The Tatas have rejected a proposal moved by the Shapoorji Pallonji Group for an IPO by Tata Sons, the holding company of the $150 billion salt-to-software conglomerate.

The SP Group — which holds an 18.5 per cent stake in Tata Sons — tabled the IPO proposal at the annual general meeting of Tata Sons on Monday.

The SP group, which is the single largest shareholder in Tata Sons, has had fraught relations with the Tatas after Cyrus Mistry was removed as Tata Group chairman in October 2016 following a bitter battle with patriarch Ratan Tata.

The Mistry family has tried several times in the past to monetise its holding in Tata Sons as it struggles to find ways to pare its over ₹20,000 crore debt — but has always been stymied by the Tatas because of a provision in Tata Sons’ articles of association that bars any minority shareholder from selling or pledging the shares with a third party.

An unofficial estimate floating around in corporate circles estimated the value of the Mistry holding of 74,352 Tata Sons shares at ₹1,78,459 crore in 2020 — which probably suggested the biggest-ever payout to any shareholder in India Inc .

In March, a brokerage had pegged a valuation of ₹7.8 lakh crore for Tata Sons on the basis of the market capitalisation of the Tata group companies.

Observers said a potential IPO would have allowed the SP group to bypass Article 75 of Tata Sons Articles of Association (AoA) which conferred the right of first refusal to the company.

“The company may at any time by Special Resolution resolve that any holder of Ordinary shares do transfer his Ordinary Shares,” the Articles of Association said.

“Such a member would thereupon be deemed to have served the Company with a sale notice in respect of his Ordinary shares in accordance with Article 58 hereof, and all the ancillary and consequential provisions of these Articles shall apply with respect to the completion of the sale of the said shares,” the Articles of Association said.

“Notice in writing of such resolution shall be given to the member affected thereby,’’ it said. This essentially meant the Tata Sons board will have the right of first refusal on the stake held by the SP group.

The Tatas have been trying to manoeuvre their way out of listing on the bourses, with the RBI making it mandatory for upper-layer NBFCs like Tata Sons to go for an IPO by September 2025.

Tata Sons has reportedly been in discussions with the banking regulator since December to dodge such a potential listing. A key step to avoid listing is to completely bring down debt.