Tata Trusts rift deepens as four trustees challenge two over Tata Sons listing

Four trustees of the Tata charities that control Tata Sons have accused two fellow trustees of breaking with the group’s long-standing opposition to listing the holding company, deepening an ongoing dispute over the future of the $277 billion Tata empire, reported news agency Reuters.

The accusation was made in a letter dated October 5 and addressed to trustees Venu Srinivasan and Vijay Singh, according to two people familiar with the letter who spoke to Reuters. The letter was signed by Tata Trusts chairman Noel Tata, his son Neville Tata, senior lawyer Darius Khambata and longtime Tata executive Bhaskar Bhat.

The four trustees argued that exploring ways to keep Tata Sons unlisted was consistent with positions previously approved by the seven charitable trusts that control the company, the report said.

The development comes amid an increasingly public disagreement among Tata trustees over how Tata Sons should respond to regulatory requirements that could force it to list on the stock market.

Tata Sons, the holding company of 26 publicly listed Tata Group companies, is 66% owned by Tata Trusts. The holding company has been classified by the Reserve Bank of India as an NBFC-Upper Layer, under rules that require entities in that category to list within the prescribed timeframe.

The latest dispute centres on efforts to avoid such a listing.

According to the report, the four trustees said the question of keeping Tata Sons unlisted had been discussed and endorsed by the trusts on multiple occasions. They argued that the recent restructuring proposal was being considered after the RBI rejected Tata Sons’ request for an exemption from the rules requiring it to list.

The four trustees also maintained that Tata Trusts was not interfering in the affairs of Tata Sons, but was only expressing its views on the listing issue in its capacity as the company's controlling shareholder.

This position is significant because the disagreement between the trustees is not only about whether Tata Sons should list, but also about the role Tata Trusts should play in decisions concerning the holding company.TRUSTEE DISPUTE WIDENS

Reuters had reported last week that differences had emerged among Tata trustees over proposals that could allow Tata Sons to remain unlisted. Separate complaints have also raised broader questions about governance within the trusts.

Venu Srinivasan and Vijay Singh had earlier questioned the process surrounding the proposed restructuring, including whether a shareholder should direct the Tata Sons board to approve a restructuring that falls within the board’s independent decision-making responsibilities.

The two trustees had argued that a shareholder could express its views or propose a course of action, but the final decision should be taken by the Tata Sons board after independently assessing the legal, regulatory, financial and commercial implications.

The latest letter from the four trustees represents a direct pushback to that position. They have argued that the trusts’ stance on keeping Tata Sons unlisted was not a new intervention, but one that had been debated and approved previously.RESTRUCTURING AS ALTERNATIVE TO LISTING

The dispute follows a proposal to restructure Tata Sons as an alternative to taking the holding company public.

The restructuring option has emerged after the RBI rejected Tata Sons’ request to surrender or avoid the regulatory requirements applicable to its classification as an NBFC-Upper Layer. Tata Trusts has maintained that Tata Sons should remain unlisted and has been examining alternatives that could address the regulatory requirements without a stock market listing.

The latest disagreement among trustees adds another layer to the issue, with questions now being raised over both the listing decision and the governance process through which the Tata Trusts arrive at their position on Tata Sons.

The report also comes against the backdrop of separate complaints concerning the administration and governance of the charitable trusts, making the disagreement over Tata Sons part of a wider governance dispute at the top of the Tata group.- Ends