|More trouble at UTI AMC as LIC now wants a seat on board|
|Thursday, 01 September 2011 00:00|
Six months after trouble started over the selection of the next chief of UTI AMC, serious boardroom tensions have emerged again. At last week's AGM, the representative of LIC, one of the shareholders of UTI AMC, asked for a position on UTI AMC's trustee board. This was turned down citing a conflict of interest – LIC runs its own mutual fund (MF) and so it cannot be on the board of a rival MF – but the matter appears to have been joined. UTI AMC is India's fourth-largest mutual fund with R67,189 crore of assets under management.
Prior to the AGM, LIC had written a letter asking for a board position since it holds a 20% stake in UTI AMC. UTI AMC had replied saying this was not possible since Sebi had decreed that the four PSU shareholders — US firm T Rowe Price is the only non-PSU equity holder — had their own mutual funds. Given that the four PSUs have not had a board position ever since T Rowe Price was brought into UTI AMC, it is not clear what has triggered this change in position. Nor is it clear why the issue was brought up in the AGM after UTI AMC’s written reply.
Trouble between the government and UTI AMC’s board started around March when a successor had to be found for UK Sinha, who took over as Sebi chief. At that time, UTI’s board entrusted the task to an HR sub-committee. The HR sub-committee, in turn, asked HR firm Egon Zehnder to make a global shortlist; it was to interview candidates from this shortlist and send a final list for the board to consider. At this point, the finance ministry was reportedly keen on a candidate who was not on the Zehnder list. When the HR committee gave its final list to shareholders — T Rowe Price, LIC, SBI, Punjab National Bank and Bank of India — the PSU shareholders refused to accept the report.
Since then, officials of T Rowe Price have met finance ministry officials as well as individual shareholders to try and break the deadlock, but without success.
|Last Updated ( Friday, 25 November 2011 06:14 )|