Tata Trusts have proposed a major restructuring of Tata Sons that could allow the Tata Group's holding company to remain an unlisted private entity. The proposal involves merging Tata Electronics Systems Solutions Pvt Ltd (TESS) and Tata Consulting Engineers (TCE) into Tata Sons.

The Trusts, which hold a 66% stake in Tata Sons, have asked the company's board to consider the proposed amalgamation and seek a prior no-objection certificate from the Reserve Bank of India (RBI). The objective is to change Tata Sons' business and asset composition so that the reorganised entity would no longer qualify as either a non-banking financial company (NBFC) or a core investment company (CIC).

What Is Tata Trusts' Proposal?

Under the proposed restructuring, TESS and TCE would be merged into Tata Sons. This would bring their operating businesses and revenues directly into the holding company.

According to Tata Trusts, financial figures as of March 31, 2026, indicate that the reorganised Tata Sons would have operating revenue of Rs 1,05,043 crore. This would represent 64.3% of its total income, while income from financial assets would amount to Rs 40,072 crore.

The Trusts believe this change in the composition of Tata Sons would mean the company no longer satisfies the regulatory criteria applicable to an NBFC or CIC.

How the Merger Could Affect Tata Sons' RBI Status

Tata Sons has been subject to RBI regulation as an upper-layer NBFC. The company has also been treated within the regulatory framework applicable to core investment companies.

The proposed restructuring is designed to alter the proportion of operating businesses, financial assets and investments within Tata Sons.

The Trusts said the reorganised entity would have net assets of Rs 2,00,158 crore. Investments in Tata Group companies would account for Rs 1,77,120 crore, or less than 90% of total net assets.

The figures are significant because the proposed structure is intended to ensure that Tata Sons no longer meets the relevant criteria for classification as a CIC.

RBI Approval Will Be Required

The proposed merger would not take effect automatically. Tata Sons' board would first have to consider the proposal, followed by the necessary regulatory and corporate approvals.

Tata Trusts said the amalgamation would need to comply with the RBI's Non-Banking Financial Companies - Voluntary Amalgamation Directions, 2025. The process would include obtaining a prior no-objection certificate from the central bank.

If the restructuring results in Tata Sons ceasing to qualify as a CIC, the company would also be required to surrender its certificate of registration, according to the Trusts.

The Trusts have indicated that they intend to engage with the RBI regarding the proposed reorganisation.

Why Is Tata Sons' Listing an Issue?

The restructuring comes amid a dispute over whether Tata Sons should remain an unlisted private company or comply with the RBI framework that has resulted in a listing requirement.

The RBI classified Tata Sons as an upper-layer NBFC in 2022. The regulatory framework for entities in this category includes additional compliance requirements, including listing-related obligations for qualifying entities.

Tata Sons had sought relief from the regulatory framework but, according to Reuters, the RBI rejected the company's request to deregister as an NBFC in September 2026. Tata Sons subsequently indicated that it would take steps towards compliance.

The Tata Trusts have taken a different position and have maintained that Tata Sons should remain privately held.

Tata Trusts Want to Preserve the Unlisted Structure

Tata Trusts said their proposal is consistent with resolutions passed by the boards of the Sir Dorabji Tata Trust and Sir Ratan Tata Trust in July 2025.

The Trusts have argued that keeping Tata Sons private would preserve the group's long-standing organisational structure and allow it to continue focusing on long-term strategic initiatives.

The proposed restructuring would also bring Tata Sons closer to the model it followed for much of its history, when operating businesses were housed directly within the holding company.

One example cited by the Trusts is Tata Consultancy Services (TCS), which operated as a division of Tata Sons before being demerged as a separate subsidiary in 2004.

Tata Trusts and Tata Sons Board Dispute

The proposal arrives against the backdrop of a wider disagreement between Tata Trusts and the Tata Sons board over governance, leadership and the future structure of the holding company.

Noel Tata, chairman of Tata Trusts, has opposed the proposed listing of Tata Sons. The issue has become intertwined with questions surrounding the leadership of Tata Sons and the tenure of chairman N Chandrasekaran.

In September 2026, the Tata Sons board voted to give Chandrasekaran another five-year term. Noel Tata voted against the proposal, while the other four directors supported it, according to Reuters. The Trusts subsequently questioned the validity of the board resolution.

The disagreement over Tata Sons' regulatory status and listing has therefore become one of the central issues in the ongoing Tata Group governance dispute.

Financial Structure Under the Proposed Reorganisation

The Trusts have provided financial figures to explain how the proposed merger could change Tata Sons' regulatory classification.

Key figures based on March 31, 2026 data:

• Operating revenue: Rs 1,05,043 crore
• Share of total income from operating revenue: 64.3%
• Income from financial assets: Rs 40,072 crore
• Total net assets: Rs 2,00,158 crore
• Investments in Tata Group companies: Rs 1,77,120 crore
• Group-company investments as a share of net assets: Less than 90%
• Tata Trusts' stake in Tata Sons: 66%

The Trusts say these figures would place the reorganised entity outside the relevant NBFC and CIC classifications.

What Happens Next?

The proposal must first be considered by the Tata Sons board. If the board proceeds, the restructuring would then require the applicable corporate and regulatory approvals.

A key step would be obtaining the RBI's no-objection certificate. The regulator would ultimately have to consider the proposed structure and its implications under the applicable regulatory framework.

Until those steps are completed, Tata Sons' existing regulatory obligations remain relevant.

Key Highlights

• Tata Trusts hold a 66% stake in Tata Sons.
• The Trusts have proposed merging TESS and TCE with Tata Sons.
• The restructuring aims to change Tata Sons' regulatory classification.
• The proposed entity would have Rs 1,05,043 crore in operating revenue based on March 31, 2026 figures.
• Operating revenue would represent 64.3% of total income.
• Proposed net assets would total Rs 2,00,158 crore.
• Tata Group investments would represent less than 90% of net assets.
• The merger would require a prior RBI no-objection certificate.
• Tata Trusts want Tata Sons to remain an unlisted private company.
• The proposal still requires consideration by the Tata Sons board and subsequent regulatory approvals.

Professional Disclaimer & Third-Party Reference

This article is based on publicly reported information and statements attributed to Tata Trusts, along with reporting by established third-party news sources including PTI, Reuters and Financial Express. Financial figures, regulatory interpretations and corporate developments are presented for informational purposes and may change as the restructuring process progresses. Readers should refer to official Tata Group, Tata Trusts and RBI communications for primary-source confirmation.

Conclusion

The Tata Trusts' proposed merger of TESS and TCE with Tata Sons represents a significant attempt to change the holding company's regulatory position without pursuing a stock-market listing. The proposal now moves the focus to the Tata Sons board and the RBI, whose consideration and approvals will determine whether the proposed restructuring can be implemented.