The big corporate event this week – The Tata Sons board meeting is scheduled to be held on September 17 in Mumbai. All eyes are on the meeting, as the board is expected to take up three critical issues — the prospect of a listing for Tata Sons following the Reserve Bank of India’s (RBI) decision, uncertainty over who will succeed N Chandrasekaran as chairman, and the continuing governance impasse at one of the two key Tata Trusts.
Here is a look at what has happened so far.
RBI rejects Tata Sons’ bid to avoid listing
The RBI last week rejected Tata Sons’ bid to voluntarily surrender its non-banking financial company (NBFC) registration. This brings Tata Sons listing plans in focus.
Tata Sons had filed the application to surrender its Core Investment Company (CIC) registration in March 2024, which would have taken it outside the regulatory framework requiring it to list.
However, Tata Sons could challenge the RBI’s decision before the Bombay High Court, with legal experts cited by Financial Express saying the company could examine issues related to the regulatory process or its ability to restructure without a listing.
The RBI has now filed a caveat in the Bombay High Court to ensure that it gets an opportunity to present its case if Tata Sons or any other party challenges the decision in court. A caveat allows the RBI to be heard before the court passes an order in any matter challenging its decision or seeking a stay.
Why Tata Sons faces a listing requirement
Tata Sons assets exceed Rs 1 lakh crore. This is above the threshold decided under RBI’s revised framework for automatic classification as an Upper Layer NBFC.
The RBI first classified Tata Sons as an Upper Layer NBFC in September 2022. Such entities were required to list within three years, giving Tata Sons an original deadline of September 30, 2025.
Tata Sons sought to avoid the requirement by exiting the NBFC framework. It also repaid more than Rs 21,000 crore of debt in 2024.
Who will lead Tata Sons next?
Another key issue expected to be discussed at the board meeting is the appointment of Tata Sons’ next chairman after N Chandrasekaran informed the board in August 2026 that he would not seek a third term when his current tenure ends in February 2027.
Tata Trusts, which collectively control about 66% of Tata Sons, have been reluctant about a listing, while the Shapoorji Pallonji Group, which holds around 18%, favoured one.
Apart from the listing issue, differences between Tata Trusts and Chandrasekaran also centred on the performance and losses of businesses such as Tata Digital and Air India.
Governance impasse at Sir Ratan Tata Trust
Another issue in focus is governance impasse at one of the two principal Tata Trusts– Sir Ratan Tata Trust (SRTT) and Sir Dorabji Tata Trust (SDTT).
SRTT has been barred from holding board meetings under a directive of the Maharashtra Charity Commissioner, while the authority investigates allegations of governance lapses at the trust.
The restriction has already affected Tata Sons’ functioning. Its annual general meeting on August 18 was adjourned for lack of quorum after SRTT could not participate in the nomination of a joint representative with the Sir Dorabji Tata Trust (SDTT), the other key promoter trust. Under Tata Sons’ Articles of Association, such a joint representative is required for the AGM to meet the quorum requirement.
The SRTT impasse has also stalled the process of finding a successor to Tata Sons Chairman N Chandrasekaran, who has said he will not seek reappointment when his current term ends on February 20, 2027. SDTT, which holds a 27.98% stake in Tata Sons, passed a resolution on August 13 to initiate the formation of a Selection Committee to recommend the next chairman.
The five-member Selection Committee requires the participation of both SRTT and SDTT, which together nominate three members. With SRTT unable to convene a board meeting, it has been unable to participate in the nomination process, leaving the formation of the committee stalled.
The continuing restriction has prompted SRTT trustees to seek relief from the Charity Commissioner so the trust can take up urgent matters, including its participation in the Tata Sons chairman selection process. Three trustees made a fresh appeal in August after earlier attempts to secure relief from the meeting ban failed.