Time to “Change:” Tata Sons Saga

[Anushka is a student at National Law School of India University.]

The disclosure framework of India’s listed companies is premised on a presumption so obvious that it is rarely ever articulated, that the company that discloses and the company that governs in a manner important for the investor are one and the same, or perhaps only one step away via the subsidiary.  Regulation 30, under Security and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations 2015 (LODR) requires the listed company to make disclosures regarding material events related to the company and the company’s subsidiaries. The regulation makes no provisions for material events in relation to whoever is controlling the listed company from the outside, the “promoter of the promoter,” as it were, since that is what the regulation was not intended to do. This is true for almost all the listed Indian firms. The promoter is an individual, a family or an entity that is also listed, hence, there is not much distinction between the view of SEBI and reality. However, Tata Sons clearly goes against this presumption. It operates in a web of charitable trusts which is not regulated by SEBI but by the provisions of the Maharashtra Public Trusts Act 1950 and accountable to the state charity commissioner and not to the shareholders of about two dozen listed operating firms that it controls.

The impact of this has already been witnessed in practice this year. In February 2026, the board of Tata Sons deferred its decision regarding the tenure of N Chandrasekaran as chairman of Tata Sons due to withholding of support by Noel Tata, the chairman of Tata Trusts due to losses in new projects. This was a deferral significant enough to unsettle Tata Investment Corporation’s share price the same afternoon (entirely outside any exchange filing). In May 2026, the Maharashtra Charity Commissioner issued notice to Tata Trusts to refrain from conducting any board meetings until the inquiry under Sections 37 and 39 of the Maharashtra Public Trusts Act 1950, was conducted regarding whether the board composition of Sir Ratan Tata Trust is in accordance with the limit imposed by Section 30A(2). None of it touched a stock exchange filing, because nothing in the LODR gives a listed Tata company a legal obligation to disclose what happens at that level.

The intuitive solution would be to view the matter as one of securities law and solve the problem by crafting a new disclosure trigger in the LODR regime, or even in the proposed Securities Markets Code 2025 (Code), which would compel listed firms to disclose relevant information regarding control level events involving their promoters. Such a solution falls short. The legal framework within company law has been designed precisely with this kind of structural anomaly in mind, and there are compelling reasons why even such a provision fails to resolve this matter that go beyond the securities law framework.

The Part Company Law Already Does

Section 90 of the Companies Act 2013, read the Companies (Significant Beneficial Owners) Rules 2018 (SBO Rules), was built for exactly the structural feature that makes Tata Sons hard to see through: layers of trusts and holding vehicles between an operating company and the natural persons who actually control it. The significant beneficial owner (SBO) scheme covers all types of companies - private, public, listed and unlisted, and obliges a company to disclose individual who, “acting alone or together, or through one or more persons or trust” hold at least 10% of shares or voting rights indirectly, or who exercise significant influence or control “in any manner other than through direct holding alone.” Under the SBO Rules, the trustees of discretionary or charitable trusts are specifically treated as indirect holdings. Thus, Tata Sons has to disclose the individual trustees of Tata Trusts, who have crossed the threshold mentioned above, causing Tata Trusts (SBO) to file Form BEN-1, and itself (the reporting company) filing BEN-2 with the Registrar of the Companies (RoC).

Hence, the “who ultimately controls the entity that controls two dozen listed companies” question is the one where SEBI has no jurisdiction because it does not reach the unlisted core investment company sitting beneath a charitable trust structure. The answer somewhat lies in the company law’s SBO framework as the above analysis demonstrates.

This Goes Only So Far

Identifying the controller is not the same as disclosing what happens to that controller’s control. This is where the current SBO framework’s architecture, not its coverage, becomes insufficient.

The SBO regime revolves around status rather than an event. Form BEN-1 is filled upon the person becoming a significant beneficial owner or in the event of a change in such status. The event that does not amount to any change in the beneficial ownership status cannot result in the filling of form BEN-1. For example, a decision not to appoint a chairman again would not affect anyone’s shareholding status. Whether the decision of the charity commissioner restraining a trust’s board from functioning amounts to “change” is debatable since the SBO Rules do not define “change.” A restraint that takes away the capacity of the trustee to cast a vote, but does not affect his beneficial interest formally, falls in such grey area. Logically, it must be included because, as already mentioned, the Rules require an individual to have actual significance influence or control.

It should be noted that even assuming doubts about the authority of the ROC’s LinkedIn Order, which favours a functional reading of the SBO status, the interpretation of the Rules based on the statute supports such a reading. The structure of the SBO Rules is focused on substance rather than form. For example, Rule 2(1)(h)(iv), which provides that an individual “actually exercising” significant influence or control becomes an SBO regardless of whether he holds shares or not. Read with the definition of “significant influence” as “the power to participate” (Rule 2(1)(i)) and control as “control exercisable in any other manner” (Section 2(27) of the Companies Act 2013), the legislation clearly supports a functional reading.

Further, even if a filing were triggered, it does not reach the market. The filing that gets triggered is BEN-2, which does not go to the stock exchange but is rather filed with the RoC. It goes into the MCA21 database which is available through a pay-for-access system without any requirement that the change be highlighted for shareholders of Tata Sons’ listed companies, let alone any time-bound requirement for doing so. Clearly, this process is distinct from Regulation 30 of LODR, where disclosures have to be made to the stock exchange as per time bound deadlines since the idea is to alert the market and not fill up a register.

Even more so, the information that reaches the market does not give the whole picture. The SBO chain stops at Tata Sons. A fully compliant BEN-2 filing tells us about the ownership of Tata Sons. The requirement is only upward looking to the owners of Tata Sons, i.e., there is no duty imposed downward on the listed operating companies, because the intent behind Section 90 is to know the ownership of the reporting company rather than that of its subsidiary. The statute was never built to track information down a control chain to public shareholders three or four levels removed.

What’s the Fix? 

The reflex response would be to add a new SEBI-level disclosure trigger, obligating listed companies to report material control-level events at their promoter. That fixes half the issue, and it risks building a second, parallel disclosure regime on top of one that already half-exists and is already broken: an undefined trigger term, i.e., “change.” Before legislating a new promoter-level event category into the Code, a better fix is to resolve what “change” means under Rule 3(2) of the SBO Rules, ideally by clarifying that a change in the capacity to exercise significant influence or control is also included. This should be supplemented by a requirement that a listed company disclose to exchanges, within a specified period, any BEN-2 filed by its promoter or promoter’s controlling entity reporting a change in SBO status.

That is an easier fix than a promoter-tier disclosure category, and it has the advantage of building on Section 90, that already does the groundwork of looking through trusts to natural persons. It also avoids a jurisdictional overreach problem which is that SEBI would not be regulating charitable trusts or an RBI-regulated NBFC directly, only requiring listed companies to disclose a fact that company law already obliges their promoter to establish and file.

The point that would get lost by treating this only as a securities-law question alone is that India does not have one disclosure gap above Tata Sons. It has two disclosure regimes that were each built to answer a different question; company law asks who controls, securities law asks what happened. Neither could have been possibly designed having a multi-tier, trust-controlled, unlisted promoter sitting above a listed group in mind.