NEW DELHI: The Supreme Court on Wednesday has ruled that consent of unitholders is mandatory when winding up schemes of a mutual fund. The top court has agreed with the views of the High Court. However, it said that the requirement for consent of a majority of shareholders will be posting the publication of notices.
The court further stated that it has upheld the validity of the regulations, and while doing so, they have held that in case of trustees wrongfully seek winding up, SEBI will have the power to intervene in the same.
“We hold that the consent of the unitholders, as envisaged under clause (c) to Regulation 18(15), is not required before publication of the notices under Regulation 39(3). Consent of the unitholders should be sought post-publication of the notice and disclosure of the reasons for winding up under Regulation 39(3),” said the order by Justices Abdul S Nazeer and Sanjeev Khanna.
The court had also approved the application filed by SBI Mutual Fund and SBI Funds Management Pvt Ltd for placing on record the distribution mechanism proposed to be followed while distributing Franklin Templeton’s Rs 9,122 crore amongst its unitholders, under the six mutual fund schemes.
The application has followed the top court’s last order whereby it had directed SBI Mutual Funds to undertake the distribution, dividing the amount amongst unitholders, in proportion to their respective interest in assets of the scheme, as agreed by both Franklin Templeton Trust and SEBI.