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Sebi gives LIC, SBI, BoB until Dec 2020 to bring UTI AMC stake below 10%

LIC, SBI and BoB are also sponsors of UTI AMC and hold more than 10 per cent stake individually in the AMC and trustee company of UTIMF

Press Trust of India  |  New Delhi 

Sebi

regulator on Friday directed three public sector financial institutions -- LIC, SBI and -- to dilute their stakes to below 10 per cent in UTI Asset Management Company (AMC) by December next year.

In the case of non-compliance with directions, the shareholding and voting rights of these entities in and UTI Trustee in excess of 9.99 per cent and corporate benefits will be frozen till the time they comply with the orders.

is promoted by four public sector financial institutions as sponsors -- State Bank of India (SBI), Life Insurance Corporation of India (LIC), (BoB) and Punjab National Bank (PNB) -- with each of them presently holding 18.24 per cent stake in the fund house, while private equity firm T Rowe Price International holds 26 per cent stake in

observed that LIC, SBI and BoB are the sponsors of Mutual Fund, SBI Mutual Fund and Baroda Mutual Fund, respectively, and they also hold more than 10 per cent stake each in these mutual funds.

In addition, LIC, SBI and BoB are also sponsors of UTI AMC and hold more than 10 per cent stake individually in the AMC and trustee company of UTIMF.

"The noticees (LIC, SBI and BoB) are sponsors of more than one mutual fund and hold more than 10 per cent shareholding in more than one AMC and trustee company and, hence, are not in compliance with the requirements of ...the MF regulations," said in an order.

Sebi amended the mutual fund regulations in March 2018, wherein a shareholder or a sponsor owning at least 10 per cent stake in an AMC is not allowed to have 10 per cent or more stake in another mutual fund house operating in the country.

In addition, such entities are not allowed to have a representation on the board of another mutual fund house.

Entities not in compliance with the requirement was given time up to March 2019 to comply with the requirement.

Besides, it was alleged that and SBI had nominated directors on the board of UTI AMC.

In their reply to Sebi, they said they had nominated directors in accordance with the provisions in the shareholder agreement and further clarified that such nominees were also not their directors. It was also submitted that none of the working employees of or SBI were on the board of UTI AMC or UTI Trustee and the nominated directors did not have any reporting relationship with the two companies.

Sebi said that despite the expiry of over 20 months from the date of amendment of the regulations, the three entities are yet to achieve compliance with these requirements. While they have shown that they have initiated some steps to dilute their stake in UTI AMC, the substantial compliance with the regulation "still remains pending".

Accordingly, the regulator has said that the voting rights of LIC, SBI and BoB in UTI AMC and UTI Trustee shall be brought down below 10 per cent on or before December 31, 2020.

Also, they have been asked to take suitable steps to ensure compliance with regards to board composition.

"In the event of non-compliance with the aforesaid directions, the shareholding and voting rights of the noticees in UTI AMC and UTI Trustee in excess of 9.99 per cent and corporate benefits thereon shall stand frozen till such time the noticees comply with the aforesaid directions," it added.

First Published: Fri, December 06 2019. 20:55 IST
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