T Rowe Price Moves Court Against Power Grab By Some UTI AMC Shareholders
T Rowe Price has alleged that two Indian sponsors and their nominee directors on the board of UTI Asset Management Company Ltd. have taken control of the board and are “disrupting board governance”.
The U.S. - based fund house, after having failed to get intervention from either the Ministry of Finance or market regulator SEBI, has now approached the Bombay High Court to instruct authorities “to fulfill their supervisory responsibilities by directing the other UTI shareholders and their nominee directors to comply with regulations...,” it said in an emailed statement to BloombergQuint.
The regulations being referred to are a cross-ownership rule passed by the Securities and Exchange Board of India in March 2017. It mandated the four Indian shareholders in UTI AMC - State Bank of India, Bank of Baroda, Punjab National Bank and Life Insurance Corporation of India - which own 18.25 percent each to reduce their individual stakes to below 10 percent by March 2019. T Rowe Price owns 26 percent in UTI AMC.
The foreign fund claims that since then two of the Indian sponsors have asked for an extension which they have yet to receive. Subsequently, the fund alleged in its statement, that “certain conflicted Board members have begun acting as a block, disrupting Board governance and seeking to create a gap in leadership, apparently to delay progress toward selling down their stakes”.
T Rowe Price’s petition in court has sought action to ensure compliance with the SEBI regulation.
Specifically, we want the UTI AMC Board to follow the direction of the Trustee Board with respect to timely compliance with SEBI’s cross-ownership rule, extending the contract of the Managing Director to prepare for the long-planned IPO, and certain other governance matters.T Rowe Price Statement
UTI AMC’s managing director and chief executive officer Leo Puri’s term is ending this month and the shareholders are locked in dispute over extending it. While T Rowe Price is keen on an extension, to facilitate the IPO as per its statement, Indian shareholders are not in favour, according to several media reports.
The foreign fund is also seeking implementation of the recommendations of the UTI Trustee board, that Puri’s term be extended and that SEBI’s ownership regulations be complied with.
The lack of timely action will negatively hurt India’s attractiveness as an investment destination, the fund stated.
BloombergQuint has reached out to UTI AMC’s Indian shareholders for comment on the dispute and court case. They have yet to respond.