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Franklin Templeton: Gujarat HC stays e-voting on shuttering six debt funds

On Wednesday the High Court of Gujarat held the electronic voting and unitholders’ meeting required for Franklin Templeton Mutual Fund before it can wind up its six debt schemes. The matter will be next heard on June 12, 2020.

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As per the order of the Gujarat High Court, “In the meantime, by way of ad-interim relief, the operation and implementation of the notice dated 28.05.2020 regarding E-voting and Unit-holder’s Meeting send through Email by respondent no.3 herein shall remain stayed.”

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Areez Phirozsha Khambatta, Persis Khambatta, and Khabhatta Family Trust are the petitioners in the case. It was claimed by the senior counsel that the petitioners had invested approximately Rs 6.55 in the schemes of the fund house.

However, the court in its order said that the asset management company will hold a meeting in order to dispose of the properties of the company without passing any resolution in that regard, which would have a significant impact on the amount invested by the investors.

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Franklin Templeton

Franklin Templeton : Earlier, in April the fund house had closed six debt schemes because of reduced liquidity in the Indian bond markets and unprecedented levels of redemptions due to the COVID-19 crisis. Later on May 28, the fund house announced its e-voting process and unitholders meeting for the wind-up.

Moreover, the order also added that the attention of the court was invited to Sub-clause 15(c) of Regulation-18 of the SEBI (Mutual Funds) Regulations, 1996 that brings out the point that the trustees have to obtain the consent of the unitholders, when a majority of the trustees decide to wind up or prematurely redeem the units.

“However, during this case, no such consent has been obtained. Referring to Regulation-39 of the Regulations, it had been submitted that a scheme of a open-end fund could also be aroused only after repayment of the quantity thanks to the unit-holders, which has also not been followed during this case,” said the order.

 

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