LIC to Consult Finance Ministry on Infosys

Life Insurance Corporation (LIC) of India will seek guidance from the finance ministry's department of financial services on the position it should take on Infosys BSE 0.02 %.The corporation is the largest Indian institutional investor in the IT company with a 7.03% stake. Other government institutions usually follow the lead taken by LIC on matters that come up for vote.

In all boardroom battles for control of a business, the corporation has until now supported the promoters. In the tussle in Bombay House between the old guard led by Ratan Tata and the ousted chairman of Tata Sons, Cyrus Mistry , the corporation had supported the Tatas.In Infosys, while LIC would like to continue its standard practice, it is in a dilemma over a few issues. The key one being whether the founders should be treated as promoters or ordinary shareholders. The second issue is whether the corporation should play a more active role or abstain from voting. What makes it tricky for the insurer is that the industry regulator has asked life companies to have a policy setting out the criteria or circumstances in which they will actively intervene. "Intervention should be considered regardless of whether an active or passive investment policy is followed," the IRDAI had said in its guidelines on a stewardship code for insurance companies. LIC accounts for the bulk of the 11.01% shareholding of domestic insurance companies.