Maruti Udyog still non-committal on board slot for LIC

NEW DELHI, JUL 2 -- Maruti Udyog Ltd (MUL) on Monday remained non-committal on alloting a board position to Life Insurance Corporation (LIC), which is set to become the second single-largest shareholder in the company after Suzuki, saying there was no such provision in the company’s Articles of Association. “As per the articles of association of the company, there is no stipulation that any shareholder holding above 10% will become eligible for a berth in the board,” Maruti chairman S Nakanishi told newspersons.

Asked if Suzuki, which holds 54.2% stake in Maruti, will offer LIC a board position, he declined to comment. LIC, which currently has around 8.1% stake in the bluechip company, is set to increase this to 14.5% after it bought shares when the government divested its 10.26% residual stake in the company earlier this year. In May, LIC had cornered 1.3 crore shares of the total 2.96 crore that were put on the block by the government.

Although LIC has got all other necessary approvals for increasing its stake in MUL, it still has to get the final nod from shareholders of the carmaker at the annual general meeting to be held in September. TS Vijayan, LIC chairman was not reachable for comment on the issue. Actual transfer of government shares to LIC will take after the AGM. According to senior corporate lawyer UK Chaudhary, a shareholder having 51% stake in a company has a final say on director nominations, except if the parties previously agree to a proportional representation.