New Delhi: At a time when stock market investors are eagerly waiting for the Initial Public Offer (IPO) of Tata Sons, a new controversy has erupted where it is being alleged that Tata Sons is attempting to avoid mandatory public listing rules. It may be noted that a legal notice has been sent by a person which highlights a potential conflict of interest within the RBI.
The legal notice was sent to Tata Sons and the RBI. The notice mentions that as long as Venu Srinivasan is in RBI, he will continue to have conflict of interest with Tata Sons, as the individual is also a member of the Tata Trust. The notice further read that if a person, who is associated with a corporate house and is also appointed on the board of the regulator (RBI), a situation can arise where the regulator will not be able to take independent and impartial decisions. Srinivasan was appointed as a director at RBI in 2022 and his tenure ends in 2026.
Legal Notice Accuses Tata Sons of Evading IPO Mandate
The legal notice alleges that Tata Sons, classified as a Core Investment Company (CIC) under the RBI’s Scale-Based Regulation (SBR) framework, is evading its obligation to go ahead with its IPO by September 2025. According to the guidelines, Tata Sons is mandated to go public within 10 months to meet the deadline. However, the application for deregistration from its CIC status on March 28, 2024, is being seen as a potential way to sidestep this requirement, allowing it to remain private and avoid public listing obligations.
Tata Sons was classified as a Non-Banking Financial Company – Upper Layer (NBFC-UL) in September 2022. As per RBI rules, the companies which are listed as NBFC are mandated to list within three years.
Meanwhile, reports say that Tata Sons repaid the outstanding standalone debts with an aim to facilitate the relinquishment of its RBI registration. With the debt repayment, Tata Sons has made it eligible to get exempted it from the listing requirement and allowing it to do away with its NBFC registration.
The legal notice states that to protect the interests of investors, borrowers and the general public, such applications should not be considered. The RBI had introduced scale based regulation i.e. SBR. As per SBR guidelines, a total of 15 companies were kept in the upper layer and all of those have to be listed in the stock exchange before September 2025. Out of these, 11 companies have been listed. Four companies, including Tata Sons are yet to get listed.
Notably, Shapoorji Pallonji Group, which has a 18 per cent stake in Tata Sons, has advocated for an IPO. Backing the launch of IPO at a recent annual general meeting of Tata Sons, the Shapoorji Group said that the public offer could unlock significant value and improve market liquidity.
It is being said that the notice queries include – when 11 companies followed the RBI rules then how Tata Sons was can be exempted from listing. The notice has accused Tata Sons of taking exemption from listing after repaying the loan as it wants to avoid the scrutiny of RBI by surrendering this CIC. If ;aunched, Tata Sons’ IPO could be the country’s biggest IPO. Estimates say that even a five percent stake sale, will help raise Rs 55,000 crore.
A legal notice alleges Tata Sons is attempting to avoid mandatory public listing rules by deregistering as a Core Investment Company (CIC). The notice highlights a potential conflict of interest involving RBI director Venu Srinivasan, who also sits on the Tata Trust. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
