Franklin Templeton to soon start e-voting process for winding up six debt schemes

Sources in the mutual fund industry say that Trustees of Franklin Templeton MF will start sending notices to investors on the voting process and unit holders’ meeting in the next two-three days.

Franklin Templeton Mutual Fund will soon start the voting process for winding down six of its debt schemes that were shuttered in April. Sources in the mutual fund industry say that Trustees of Franklin Templeton MF will start sending notices to investors on the voting process and unit holders’ meeting in the next two-three days.

Investors will have two options on how the scheme assets should be monetised. First, they can authorise the Trustees assisted by Kotak Mahindra Bank as independent advisor and supported by the asset management company (AMC). The second option will be to authorise Deloitte Touche Tohmatsu India LLP (DTTILLP), which will be assisted by the AMC and its advisor Kotak Mahindra Bank.

In a note sent to distributors by Franklin Templeton MF stated that investors will also have an option to vote ‘No’ for either of the above two proposals, but this will delay the monetisation of scheme assets. In April, the fund house had closed six debt schemes due to significantly reduced liquidity in the Indian bond markets for most debt securities and unprecedented levels of redemptions following the Covid outbreak and lockdown.

As per regulation 41 of SEBI (Mutual Fund) Regulation, 1996, approval of the unit holders is required to take steps for winding up of the scheme. The schemes can be wound up only after repaying the amount due to the unit holders. The steps to wind-up the schemes include active monetisation of assets and return of the investment proceeds to the unit holders. In the absence of authorisation, the winding-up process will be delayed as further steps will be possible only after seeking a fresh authorisation from the unit holders.

The Trustees of Franklin Templeton have partnered with “K Fintech” for the electronic voting process. Unit holders will receive an email or SMS from “K Fintech” on their registered email id or mobile number for each scheme that they have invested in. There will be three-day voting window to participate in the e-voting process. The process of e-voting will start around 10-11 days after the notice goes to the investors.

A video conference (VC) for unit holders will be held after completion of the three-day e-voting period. During the VC, unit holders will get a chance to ask questions to the Trustees of the fund house. Each unit holder is entitled to vote only once per scheme that they have invested in, irrespective of the number of units. Unit holders who have invested in more than one scheme, will get a separate email or SMS for each scheme.