Public sector financial institution Life Insurance Corporation of India is shaping up its plan to go for over 40% reduction in its stake in UTI Asset Management Company(UTI AMC). The process has been initiated following a directive issued by market regulator Sebi.
“We are in process of developing plan to cut down our stake in UTI AMC. We will do our best to regard SEBI and its directive,” T C Susheel Kumar, Managing Director, LIC told ET at Siliguri.
As per a SEBI directive, LIC will have to bring down its stake in UTI AMC to 10% from its existing level of 18.24% by December 2020.
“The work planning for this is being developed at several tires of LIC management. We have our ‘Investment committee’ that will play an important role in it. In addition, our board also will do its job on this in suitable manner. Everything will be done as per our Standard Operational Procedure. We have one year in hand,” said Kumar.
As learnt, Sebi observed that while holding more than 10% in LIC Mutual Fund, LIC holds above 10% also in UTI AMC.
But, as per March 2018 amendment of mutual fund regulations, 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 in another mutual fund house in the country. Bodies not conforming to that were given time till March 2019 to comply with the requirement. This remained pending with LIC.
Along with LIC, State Bank of India and Bank of Baroda have also been asked by SEBI to pull down their stake to below 10% in UTI AMC from present level of 18.24% for similar reason. For them also the deadline is December 2020. SBI and BoB hold more than 10% stake in SBI Mutual Fund and Baroda Mutual Fund respectively.
Anyone failing to comply with the SEBI directive will have its voting right in UTI AMC in excess of 9.99% or corporate benefits as frozen till the compliance is ensured.
Source: Economic Times