Supreme Court Tells Franklin Templeton To Get Unitholders’ Consent To Wind Down Its Six Mutual Fund Schemes
A motorcylist passes in front of the Franklin Templeton Investments building in Hyderabad, India. (Photographer: Adeel Halim/Bloomberg)

Supreme Court Tells Franklin Templeton To Get Unitholders’ Consent To Wind Down Its Six Mutual Fund Schemes

The Supreme Court today allowed Franklin Templeton Asset Management (India) Pvt. Ltd. to convene a meeting of its unitholders to seek their consent to wind down six of its mutual fund schemes.

“Without prejudice to rights and contentions of all parties, the trustees are permitted to call meeting of unit holders to seek their consent/approval,” the interim order passed by a two-judge bench of the top court said. “Steps in this regard be taken within a period of one week from today.”

The top court, in a hearing today, also directed a stay on redemption payment being made to unitholders for the time being.

In a statement issued after the hearing, Franklin Templeton said the top court’s order will be helpful in ensuring orderly monetisation and distribution of scheme assets.

We will issue the notice to seek consent of unitholders shortly. We deeply appreciate the support of our investors and partners till date and hope to commence distribution of investment proceeds at the earliest.
Franklin Templeton to BloombergQuint

The top court was hearing an appeal filed by Franklin Templeton against the Karnataka High Court’s judgment which had mandated the fund house to obtain the consent of a majority of unitholders before winding down the six schemes in question.

Franklin Tempelton had in April announced its decision to wind up six yield-oriented, managed credit funds citing “severe market dislocation and illiquidity” caused by the Covid-19 pandemic.

The wound-up schemes include:

  • Franklin India Low Duration Fund
  • Franklin India Dynamic Accrual Fund
  • Franklin India Credit Risk Fund
  • Franklin India Short Term Income Plan
  • Franklin India Ultra Short Bond Fund
  • Franklin India Income Opportunities Fund

Subsequently, the decision was challenged in multiple high courts and the Supreme Court directed all the cases to be heard by the Karnataka High Court. The Karnataka High Court passed its judgment in October after which the case landed in the apex court.

A top court bench comprising Justice S Abdul Nazeer and Justice Sanjiv Khanna will hear the case again next week.

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