Financial Daily from THE HINDU group of publications
Monday, Sep 26, 2005
Financial Daily from THE HINDU group of publications Monday, Sep 26, 2005 |
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Mutual Funds Markets - Mutual Funds Transfer deal: No more Govt nominees on UTI MF board Sponsors to appoint all 8 directors Sarbajeet K. Sen
New Delhi , Sept. 25 THE Government will soon step aside from guiding the fortunes of the country's largest mutual fund - the UTI Mutual Fund. The Ministry of Finance is understood to have agreed that after the deal to formalise the transfer of the mutual fund to its sponsors is completed, it would put an end to the practice of having a Government nominee on the board of directors of the asset management company. The deal will also result in a complete overhaul and simultaneous expansion of the board of the AMC. Sources said that the new-look board would have eight members (instead of the current five) with each of the four sponsors having the right to appoint two directors. While one of the directors will be an official of the sponsor, the four institutions will also appoint one independent director each. The Government will also give up the right to appoint a chief executive of the mutual fund. Instead, the four sponsors — Life Insurance Corporation of India, State Bank of India, Punjab National Bank and Bank of Baroda — will select the CEO. UTI has been without a chief executive ever since Mr M. Damodaran, the present SEBI Chairman, moved out in late 2004. Govt to get Rs 1,200 cr for transfer: The Government is expected to soon place the details of the deal before the Union Cabinet for its approval. The control of the mutual fund is to be passed on to the sponsors on a consideration of about Rs 1,200 crore, which would be paid by them to the Government. Under the present plans, UTI MF will remain under the control of a combination of the existing sponsors for at least three years. After three years, the sponsors would have the right to exit by selling off to an outside entity.
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