Giltenan added, “We have withdrawn our petition before the Bombay High Court with a right to re-file it at a future date if we so choose. We will continue to work with all parties to sustain progress and reach a successful resolution of these matters in the near term.”
T Rowe Price had expressed concerns on the composition of the board of UTI MF, which was dominated by the state-owned shareholders who also owned their separate asset management companies. While T Rowe holds a 26 per cent strategic stake in UTI MF, it found that certain PSU-backed board members were acting as a ‘block’ to the board proceedings, which was causing delay to the pending IPO of UTI MF.
The four state-owned shareholders – Life Insurance Corporation of India (LIC), State Bank of India (SBI), Bank of Baroda (BoB) and Punjab National Bank (PNB) – hold 18.25 per cent each; 73 per cent stake in all.
"The UTI AMC directors nominated by certain conflicted shareholders have gone well outside the bounds of good governance and essentially taken control of the UTI AMC Board, including defying the lawfully binding direction of the independent mutual fund Trustee Board. In doing so, they have created conditions that prevent timely compliance with the Sebi regulation, requiring each of them to sell below 10 per cent,” Giltenan had said when T Rowe submitted its petition on August 8.
According to reports, SBI and LIC had made a representation to Sebi, saying that even T Rowe should be required to reduce its stake in line with the cross-holding norms as it had its own asset management business in the US. However, Sebi is said to have clarified that the mutual fund cross-holding norms are not applicable to T Rowe, but only to domestic entities.
As per the norms, “… no sponsor of an MF can own over 10 per cent in more than one fund house. Rules also bar a single entity from having representation on the board of an AMC or trustee company of more than one MF.”
When UTI Mutual Fund was set up, the four state-owned shareholders were brought on board as temporary custodians and it was indicated that they will have to eventually bring down their stake.
T Rowe Price moved the court in early August seeking a 12-month extension of UTI MF’s managing director Leo Puri and timely action by Government and Sebi to ensure cross-holding norms are duly complied with.
However, Puri was not in favour of an extension with a divided board and his term came to an end on August 13.
According to people in the know, the appointment process to find the next managing director and chief executive officer will be expedited so that the IPO remains on track. As Business Standard reported earlier, Imtaiyazur Rahman has been named as an interim chief executive officer.
T Rowe Price withraws its writ petition in Bombay HC after assurances from Government agencies
Expresses confidence that state-owned shareholders will comply with regulations and work towards UTI MF's IPO
However, remains watchful, as it has a right to re-file writ petition at a future date
Open to working with all parties concerned to reach quick resolution