Tata Trusts, which owns 66% stake in Tata Sons, has proposed to merge the two operating companies with the Tata Group’s holding company. With this restructuring, the company will shed its ‘Non-Banking Financial Company’ (NBFC) and ‘Core Investment Company’ identities and retain the status of ‘Unlisted Private Company’. According to a statement issued by Tata Trust on Monday, the proposed restructuring involves the merger of Tata Electronics Systems Solutions Pvt Ltd (TESS) and Tata Consulting Engineers (TCE) with Tata Sons. Tata Sons is the holding company of a group of businesses ranging from salt to software, cars and airlines.

The Trust objected

The trusts have strongly opposed the listing of the holding company. He has asked the board of Tata Sons to consider the proposal and take necessary steps, including obtaining a ‘no-objection certificate’ (NOC) from the Reserve Bank of India (RBI) for the proposed merger. The trusts say the purpose of the restructuring is to ensure that the reorganized Tata Sons does not fall under the regulatory criteria (rules) of an NBFC or core investment company.

The proposed restructuring comes at a time when differences are growing between the boards of Tata Trust and Tata Sons over the future ownership structure. Trusts led by Noel Tata opposed the listing of Tata Sons from October 2024. In July 2025, they unanimously decided that efforts should be made to keep the company as an ‘unlisted private entity’.

Tata Sons was called an upper-layer NBFC

The matter became more urgent when the RBI classified Tata Sons as an ‘upper-layer NBFC’ in 2022. The condition of regulatory listing is also attached to this condition. Tata Sons tried to exit the NBFC framework, but the RBI rejected its appeal in September, leaving the listing issue unresolved.

This dispute Tata Sons Chairman N. Chandrasekaran’s appointment has been reached. Trustees supported his reappointment for a third five-year term in July 2025, but opposed the board’s decision to reappoint him in 2026, even though he indicated he would not seek another term.

Noel Tata and the trusts argued that Tata Sons’ articles required the approval of the trust’s nominee directors for appointment and invalidated the board’s decision. Despite this, the board has supported Chandrasekaran and taken steps towards compliance with regulatory norms. The new restructuring proposal will provide a way for the trust to meet the listing requirement, while Tata Sons will remain an unlisted private company.

Tata Trust’s new plan announced

Tata Trusts, as the major shareholder with 66% stake in Tata Sons Private Limited (TSPL), today presented a strategic restructuring plan for the company, the statement said. Upon its implementation, it will be ensured that the reorganized company will be neither an NBFC nor a Core Investment Company (CIC). The proposed restructuring mainly involves the merger of TESS and TCE into Tata Sons. As per the proposal, by March 31, 2026, the combined company’s operating income would be Rs. 105,043 crore, which will be 64.3 percent of the total income, while income from financial assets will be Rs. 40,072 crore will be. The net assets of the reorganized company stood at Rs. 200,158 crore, of which investment in group companies will be Rs. 177,120 crore, i.e. less than 90 percent of the total net worth. The trusts said this would mean it would not meet the core business criteria for NBFCs or the conditions applicable to CICs.

Tata Sons will repeat history again

The proposal will also restore the operating structure that Tata Sons followed for most of its history, when the holding company ran the operating business alongside its investments in Tata group companies. For example, Tata Consultancy Services (TCS) was a division of Tata Sons before being spun off as a separate subsidiary in 2004. The proposed merger will have to comply with the RBI (Non-Banking Financial Companies – Voluntary Amalgamation) Directives, 2025, which require clearance from the Centre. Bank

After completion of restructuring, Tata Sons will surrender its registration certificate as CIC, the trusts said. The proposal follows a unanimous decision taken by the boards of Sir Dorabji Tata Trust and Sir Ratan Tata Trust in July 2025, which said efforts should be made to maintain Tata Sons as an unlisted private company.

Tata Trusts said the proposed structure would retain the long-standing organizational model of the Tata group and also meet all necessary regulatory requirements. The proposal is currently subject to Tata Sons board consideration, RBI approval and completion of the merger process.

Instructions given to Tata Sons

Tata Trusts has asked the Tata Sons board to consider the proposal and take steps towards obtaining the required ‘No-Objection Certificate’ (NOC) from the RBI for the proposed merger. Under the proposed structure, Tata Sons will have the role of the holding company of the Tata Group as well as a major share of the operating business and revenues. The trusts said the structure is intended to comply with applicable regulations and maintain Tata Sons as an unlisted private company.

Tata Sons is currently classified as a ‘Core Investment Company’, a category of NBFCs that primarily invests in group companies. The proposed merger will bring the operating businesses directly under the purview of the company, which will significantly alter the asset and revenue structure of Tata Sons.

The trusts said that after 2004 RBI also classified Tata Sons as a ‘non-banking, non-financial company’. The proposed merger will combine TESS and TCE and bring the operating business back to Tata Sons. The restructuring will allow Tata Sons to retain its position as a private holding company at the heart of the Tata Group, while changing the regulatory basis of its operations. Along with this, the existing organizational structure of the group will also be retained and Tata Sons will not need to become a listed company.