Tata Sons’ decision to proceed with steps towards a public listing has opened complex corporate and regulatory hurdles, with the proposed initial public offering (IPO) facing potential roadblocks involving shareholder approvals, changes in corporate structure and amendments to its Articles of Association.“The IPO will require Tata Sons to convert itself from a private to public company and also amend the Articles of Association. These actions require prior approval of shareholders in AGM or EGM,” said a top-level source in the Tata group. This means all the parties involved in the power struggle will have to settle the disputes and come to an understanding.While there is a move for mediation to settle the disputes, it’s learnt both sides have not budged from their positions so far.Tata Sons’ board does not necessarily require AGM approval merely to decide to pursue an IPO. “However, shareholder approval may be required depending on the structure of the issue and the applicable provisions of the Companies Act, 2013, SEBI regulations and Tata Sons’ Articles of Association. Therefore, whether AGM approval is mandatory depends on the specific corporate actions proposed as part of the IPO,” said Sonam Chandwani, Managing Partner, KS Legal & Associates.The board of Tata Sons, the holding company of the Tata group, voted on September 17 to proceed with the listing following the Reserve Bank of India’s rejection of its application to surrender its registration as a Core Investment Company. Four directors backed the listing process, while Tata Trusts Chairman Noel Tata opposed it.Tata Sons has reportedly initiated preliminary talks with some banks for the IPO plan. “How will the company go for an IPO if it needs shareholder approval. Tata Trusts which hold 66 per cent of the company can easily block it. The company will have to change its status to a public limited company. Four independent directors can’t alone decide whether to go for an IPO. Then the issue of Articles of Association. Tata Sons will need the support of shareholders,” said an observer tracking the Tata group developments.The challenge is compounded by the deep divisions within Tata Trusts, which collectively hold about 66 per cent of Tata Sons. Noel Tata has argued that the company should explore all permissible avenues to avoid a public listing, maintaining that it could fundamentally alter the character of the group and its long-standing philanthropic commitments. In a note to the board, Noel Tata said any structural step towards listing would require shareholder approvals that only the shareholders could provide. Their involvement, he argued, was therefore unavoidable.Story continues below this adAlso Read | Tata-Mistry verdict explained: Why Tata Trusts’ voting rights are central to the Tata Sons power struggleHowever, Venu Srinivasan and Vijay Singh, both Vice Chairmen of Tata Trusts, have argued for listing Tata Sons on the stock exchanges. While the board has backed the move, the company must address the procedural and governance requirements associated with a public offering.The Articles of Association assume particular significance in this context. Tata Sons has faced disagreements over the interpretation of these provisions in relation to board decisions, leadership appointments and the role of Tata Trusts’ nominee directors. The listing proposal adds another layer to these disputes.Further, there is a restraining order against Sir Ratan Tata Trust – one of the two main trusts in the Tata Trusts group – that prohibits it from holding meetings and taking decisions. Another complaint has gone against Sir Dorabji Tata Trust to the Charity Commissioner of Maharashtra. These two trusts hold over 51 per cent stake in Tata Sons. This can create the quorum issue at the AGM or EGM.Mandated Regulatory RequirementsThe regulatory backdrop is central to the dispute. Tata Sons was classified by the RBI as an upper-layer non-banking financial company (NBFC) in September 2022. Under the RBI’s regulatory framework, upper-layer NBFCs are required to list within the prescribed period. Tata Sons subsequently sought to surrender its registration, but the RBI rejected the application on September 11 and directed the company to comply with applicable regulatory requirements.Story continues below this adAlso Read | Tata Sons: After boardroom showdown, what lies aheadFollowing the rejection, the board decided to proceed with listing. The question now is whether Tata Sons will implement that decision or pursue alternatives to change its regulatory classification.A proposed restructuring has emerged as one such alternative. Tata Trusts has proposed merging Tata Electronics Systems Solutions and Tata Consulting Engineers with Tata Sons, potentially changing the composition of the holding company’s assets and income. The proposal seeks to make Tata Sons less of an investment-holding company and more of an operating business, with the objective of moving it outside the regulatory definition that could trigger mandatory listing.But the restructuring is not a guaranteed escape route. It would require the board’s approval and would have to satisfy the RBI that the reconstituted company no longer falls within the relevant regulatory categories. The regulator’s assessment would depend on the precise structure and business composition after the merger.The disagreement over listing also reflects competing views about Tata Sons’ purpose. Noel Tata has argued that a listed company would face pressure from institutional and foreign shareholders seeking financial returns, potentially constraining long-term investments and support for group companies. With Tata Trusts opposing the move and the company’s governance already under strain, the path to a public offering is likely to be long and contested.