Amitha Muraleedharan
Franklin Templeton Mutual Fund (MF) moved to the Supreme Court against the Karnataka High Court’s order that said that a simple majority consent from unitholders is necessary before the closure of any debt scheme in April.
In its October 24 judgment, the high court stated that the trustees are not entitled to take action on the closure of schemes till consent was received.
Also, it restricted the company and its trustees from taking any new borrowings in the six debt schemes.
The closure of six debt schemes by the trustees of Franklin Templeton on April 23 affected around 300,000 investors and assets under management of Rs 26,000 crore.
It motivated some investors to approach the courts.The petition from investors said that under the Sebi norms, consent of unit holders through e-voting is necessary to close a scheme in mutual funds.
The investors also argued that the schemes were not managed properly and the decision was illegal as it required the decision of investors.
The Supreme Court brought all pending cases together from all the High Courts and sent the Karnataka High Court.Franklin, in its defence, stated that in May 2020 the trustees had sought a vote by unitholders under section 41(1) of the Sebi Mutual Fund Regulations, to permit the Trustee to undertake an orderly sale of the debt securities held in the funds and return money to unitholders.
