Gujarat High Court Stays Franklin Templeton’s Notice On Asset Monetisation
Two individuals and a trust moved court alleging that the asset manger was holding a meeting without the unitholders’ consent.
The Gujarat High Court has stayed Franklin Templeton Mutual Fund’s notice to its investors seeking electronic votes for selecting the option to monetise assets to repay unitholders.
This comes after Rasna India’s founder Areez Khambatta, along with an investor and a trust promoted by them, moved the court seeking a stay on the notice. They had collectively invested an amount exceeding Rs 6.5 crore in mutual fund schemes floated by the asset manager.
The investors alleged in their petition that Franklin Templeton Asset Management (India) Pvt. Ltd. decided to conduct a meeting to dispose of its properties without passing a resolution.
The petitioners said mutual fund regulations require the trustees to obtain consent of unitholders before winding up or prematurely redeeming units of a scheme. Similarly, schemes can be wound up only after repayments to unitholders. Both these requirements weren’t met by Franklin Templeton, the petitioners contended.
A bench comprising Justice Gita Gopi stayed the notice and directed that notices be issued to respondents, including Franklin Templeton.
Franklin Templeton Mutual Fund froze six credit-risk schemes worth nearly Rs 28,000 crore in assets citing redemption pressure in April. Seeking to repay its investors of six debt schemes that it wound up, the fund house had offered investors two options: monetisation of assets by trustees or hiring of a third party to conduct the process.
Investors, according to the notice, were offered a choice between between Deloitte Touche Tohmatsu LLP, a liquidation and restructuring firm, and the trustee appointed by the asset manager. Unitholders are allowed to select between two of the options through e-voting during June 9-11.