Uncertainty persists surrounding the listing of Tata Sons, the holding company of the Tata group. Although the company's board of directors decided to advance steps related to a potential share offering, Tata Trusts has stated that it does not approve of this listing.
According to sources, Noel Tata stated during a Tata Sons board meeting on Thursday: 'The listing will lead to the disappearance of the current form of Tata Sons and directly affect the fundamental principle upon which the entire structure is based.' The Chairman of Tata Trusts, Noel Tata, also spoke out against it, insisting that instead of rushing to the stock market, all alternative paths should be considered. Therefore, deeming the Tata Sons listing inevitable at this moment would be premature.
The Tata Sons board of directors met on Thursday. At this meeting, the appointment of N. Chandrasekaran as the company's executive chairman for another five years was approved. As part of the same meeting, a decision was made to move towards listing Tata Sons on the stock market. However, this is where the disagreement with Tata Trusts emerged. Tata Trusts owns approximately 66% of Tata Sons shares and clearly stated after the meeting that it disagrees with the Tata Sons listing. The Trust believes that instead of only pursuing the IPO or listing option, all available options for the company must be immediately examined.
To understand this dispute, one must look at the matter between Tata Sons and the Reserve Bank of India (RBI). According to RBI regulations, Tata Sons is considered a financial company of a specific category. In March 2024, the company voluntarily applied to the RBI for the withdrawal of its Certificate of Registration (CoR) as a financial company.
However, Tata Sons' request was rejected by the RBI. Following this, Tata Sons had to consider several options regarding the company's current status, including going public. Nevertheless, Noel Tata notes that the RBI letter did not state anywhere that listing was the only way out.
The Chairman of Tata Trusts, Noel Tata, argues that Tata Sons cannot be viewed merely as a conventional holding company. Simply put, Tata Sons holds stakes in several major companies of the Tata group, and Tata Trusts is the largest shareholder of Tata Sons. This stake of Tata Trusts is linked not only to commercial investments but also to the philanthropic activities of the Tata group.
Noel Tata is concerned that if Tata Sons is listed on the stock market, the existing rights and influence of Tata Trusts over the company may weaken. In his view, the current capital structure of Tata Sons has maintained a special link between the group's business and its social and charitable activities for over a century.
Noel Tata proposed that Tata Sons re-present its position in detail to the RBI and request a review of its initial application. He also believes that the company should demand the opportunity to be heard by the RBI. Furthermore, the company should explore whether the issue can be resolved by making changes to the existing structure or through another legal route. Another important suggestion is that major steps, such as preparing for listing, appointing consultants, or determining the structure and timeline of the IPO, should not be taken without consulting Tata Trusts.
Noel Tata also mentioned the unanimous decision of the Tata Sons board of directors made in March 2024. At that time, the board decided to keep the company unlisted, meaning not to take it public. During this period, under the leadership of the late Ratan Tata, an application was submitted to the RBI for the withdrawal of the company's registration certificate. Subsequently, Tata Sons repaid its debts by raising funds from internal financial strength and some Tata group stakes.
The company also pre-purchased about 20,000 crore rupees worth of preference shares. Noel Tata emphasized that the fact that the company could spend such a large sum to preserve its structure meant that the decision to keep the company private was important at that time. According to him, the Tata Sons board's decision from March 2024 remains valid as it has not been officially changed before the board.
Noel Tata stated that if all attempts to keep Tata Sons a private company prove unsuccessful and a stock market listing ultimately becomes necessary, it should be given sufficient time. He requested a minimum of three years, suggesting a deadline until September 2029. The reason is that an IPO is not just selling shares on the stock market. First and foremost, the company needs to change its rules, obtain approval from existing shareholders, prepare financial statements, hire investment bankers and other consultants, conduct full due diligence on the company, and much more.
