Tata Trusts have proposed a strategic reorganisation of Tata Sons that could provide an alternative to the company's planned public listing.

The proposal involves merging Tata Electronics Systems Solutions Pvt Ltd (TESS) and Tata Consulting Engineers (TCE) with Tata Sons Pvt Ltd (TSPL). Tata Trusts, which hold a 66 per cent stake in Tata Sons, have asked the Tata Sons board to consider the proposal and seek the necessary no-objection certificate from the Reserve Bank of India (RBI).

The proposed restructuring is designed to make Tata Sons an operating company alongside its existing role as the holding company of the Tata Group. Tata Trusts said the reorganised entity would no longer qualify as either a non-banking financial company (NBFC) or a core investment company (CIC). If the restructuring receives the required approvals and changes the company's regulatory classification, Tata Sons could remain privately held rather than proceeding with a public listing.

According to Tata Trusts, the combined entity would have operating revenue of Rs 1,05,043 crore based on figures as of March 31, 2026, compared with income of Rs 40,072 crore from financial assets. The Trusts argue that the resulting revenue mix would mean Tata Sons would not meet the principal business criteria for classification as an NBFC.

The Trusts also said the reorganisation would take Tata Sons outside the conditions applicable to a CIC. The proposed merger would, however, require compliance with the RBI's Non-Banking Financial Companies–Voluntary Amalgamation Directions, 2025, including prior approval 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.

Why Tata Sons is facing a listing requirement

The proposal comes after a major regulatory development involving Tata Sons.

The RBI classified Tata Sons as an upper-layer NBFC in September 2022. Under the applicable regulatory framework, upper-layer NBFCs meeting the relevant criteria are subject to enhanced requirements, including listing. Tata Sons subsequently sought to surrender its registration and remain private, but the RBI rejected that application earlier this month and directed the company to comply with the applicable regulatory requirements.

The Tata Sons board then decided on September 17 to begin steps towards a public listing. At that meeting, Tata Trusts reiterated that it did not agree with listing and wanted alternative options to be explored.

The latest restructuring proposal is therefore a fresh attempt to address the regulatory issue without taking Tata Sons public.

What Tata Trusts is proposing

The Trusts argue that Tata Sons historically operated businesses directly alongside its role as the group's holding company.

They pointed to Tata Consultancy Services (TCS), which was a business division of Tata Sons before being demerged into a separate subsidiary in 2004. The proposed merger of TESS and TCE would, according to the Trusts, return Tata Sons to an operating model in which it has its own businesses and revenues as well as its holding-company role.

Tata Trusts said the proposal is also consistent with resolutions passed by the Sir Dorabji Tata Trust and Sir Ratan Tata Trust in July 2025, under which efforts were to be made to preserve Tata Sons' status as an unlisted private company.

What happens next

The proposal is currently with the Tata Sons board. The restructuring cannot simply take effect through the Trusts' proposal; it would require consideration and approval through the relevant corporate and regulatory processes, including a prior RBI no-objection certificate.

The development also comes as the RBI is seeking clarity from Tata Sons on its compliance roadmap following the rejection of its deregistration application. The central bank has reportedly sought updates on the company's plans, while Tata Sons has been preparing its response.

The Tata Sons board's position and the Tata Trusts' proposal therefore represent two different routes being discussed in response to the same regulatory issue: moving towards a listing or restructuring the company so that the regulatory classification requiring it is no longer applicable.