Tata Trusts Blocks Transfer of Tata Sons Shares

Tata Trusts, which holds a 66% stake in Tata Sons, has raised concerns over Shapoorji Pallonji (SP) Group's plan to roll over pledged Tata Sons shares to refinance over $2 billion in debt. SP Group, controlled by the Mistry family, has pledged its entire 18.5% stake in Tata Sons to secure funds from private credit sources such as Ares and Farallon. Tata Trusts has officially stated that these shares are non-transferable and worries about potential legal complications if SP Group defaults on its obligations.

The pledged shares have been used as collateral multiple times before, which adds to the lenders' uncertainty about their enforceability. This issue was not directly addressed in the Supreme Court's March 2021 ruling, which favored Tata Group over the dismissal of Cyrus Mistry. The Trusts are concerned about possible litigation with lenders over enforcing the security in case of default, while SP Group argues there is no restriction on its ownership and right to raise capital against these shares. The matter could potentially lead to a legal dispute.