Tata Trusts, the majority owner of Tata Sons, have proposed merging two operating companies with the group's holding company in a restructuring aimed at allowing Tata Sons to shed its regulatory classification as a non-banking financial company and a core investment company, potentially removing the need for a stock-market listing.
The restructuring comes amid a widening disagreement between Tata Trusts and the Tata Sons board over the future ownership and governance of the holding company. At the heart of the dispute is whether Tata Sons should remain an unlisted private company or comply with an RBI framework that could require it to list.
The proposal, announced on Monday, involves merging Tata Electronics Systems Solutions Pvt Ltd (TESS) and Tata Consulting Engineers (TCE) with Tata Sons. The Trusts have asked the Tata Sons board to consider the plan and seek a prior no-objection certificate from the Reserve Bank of India.
The proposed structure would turn Tata Sons back into an operating company while retaining its role as the Tata Group's holding company, with operating businesses and revenues sitting directly within the parent. The Trusts said this would ensure the reorganised entity does not meet the regulatory criteria for either an NBFC or a core investment company.
"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.
As of March 31, 2026, the combined entity would have operating revenue of Rs 105,043 crore, accounting for 64.3 per cent of total income, while income from financial assets would stand at Rs 40,072 crore, according to the Trusts. Net assets would total Rs 200,158 crore, with investments in Tata Group companies accounting for Rs 177,120 crore, or less than 90 per cent of net assets.
"An amalgamation of genuine operating, non-financial companies (such as TESS and TCE) with an NBFC (such as Tata Sons) will need to be undertaken in accordance with the provisions of the Reserve Bank of India (Non-Banking Financial Companies - Voluntary Amalgamation) Directions, 2025, including the requirement to obtain a prior 'no objection certificate' of the RBI," it said.
"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, chaired by Noel Tata since October 2024, have consistently opposed a listing. The Trusts' boards resolved in July 2025 that efforts should be made to retain Tata Sons as an unlisted private company. Noel has argued that the existing structure, under which philanthropic trusts control the holding company, is central to the Tata model.
The listing question became more pressing after the RBI classified Tata Sons as an upper-layer NBFC in 2022, a designation that carries a listing requirement. Tata Sons subsequently sought to exit the regulatory framework, but the RBI rejected its request in September, leaving the company facing the listing issue.
The Tata Sons board has since backed steps towards compliance, while the Trusts have pushed for alternatives that would allow the company to remain private.
The disagreement has also become intertwined with the question of N Chandrasekaran's future as Tata Sons chairman. Chandrasekaran, who has led the holding company since 2017, had initially been backed by the Trusts for a third five-year term.
But in early 2026, Noel sought assurances from Chandrasekaran on key issues, including that Tata Sons would remain privately held, according to people familiar with the matter. The absence of a clear commitment on the listing question became one of the issues complicating his reappointment.
Chandrasekaran subsequently said in August that he would not offer himself for another term when his tenure ended in February 2027. The Trusts accepted his decision and asked Tata Sons to begin the process of finding a successor.
That decision was reversed dramatically 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 argued that the resolution was invalid under Tata Sons' articles of association because it lacked the required support of the Trusts' nominee directors.
The board also backed moving ahead with steps related to the RBI's listing requirement, deepening the divide between the majority shareholder and the board. Noel had argued that listing was not inevitable and that Tata Sons should exhaust regulatory and legal alternatives before considering a public offering.
The latest restructuring proposal provides the Trusts with an alternative route. By bringing operating businesses directly into Tata Sons, the company would seek to change the composition of its income and assets sufficiently to fall outside the RBI's NBFC and CIC classifications.
The Trusts said the proposal would also restore an organisational model that Tata Sons followed for much of its history. Tata Consultancy Services, for instance, operated as a division of Tata Sons until it was demerged into a separate subsidiary in 2004.
The proposed merger will need RBI approval under the RBI (Non-Banking Financial Companies - Voluntary Amalgamation) Directions, 2025. Once completed, Tata Sons would surrender its certificate of registration as a CIC, according to the Trusts.
The restructuring therefore goes beyond a corporate reorganisation: it offers the Tata Trusts a potential regulatory route to preserve the unlisted Tata Sons structure at a time when the holding company's board is moving towards compliance with the RBI's listing framework.
For the Tata Group, the outcome will determine not only the regulatory status of its holding company but also the balance of influence between its charitable majority shareholders and the Tata Sons board over the group's long-term structure and leadership.
"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, in addition to being a regulatory permissible and compliant form of reorganization of a CIC," the statement said.
The Tata Trusts have, accordingly, written to the TSPL board to consider and approve the proposal, and to take necessary steps, including applying to the RBI for the necessary 'no-objection certificate' as required for the proposed merger and reorganisation.
"The Tata Trusts, along with TSPL, will engage with the RBI on all aspects of the proposed reorganisation," it said. "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 wherein it was agreed that all endeavours should be made to ensure that the status of TSPL as an unlisted private company should continue."
The private unlisted status, it said, "has the advantage of preserving the more than 100-year-old distinctive and unique organisational structure of the Group, which has always focussed on long term strategic initiatives geared towards nation building and the welfare of the disadvantaged and the excluded."
(With inputs from PTI)
