Former Chief Justice of India Uday U Lalit has given a legal opinion that Tata Sons should be treated as an entity with indirect access to public funds and it would not be prudent for the Reserve Bank of India(RBI) to provide an exemption to Tata Sons from Mandatory listing by October 2025. The development assumes significance as Tata Sons has approached the RBI seeking an exemption from mandatory listing.
In order to obtain this exemption Tata Sons has sought to surrender its core investment company(CIC) license. The surrender application is still pending with the central bank.
Any entity categorized as NBFC-Upper Layer (NBFC-UL) need to be listed within three years of the entity being categorized as one.
This opinion was provided in response to queries of Cyrus Investments and Sterling Investment Corporation – entities owned by the Shapoorji Pallonji(SP) Group who own 18.37% stake in Tata Sons.
Emails sent to Tata Sons and SP group remained unanswered at the time of publishing the story. Justice Lalit also did not reply to an email sent on Tuesday evening.
“No. It would not be within domain, power and discretion of Reserve Bank of India to ignore concerns voiced in the case of opinion as set out hereinabove,” said Lalit in a legal opinion dated March 11, 2025.
The legal opinion also added RBI must take into consideration the concerns raised by the SP Group entities before deciding on the matter.
“RBI would be duty bound to consider the interest and legitimate expectations of investors and other stakeholders,” as per the legal opinion. “Yes. Undoubtedly, all those recommendations having dealt with the core issues must be given due weightage while considering the application to de-register,” it added.
Any NBFC which acts as a CIC and has significant debt and also has access to public funds is categorized as upper layer NBFC by RBI.
The banking regulator also factors in various qualitative and quantitative risk tests before declaring an NBFC as UL.
Tata Sons, in order to ensure it doesn’t fall under the category of NBFC-UL, had repaid debts worth over Rs 20,000 crore last year, according to media reports. However, the former chief justice’s opinion states Tata Sons is still an entity that accepts public funds albeit indirectly.
“In view of accessing funds from listed group of companies must be treated as indirect access to public funds by Tata Sons.” the legal opinion cited above added.
In the request for legal opinion, SP group entities had cited “interconnectedness” between listed entities and Tata Sons and have also highlighted the high public interest in Tata Sons given their exposure to group companies. Tata Group has over half a dozen listed companies in which Tata Group holds shares through Tata Sons. According to SP group, Tata Sons currently owns assets worth Rs 1.3 lakh crore.
Apart from the 18.37% ownership of SP Group in Tata Sons, 65.89% is owned by Tata Trusts while another 12.87% is owned by various Tata Group companies and 2.65% owned by others. The 12.87% stake of group companies suggests the interconnectedness between Tata Sons and its group companies since Tata Sons itself owns stakes in some of the group listed companies, say experts.
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