Franklin Templeton MF to issue notice to seek consent of unitholders shortly

The apex court also said that for the time being, there will be stay of redemption payment to the unit holders.

Published: 04th December 2020 03:15 PM  |   Last Updated: 04th December 2020 03:15 PM   |  A+A-

For representational purpose. (Photo | Pexels)


NEW DELHI: Franklin Templeton Mutual Fund has said it will seek the consent of unitholders shortly for the winding up of six of its debt schemes.

The fund house also assured investors that voting for an orderly winding up does not mean a lengthy wait for return of money.

The announcement comes after Supreme Court on Thursday asked Franklin Templeton MF to initiate steps within one week for calling a meeting of unit holders to seek their consent for closure of six mutual fund scheme.

The apex court also said that for the time being, there will be stay of redemption payment to the unit holders.

"We will issue the notice for seeking consent of unitholders shortly," said Sanjay Sapre, President, Franklin Templeton Asset Management (India), in a letter to the investors on Thursday.

In order to ensure maximum participation, Sapre said the process of seeking unitholders' consent will be through an "electronic vote" followed by a meeting through video conference.

He further said, details and modalities of the same will be shared soon. Consent will be sought from the unitholders for each scheme separately.

"The objective of the voting exercise is to seek consent, by 'simple majority', to implement the decision taken by the trustee to wind up the six fixed income schemes and thereby enable an orderly liquidation of assets and distribution of investment proceeds," Sapre said.

The six schemes are Franklin India Low Duration Fund, Franklin India Ultra Short Bond Fund, Franklin India Short Term Income Plan, Franklin India Credit Risk Fund, Franklin India Dynamic Accrual Fund and Franklin India Income Opportunities Fund.

Franklin Templeton MF closed these six debt mutual fund schemes on April 23, citing redemption pressure and lack of liquidity in the bond market.

From April 24 to November 27, the schemes under winding up have received over Rs 11,576 crore from maturities, pre-payments, and coupons.

Out of this, the schemes have received Rs 2,836 crore in the month of November itself. The cash available stands at Rs 7, 226 crore as of November 27 for the four cash positive schemes, subject to fund running expenses.

"I would also like to assure you, that voting for an orderly winding up does not mean a lengthy wait for return of monies," Sapre said.

"Once we receive a majority 'Yes' vote in favour of the orderly winding up of the schemes, we will immediately proceed with a second vote to seek approval of the unitholders as required under. Sebi (Mutual Fund) Regulation to authorise the trustee, or any other person, to proceed with the winding up of the schemes," he added.

He, further, said person authorised under the norms would then be able to distribute the cash already available in the schemes and make further payments at regular intervals as the schemes monetise assets and receive cash-flow.

On October 24, the Karnataka High Court had said that the decision of the Franklin Templeton Trustee Services Private Limited to wind up six schemes cannot be implemented unless the consent of the unit holders is obtained.


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