tata Sons no longer meets the regulatory criteria for either an NBFC or a CIC.The Trusts said the merger would have to comply with the RBI’s Non-Banking Financial Companies – Voluntary Amalgamation Directions, 2025, including the requirement for a prior no-objection certificate from the central bank.“Given that Tata Sons Pvt Ltd (TSPL) will also cease to be a CIC upon the conclusion of the proposed reorganization, TSPL will be required to surrender its certificate of registration,” the Trusts said.The proposal does not take effect immediately. The Tata Sons board will first have to consider it, following which the required regulatory approvals would have to be obtained.Also read: Mehli Mistry to leave Tata Med Centre Trust, his 6th such exit
Why the proposal?
The restructuring is aimed at changing Tata Sons’ regulatory classification, which is central to the dispute over its listing status.The RBI classified Tata Sons as an upper-layer NBFC in 2022. Entities placed in this category are subject to additional regulatory requirements, including a requirement to list.Tata Sons subsequently sought an exemption from the framework, but the RBI rejected its request in September, leaving the company facing the listing issue.The Tata Trusts have opposed a public listing and have maintained that Tata Sons should remain an unlisted private company. Their boards resolved in July 2025 that all efforts should be made to retain Tata Sons as an unlisted private company.The proposed merger offers an alternative route: instead of complying with the framework applicable to an NBFC/CIC, Tata Sons would seek to alter its business and asset profile so that it no longer falls within those categories.The Trusts said the restructuring would restore an organisational model that existed for much of Tata Sons’ history, when operating businesses were housed directly within the parent company. Tata Consultancy Services, for instance, operated as a division of Tata Sons before being demerged as a separate subsidiary in 2004.“The proposed amalgamation and consequential steps are in line with regulatory compliance requirements and the unanimous resolutions passed by the Boards of Sir Dorabji Tata Trust and Sir Ratan Tata Trust in July 2025,” the Trusts said.Also read: Ex-CJI, more legal experts back Tata Sons on Chandra’s reappointment
Tata Trusts vs Tata Sons board
The latest proposal comes against the backdrop of a broader disagreement between Tata Trusts and the Tata Sons board over the future structure and governance of the holding company.The Trusts, chaired by Noel Tata since October 2024, have consistently opposed listing Tata Sons. The issue has also become linked to the future leadership of the holding company and the tenure of N Chandrasekaran, who has been Tata Sons chairman since 2017.Chandrasekaran had initially been backed by the Trusts for a third five-year term. However, differences emerged over key issues, including the future ownership and listing status of Tata Sons. Chandrasekaran announced in August that he would not offer himself for another term when his tenure ends in February 2027.The situation changed on September 17, when the Tata Sons board voted to give Chandrasekaran another five-year term. Noel Tata voted against the proposal, while the other four directors backed it. The Trusts subsequently questioned the validity of the resolution, arguing that it did not have the required support of their nominee directors.The board has also backed steps towards compliance with the RBI’s listing framework, putting it at odds with the Trusts’ preference for keeping Tata Sons private.The proposal will now have to be considered by the Tata Sons board and would require regulatory approval, including an RBI no-objection certificate.The Trusts said they would engage with the RBI on all aspects of the proposed reorganisation.“The Tata Trusts believe that the proposed reorganization and action plan for compliance would be in the best interests of the Tata Group as well as its stakeholders,” the statement said.The Trusts said retaining Tata Sons as an unlisted private company would preserve the group’s “more than 100-year-old distinctive and unique organisational structure”, which they said has focused on long-term strategic initiatives and nation building.The outcome of the proposal could therefore determine whether Tata Sons has to pursue a stock-market listing or can restructure itself to exit the regulatory framework that triggered the listing requirement in the first place.
