Tata Capital sets stage for IPO with articles of association update

The board of Tata Capital, the flagship financial services arm of Tata Sons, has approved changes to its memorandum of association and adopted a new set of articles of association (AoA) to align with the provisions of the Companies Act, 2013. The changes are part of the company’s plan to go public later this year.

In a postal ballot notice issued on Thursday, the company said that as a non-banking financial company (NBFC), it is subject to regulations relating to capital adequacy, which determine the minimum amount of capital the company must hold as a percentage of its risk-weighted assets and the risk-adjusted value of off-balance sheet items.

“As the company continues to grow its loan portfolio and asset base, it will require additional capital to continue meeting applicable capital adequacy ratios with respect to its business. Accordingly, the company may raise additional capital from time to time, including through rights issues,” it said.

The company said its current shareholder base is around 29,000. To avoid a situation where its shareholder base increases further due to any corporate action that may lead to non-compliance with relevant provisions of the Companies Act (such as Sections 25 and 42), it proposes to include a clause in its AoA disallowing the right of renunciation by shareholders in any of its rights issues until the company’s equity shares are listed on the stock exchange.