Ashwin Mathew

Associate Professor in JGLS


The current imbroglio involving Tata Sons Private Limited (“TSPL”) is a case of regulatory tussles and deadlocks in governance, both of which could seriously impact the ability of the company to carry on functioning. TSPL is the principal holding company and investment vehicle for the Tata Group of companies, one of India’s largest and oldest conglomerates with varied business lines including steel, motor vehicles, consumer products, software services, hotels, etc. A number of the downstream entities are listed, while TSPL is not.

Regulatory Issues and Need for Listing

Registration as CIC

TSPL was registered as a “Core Investment Company” (“CIC”) with the Reserve Bank of India (“RBI”), which is a form of non-banking financial company (“NBFC”), for an extended period of time. In 2025, the CIC Regulations of the RBI were amended to provide:

Investment Limits: Requires CICs to maintain a major portion of their assets and investments within group entities.

Leverage Restrictions: Outside liabilities of a CIC cannot exceed 2.5 times its Adjusted Net Worth based on the last audited balance sheet.

On 6 August 2026, RBI classified TSPL as an Upper Layer NBFC under the Scale Based Regulation for NBFCs. This is because TSPL met the following:

Asset threshold: Set at ₹1 lakh crore and above.

TSPL assets: Estimated at roughly ₹1.75 lakh crore.

TSPL is registered as a Core Investment Company (CIC).

Designation as Upper Layer NBFC

An Upper Layer NBFC was a special regulatory tier created by RBI in 2021 and applies to NBFCs with high systemic risk. These NBFCs require strict governance and mandatory stock exchange listing within three years of notification.

To push back on the listing and other requirements, TSPL sought to surrenders its CIC registration after:

● clearing its debts to reduce public financial reliance.

● arguing it does not borrow directly from public markets.

On 11 September 2026, RBI rejected TSPL’s request to de-register as a CIC, making listing mandatory. The original deadline was in 2025.

The other big shareholder, SP Group, which holds an 18.37 per cent stake, has also picked a side. Its chair, Shapoorji Pallonji Mistry, has backed a listing, calling it a “social and moral imperative”. Such listing would help the SP Group pare its large amount of debt. Interestingly, before the latest escalation, SP had also proposed a way out that would have allowed it to monetise part of its holding for at least Rs250bn through a selective capital reduction.

Restrictions on SRTT

Regulatory restrictions have been imposed by the Maharashtra Charity Commissioner on the Sir Ratan Tata Trust (SRTT), one of the primary philanthropic entities under the Tata Trusts umbrella and a 23.56% direct shareholder of TSPL.

Why the Freeze Happened

● Governance Rules: Amendments to the Maharashtra Public Trusts Act capped perpetual trustees at 25% for public trusts.

● The Violation: Complaints alleged perpetual trustees accounted for 50% of SRTT’s board (double the legal cap).

● The Order: The Charity Commissioner barred SRTT from convening internal board meetings or making decisions while the inquiry remains pending.

● Clarification: Although initially thought to apply broadly, the Commissioner clarified that the meeting bar applies solely to SRTT and not the other dozen-odd Tata trusts.


Impact on Tata Sons

● Quorum Deadlock: Tata Sons' Articles of Association require a joint nomination from both SRTT and Sir Dorabji Tata Trust (SDTT) to establish a valid quorum and execute major decisions, such as holding Annual General Meetings (AGMs).

● AGM Disruption: The restriction on SRTT stalled the joint nomination process, leading to historic adjournments of Tata Sons' AGM meetings. 

● Boardroom Friction: The freeze intersected with internal governance debates regarding leadership extensions, board representations, and strategic direction between factions led by Chairman Noel Tata and other trustees.

The freeze on SRTT has led to governance issues and a board room tussle. This tussle is primarily focussed on Mr. Noel Tata who heads the Tata Trusts, Mr. Chandrasekhar, the Chairman of TSPL and the board members other than Mr. Noel Tata. Earlier this year, Mr. Chandrasekhar had signalled his wish not to seek an extension of his term of chairmanship after it expired early next year. However, in the last Board meeting of TSPL, by a majority of 4:1 Mr. Chandrasekhar’s term as Chairman of TSPL was extended by a further period of 5 (five) years. Mr. Tata dissented. Under the articles of association of TSPL, such a decision cannot be taken unless a majority of the Trusts nominees assents. Mr. Tata is the Chairman of the Trusts and a member of the Board of TSPL. The approving members argue that majority of Trust nominees can be regarded as one nominee while Mr. Noel Tata insists that both nominees must agree. The question, therefore, arises as to whether the decision of the Board of TSPL is ultra vires the articles of TSPL and void. If so, what is the status of Mr. Chandrasekhar’s appointment? Further, such appointment would need to be approved by the shareholders of TSPL and since the Trusts control ~ 66% of paid-up equity capital of TSPL, Mr. Tata can still block the appointment. Without SRTT jointly nominating a person to represent its shareholding in TSPL, which after the freeze, it cannot do, an AGM of TSPL cannot be held.

Thus, TSPL’s AGM, scheduled for 18 August 2026, had to be adjourned after a regulatory freeze prevented the two principal bodies that make up Tata Trusts from nominating their required representative needed to meet the quorum requirements. It was reportedly the first time in TSPL’s history that its AGM could not proceed for this reason. That meeting is now scheduled for December 2026.

A listing of TSPL will significantly dilute the holding of the Trusts in TSPL since a minimum 25% public shareholding is required under the norms of the Securities and Exchange Board of India. This is Mr. Noel Tata’s chief concern according to Senior Advocate Harish Salve who is advising Mr. Chandrasekharan. Senior Advocate A. M. Singhvi who is advising Mr. Noel Tata and the Tata Trusts has spoken about “shareholder primacy” and the legacy of Mr. Jamshetji Tata in structuring this unique shareholder model for TSPL.

What next?

A number of things can happen, but all roads point to proceedings before the courts and tribunals which can be very time-consuming and costly:

● Mr. Noel Tata and the Tata Trusts can challenge RBI’s decision as lacking any basis and also question RBI’s authority to make it list.

● The Board of TSPL, Mr. Noel Tata and the Tata Trusts could lock horns on the appointment of Mr. Chandrasekharan as Chairman for a further period of 5 years. Such challenge could be based on an interpretation of the constitutional documents of TSPL and whether the decision of the Board of TSPL conformed to these documents.

● SRTT could challenge the freeze by the Charity Commissioner of Maharashtra. The appeal lies to the Bombay High Court either as a writ or under the statute.

● TSPL can approach the NCLT to order an AGM. Newspapers already suggest that this course of action is being contemplated.

● The minority shareholders and the SP Group can file a case for mismanagement under Section 241 and Section 242 of the Companies Act, 2013, just as happened in the Cyrus Mistry case. This claim would be made against Mr. Noel Tata and the Tata Trusts for not respecting the decision of other members of the Board of Directors and paralysing TSPL such that it cannot function. One of the reliefs that may be sought is an amendment of the articles of TSPL to minimise the stranglehold that the Tata Trusts and their Chairman have over the functioning of TSPL.

For the Tata Group companies whose Chairman is nominated by TSPL, what happens?

The road ahead is likely to be long and arduous for TSPL. Whatever be the outcome, Indian corporate law and regulatory oversight will be tested which is welcome for corporate lawyers, scholars and academics.


(These are the personal views of the author. They do not necessarily reflect the opinion of OP Jindal Global University or its affiliated institutions).