Tata Trusts has proposed restructuring Tata Sons by merging Tata Electronics Systems Solutions Private Limited (TESS) and Tata Consulting Engineers (TCE) into the group holding company, a move that could potentially take Tata Sons outside the Reserve Bank of India's regulatory framework for non-banking financial companies (NBFCs) and remove the trigger for a mandatory stock-market listing. Tata Trusts, which owns 66% of Tata Sons, said the proposed restructuring would give the company a significant operating business alongside its existing role as the holding company of the Tata Group. The proposal comes after the RBI rejected Tata Sons' application to surrender its registration as a Core Investment Company (CIC) on September 11, 2026.

The proposed merger is aimed at changing the financial structure of Tata Sons so that it may no longer meet the criteria for an NBFC or CIC. Tata Trusts said that, based on figures as of March 31, 2026, the combined entity would have operating revenue of Rs 1,05,043 crore, while income from financial assets would stand at Rs 40,072 crore. Operating revenue would therefore account for 64.3% of total income, according to the Trusts. Tata Trusts has argued that this would mean the reorganised Tata Sons would no longer meet the principal business criteria used to determine whether a company falls within the NBFC framework.

The listing issue stems from Tata Sons' classification as an Upper Layer NBFC under the RBI's Scale Based Regulation framework. NBFCs placed in the Upper Layer are required to be mandatorily listed within three years of being identified in that category, and Tata Sons was classified as an NBFC-UL in 2022. The company had sought to exit the regulatory framework by applying to surrender its CIC registration in March 2024, but the RBI rejected that request in September. The latest proposal instead seeks to alter the underlying business structure so that Tata Sons could potentially cease to meet the relevant NBFC classification.

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The restructuring also targets the criteria for being classified as a CIC, which generally applies to companies whose principal business involves holding investments in group companies. Tata Trusts said the proposed combined entity would have net assets of Rs 2,00,158 crore as of March 31, 2026, including Rs 1,77,120 crore in investments in group companies. According to the Trusts, the group-company investments would therefore account for less than 90% of net assets, meaning the reorganised company would not meet the relevant CIC criteria. The addition of TESS and TCE is consequently intended to change both the income and asset composition of Tata Sons.

Tata Trusts has maintained that keeping Tata Sons unlisted is consistent with the company's historical structure and previous board decisions. The Trusts said the proposed restructuring follows resolutions passed by the Sir Dorabji Tata Trust and Sir Ratan Tata Trust in July 2025, under which efforts would be made to retain Tata Sons as an unlisted private company. The Trusts also pointed to Tata Consultancy Services, which operated as a division of Tata Sons before being demerged into a separate subsidiary in 2004, as an example of Tata Sons' earlier operating model. The proposed merger would bring operating businesses and revenues directly into Tata Sons once again.

The proposal does not immediately remove the listing requirement, as it still requires approval from the Tata Sons board and a prior no-objection certificate from the RBI under the applicable amalgamation framework. Tata Trusts and Tata Sons are expected to engage with the central bank regarding the restructuring and its regulatory implications. If the merger is approved and the resulting entity falls outside the NBFC and CIC classifications, Tata Trusts' position is that Tata Sons would no longer be an Upper Layer NBFC and the mandatory listing requirement could cease to apply. Until those approvals and regulatory determinations are made, however, Tata Sons remains subject to the existing framework that created the listing obligation.

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