Big battle: Tata Sons Board reappoints Chandra, moves to list firm; 'illegal', say Trusts

Mumbai: Tata Trusts chairman Noel Tata is set to argue before the Tata Sons board on Thursday that the company should remain private and unlisted, despite the Reserve Bank of India's (RBI) decision to potentially force Tata Sons to list its shares. According to a source close to Noel, he intends to explain that the RBI's September 11 letter requires Tata Sons to adhere to rules for upper-layer non-banking financial companies (NBFCs), but does not inherently mandate a stock-market listing.

Noel plans to request the regulator to reconsider the rejection of Tata Sons' application to surrender its core investment company registration and seek an explanation for the decision. If complying with NBFC rules necessitates a listing, he asserts that Tata Sons will comply, but insists that compliance does not necessarily equate to a stock-market listing alone.

There are alternative ways to meet the rules, and the September 11 letter and the subsequent clarification are key topics on the agenda for Thursday's board meeting. Noel's legal team is exploring several options, including reducing Tata Sons' asset base below the Rs 1 lakh crore threshold that triggers a listing, or restructuring the company into two separate entities.

However, such restructuring would require regulatory approval and could face objections from the RBI if perceived as an attempt to bypass the listing rules. Prior to the meeting, Noel has been preparing extensively, focusing on defending the unlisted structure of Tata Sons. He believes this arrangement allows the company to adopt a longer-term perspective, free from the pressures of quarterly market fluctuations, while safeguarding Tata Trusts' capacity to carry out its long-term philanthropic and social initiatives.

Additionally, Noel plans to present a letter from Shapoor Mistry, chairman of the Shapoorji Pallonji Group, seeking approximately Rs 25,000 crore for a 3-4% stake in Tata Sons. This proposal could potentially open a path for Tata Sons and the SP Group to discuss a mutually beneficial liquidity solution, which may enable Tata Sons to remain unlisted by addressing the SP Group's liquidity requirements without resorting to a public listing.

Some Tata Trusts trustees have expressed reservations about Noel's discussions with Shapoor, citing a potential conflict of interest since Shapoor is Noel's brother-in-law.