Mumbai: Tata Trusts has proposed restructuring Tata Sons to help the group’s holding company remain unlisted, according to the supplied report. The plan involves merging two operating businesses into Tata Sons to change its business and financial profile.
The trusts, which own about 66% of Tata Sons, have asked its board to consider the proposal and initiate the necessary process.
Which Companies Could Merge?
The proposal involves merging Tata Electronics System Solutions (TESS) and Tata Consulting Engineers (TCE) into Tata Sons.
The aim is to expand its operating business sufficiently to take it outside the regulatory criteria applicable to non-banking financial companies (NBFCs) and core investment companies (CICs). The report says RBI approval would be required before the merger.
Why Avoid A Listing?
Tata Trusts wants Tata Sons to remain an unlisted private company. The proposed restructuring would strengthen its combination of investments in group companies and direct business operations.
However, the proposal does not establish that a merger would automatically remove its regulatory obligations. Its treatment would depend on the applicable requirements and regulatory decisions.
Why Do RBI Rules Matter?
According to the report, the RBI classified Tata Sons as an upper-layer NBFC in 2022, bringing additional regulatory requirements, including a listing obligation.
The report says the RBI rejected its request to exit that classification in September. The trusts now propose changing the company’s structure to address the underlying classification criteria.
Where Do The Disagreements Stand?
The report describes differences between Tata Trusts and the Tata Sons board over listing and leadership.
It says both principal trusts unanimously backed efforts in July 2025 to preserve Tata Sons’ private status.
Separately, it reports that chairman N Chandrasekaran said in August he would not seek another term beyond February 2027.
Nevertheless, the board reportedly approved another five-year term on September 17. Noel Tata opposed the decision, and the trusts subsequently questioned its compliance with company rules.
The restructuring proposal awaits further consideration.
