Tata Trusts has proposed a major restructuring of Tata Sons, the principal holding company of the Tata Group, by merging two group companies into it. The move is expected to change the nature of Tata Sons’ business profile and help it remain a private, unlisted entity.
The proposal involves the merger of Tata Electronics Systems Solutions (TESS) and Tata Consulting Engineers (TCE) with Tata Sons. However, the restructuring cannot be completed through an internal decision alone. The proposal will need to clear key corporate and regulatory steps before it can be implemented.
Here are the three key approvals and steps that will determine whether Tata Trusts’ merger plan can move forward.
1. Tata Sons Board Approval
The first major step is approval from the Tata Sons board. Tata Trusts, which own 66 per cent of Tata Sons, have written to the company’s board seeking its approval for the proposed restructuring.
The merger would bring TESS and TCE directly under Tata Sons, giving the holding company an operating business alongside its investments in other Tata Group companies.
This is important because Tata Sons is currently primarily an investment holding entity. Its main activity is holding stakes in various Tata Group businesses, which has led the Reserve Bank of India (RBI) to regulate it as a Core Investment Company (CIC).
The proposed restructuring seeks to alter that profile by increasing the contribution of operating businesses to Tata Sons’ overall income.
2. RBI No-Objection Certificate
Once the Tata Sons board approves the proposal, the company will have to approach the RBI for a no-objection certificate.
This regulatory clearance is required under the RBI’s 2025 framework governing such mergers. The RBI’s approval will therefore be a crucial milestone before the proposed reorganisation can proceed.
Tata Trusts have said that they, along with Tata Sons, will engage with the central bank on all aspects of the proposed restructuring.
The regulatory issue is important because the merger is designed, among other things, to change Tata Sons’ classification. Following completion of the reorganisation, Tata Sons is expected to surrender its registration as a Core Investment Company.
3. Completion Of Merger And Change In Regulatory Status
The third key step is the actual completion of the proposed merger and the resulting change in Tata Sons’ regulatory classification. The approval would need to come from other shareholders. The Shapoorji Pallonji Group, which owns around 18.4 per cent in Tata Sons, has supported the listing proposal and to go forward with Tata Trusts’ plan to keep Tata Sons unlisted; their approval will be needed as well.
According to the Trusts, financial figures as of March 31, 2026 show that the combined Tata Sons would generate approximately Rs 1.05 lakh crore from operating activities, compared with Rs 40,072 crore from investments.
The Trusts argue that this would make operating income the larger source of revenue, meaning Tata Sons would no longer fit the definition of a finance company or Non-Banking Financial Company (NBFC).
The proposed structure is also intended to ensure that Tata Sons does not qualify as a CIC. The merged entity is expected to have net assets of around Rs 2 lakh crore, including Rs 1.77 lakh crore invested in Tata Group companies. Since investments would account for less than 90 per cent of its net assets, the Trusts say the company would not meet the criteria for CIC classification.
Why Tata Trusts Are Pursuing The Restructuring
The proposed merger is linked to the Tata Trusts’ broader objective of keeping Tata Sons a private and unlisted company, meaning its shares would not be traded on the stock market.
The Trusts said the plan follows resolutions unanimously passed in July 2025 by the boards of Sir Dorabji Tata Trust and Sir Ratan Tata Trust. These resolutions called for every effort to be made to retain Tata Sons as an unlisted private company.
Tata Trusts’ proposal therefore seeks to address Tata Sons’ regulatory status by changing the composition of its business, while simultaneously preserving its private and unlisted structure.
For the merger to move from proposal to implementation, however, the process will depend on the Tata Sons board’s decision, the RBI’s regulatory clearance and the eventual completion of the restructuring and related change in regulatory status.
