Sebi orders LIC, SBI, Bank of Baroda to reduce participation to less than 10 pcs in UTI AMC by December 2020

New Delhi, December 6 () Market regulator Sebi ordered three public sector financial institutions, LIC, SBI and Bank of Baroda, on Friday to dilute their shares to less than 10 percent in UTI Asset Management Company ( AMC) in December of next year. .

In case of non-compliance with the instructions, the participation and voting rights of these entities in UTI AMC and UTI Trustee above 9.99 percent and corporate profits will be frozen until they comply with the orders.

UTI AMC is promoted by four public sector financial institutions as sponsors: State Bank of India (SBI), Life Insurance Corporation of India (LIC), Bank of Baroda (BoB) and Punjab National Bank (PNB), with each of them . currently owns an 18.24 percent interest in the fund's house, while private equity firm T Rowe Price International owns a 26 percent interest in UTI AMC.

Sebi noted that LIC, SBI and BoB are the sponsors of LIC Mutual Fund, SBI Mutual Fund and Baroda Mutual Fund, respectively, and also have more than 10 percent participation in these mutual funds.

In addition, LIC, SBI and BoB are also sponsors of UTI AMC and have more than 10 percent individual participation in AMC and the UTIMF trust company.

The notices (LIC, SBI and BoB) are sponsors of more than one mutual fund and have more than 10 percent stake in more than one AMC and fiduciary company and, therefore, do not meet the requirements of ... Regulations of MF, Sebi said in an order.

Sebi modified the mutual fund regulations in March 2018, in which a shareholder or a sponsor that owns at least 10% participation in an AMC cannot have 10% or more of participation in another mutual fund house that operates in the country.

In addition, such entities cannot have a representation on the board of another mutual fund house.

Entities that do not meet the requirement had time until March 2019 to meet the requirement.

In addition, it was alleged that LIC and SBI had appointed directors on the UTI AMC board.

In their response to Sebi, they said that they had appointed directors in accordance with the provisions of the shareholders agreement and clarified that said nominees were not their directors either. It was also indicated that none of the employees working in LIC or SBI were on the board of UTI AMC or UTI Trustee and that the nominated directors had no informative relationship with the two companies.

Sebi said that despite the expiration of more than 20 months from the date of modification of the regulations, the three entities have not yet met these requirements. While they have shown that they have initiated some steps to dilute their participation in UTI AMC, substantial compliance with the regulation remains pending.

Consequently, the regulator has said that the voting rights of LIC, SBI and BoB at UTI AMC and UTI Trustee will be reduced below 10 percent on December 31, 2020 or earlier.

In addition, they have been asked to take appropriate measures to ensure compliance with the composition of the meeting. In case of non-compliance with the aforementioned instructions, the participation and voting rights of the notices in UTI AMC and UTI Trustee above 9.99 percent and the corporate benefits in this regard will be frozen until such time as the notices comply with the instructions mentioned above. he added. SP HRS

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