As UTI Mutual Fund’s Initial public offer (IPO) plan is in advanced stage, All India UTI AMC Officers Association (AIUAOA) - representing Officers of UTI AMC ltd - is opposing the Government’s divestment plan. Seeking legal validity of the stake sale of 26 per cent in UTI Trustee Company and in UTI Asset Management Company, the association has filed a writ petition before Bombay High Court and the final hearing in writ petition is to be taken up by the High Court on Wednesday.
Before getting an approval from the Government, the association is demanding an urgent ‘forensic’ audit of the company by audit regulator Comptroller and Auditor General of India (CAG) in this matter.
“As we strongly oppose the Government’s privatisation move, we have filed a writ petition before Bombay High Court challenging the validity of 26 per cent stake sale in UTI Trustee Company and in UTI Asset Management Company, during January 2010 by the 4 sponsors -SBI, lIC, BoB and PNB, each holding 18.5 per cent stake - in favour of Baltimore-based foreign institutional investor T Rowe Price which holds 26 per cent stake in the paid up capital of UTI AMC,” Vishwas Utagi, Vice President, AIUAOA told The Pioneer.
“legal validity of the stake sale in both the entities will now be examined and the writ petition is to be taken up by the court on July 29, 2015. As we are not happy with the company’s audit, we also demands ‘forensic’ audit by the CAG,” Utagi added.
The association further claimed that UTI Repeal Act 2002 under section 2(h) has restricted that the specified company (UTI Trustee Company) should be subscribed by banks and financial institutions only, but T Rowe Price is neither a bank nor financial institution falling under this definition.
UTI AMC has once again sought approval from the Ministry of Finance to list a plan that the company has been toying with for years. If approved, the company will look to offer 25 per cent of its shares to the public, primarily with the aim to give some of the existing promoters an option to exit.
The transfer agreement entered into between the Government and the four sponsors during 2003 has placed a restriction on these four sponsors under clause 3.3 which allows them to sell their stakes subject to the condition that they comply with all statutory requirements as provided u/s 6 of UTI Repeal Act. “The Association has challenged that the four sponsors have failed to comply with section 6 of UTI Repeal Act and hence challenged their stake sale in favour of T Rowe Price,” Utagi said.