NEW DELHI: Approval sought by Reliance Capital Asset Management--the fund manager for government-run provident fund institution EPFO-- for its 26% stake sale to Japanese insurance firm Nippon Life and proposed change in ownership structure is likely to come up for scrutiny next week after being deferred earlier due to opposition from trade unions.
EPFO's top decision making body- Central Board of Trustees- is also likely to discuss ways to raise minimum pension for organised sector staff to Rs 1,000 per month--an issue that has been consistently deferred over the last few months.
"The CBT is likely to examine Reliance Capital Asset Management's 26% equity stake sale to Nippon last month and its proposed changed in the ownership structure in its meeting on August 7. The minimum pension issue may also be taken up," a government official told ET.
Labour unions that opposed Reliance Capital Asset Management's proposal in a meeting of the Finance and Investment Committee, an advisory body of the EPFO, in May, contend that their position on the issue stays the same and they would continue to take a stand against it if there is no dilution in the company's original proposal.
"We believe that it is not correct to allow foreign firms to have a say in fund management of the EPFO. That is why we had opposed the proposal for change in management structure. We have been told that the new proposal takes into account our concerns. If it doesn't, then we will continue our opposition," said B N Rai, general secretary, Bhartiya Mazdoor Sangh.
As per the details of the acquisition, Nippon shall have the right to appoint one associate director on the board of directors of the company, and on all the sub-committees of the board of the company.
Reliance, however, had submitted that after the acquisition no material change in the operational and management team of the company is contemplated by virtue of the acquisition. It also confirmed that notwithstanding the proposed change in its ownership structure, the company shall continue to render portfolio management services in accordance with the terms and conditions of the agreement, and the acquisition shall not have any material adverse effect on the company's ability of perform its obligations.
According to AITUC secretary D L Sachdev, labour unions can just voice their opinion, but are not in a position to disqualify a fund manager. "The AMCs and CBT had entered into an agreement when they were appointed as fund managers. We can just state if we think that a stake sale was in breach of terms and conditions of that agreement," Sachdev said.
The CBT may also deliberate upon how to provide for the additional contribution that would be required to give a guaranteed minimum pension of Rs 1,000 per month to subscribers. The labour ministry had asked employers, employees and the finance ministry to contribute equally in the last meeting of the body.
Of 35 lakh pensioners in the country, about 12.8 lakh get less than Rs 500 per month, while about 15 lakh get pension ranging between Rs 500 and Rs 1,000. Only about 7.3 lakh get a pension of more than Rs 1,000.
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