Mumbai, Sep 15 (PTI) All eyes are on the Tata Sons board meeting scheduled for September 17 in Mumbai, where three critical issues are set to converge at once: the prospect of a stock market listing following RBI decision, uncertainty over who will succeed N. Chandrasekaran as chairman, and a continuing governance impasse at one of the two principal Tata Trusts.

The Reserve Bank of India (RBI) last week rejected an application of the salt-to-software-and-cars conglomerate's holding company to surrender its non-banking financial company (NBFC) registration. Tata Sons had filed the application in March 2024 after taking steps to strengthen its balance sheet, including repaying more than Rs 21,000 crore of debt, in a bid to exit the regulatory framework that would otherwise require it to list on stock exchanges.

The decision has altered the dynamics within the Tata ecosystem, people familiar with the matter said, adding the issue may figure in discussions at the board meeting scheduled on Thursday.

Noel Tata, Chairman of Tata Trusts, has been categorical in his opposition to any potential listing of Tata Sons. He reportedly placed this as one of his pre-conditions in February this year for backing the renewal of N. Chandrasekaran's term as Chairman of Tata Sons, and has drawn support from some veteran former employees of the Tata Group.

Tata Trusts collectively control about 66 per cent of Tata Sons, while the Shapoorji Pallonji Group holds around 18 per cent. Shapoorji Pallonji has favoured a listing.

With the RBI's rejection, the listing controversy appears to have become largely moot unless the Trusts mount a legal challenge to the regulator's decision, they said.

In August 2026, Chandrasekaran, widely referred to as Chandra, informed the board of his decision not to seek a third term when his current term concludes in February 2027 - a decision communicated before the RBI's ruling, changing the context around it considerably.

"For a potential IPO, continuity of the management team including the Chairman will have to be considered by the Board. Potential investors will seek assurance on the same once the company embarks on its journey for a listing," an investment banker said.

There is speculation that the Nomination & Remuneration Committee may ask Chandrasekaran to reconsider his position on a third term.

Sources said the September 17 meeting may discuss the RBI directive and the question of a third term for the current Chairman.

Emails sent to Tata Sons and Tata Trusts for comments remained unanswered.

The listing is vexious with no unanimous view among the trustees of the Trust. Veteran trustees Venu Srinivasan and Vijay Singh have voiced their personal opinions in favour of a Tata Sons listing.

Tata Trusts is separately facing its own scrutiny, with the Charity Commissioner of Mumbai restraining the Sir Ratan Tata Trust - which holds a 23.5 per cent stake in Tata Sons - from conducting any meetings, following complaints received by the office.

The development around RBI is Noel Tata's biggest challenge so far as it will mean that he will have to prevail over the Board of Tata Sons to pursue a challenge in the legal courts, a market commentator said, adding Tata Sons Board taking on the regulator may not go down well with the markets and will be watched by the world at large.

Finding Chandrasekaran's successor too is a bit complicated. Sir Dorabji Tata Trust (SDTT), which holds 27.98 per cent in Tata Sons, said on August 13 that it respected Chandrasekaran's decision not to seek a third term and had initiated the process of constituting a selection committee to recommend the next Tata Sons chairman.

But Sir Ratan Tata Trust (SRTT), which owns about 23.56 per cent of Tata Sons, is currently unable to convene trustee meetings because of proceedings before the Maharashtra Charity Commissioner - the same impasse that forced Tata Sons' August 18 annual general meeting to be adjourned after the two principal trusts could not jointly nominate a representative.

Under Tata Sons' Articles of Association, the selection committee for the chairman consists of five members: three jointly nominated by SDTT and SRTT, one nominated from the Tata Sons board, and an independent outside member selected by the board. The requirement for the two principal trusts to jointly nominate three members means the continuing SRTT impasse could complicate the constitution of the committee.

At least one of the issues -- the RBI directive and another term for the present Chairman -- may not have found its way to the agenda till last week but dynamics of the Tata Group have changed significantly since then, sources said.

A public listing would mark a fundamental change for the holding company of one of India's oldest and largest business groups. Tata Sons owns significant stakes in listed and unlisted Tata companies spanning information technology, automobiles, steel, consumer products, aviation, hospitality and financial services.

The move could also bring far greater scrutiny of Tata Sons' finances, capital allocation and investments. A listed holding company would face regular disclosure requirements and greater pressure from public shareholders for clarity on the value of its investments and returns on capital. PTI ANZ ANZ VHI VHI