Franklin Templeton suspends e-vote, can’t shut funds until audit report spills out facts for unitholders

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Published: June 9, 2020 3:29 PM

Franklin Templeton Mutual Fund on Tuesday announced the suspension of the electronic voting process, scheduled for June 9 to June 11.

They said that Franklin Templeton violated the Sebi MF regulations and did not seek unitholders’ approval before deciding to wind up.With the suspension of voting, Franklin Templeton will not be able to liquidate six of its debt mutual fund schemes, as it had announced earlier in April this year.

Franklin Templeton Mutual Fund on Tuesday announced the suspension of the electronic voting process, scheduled for June 9 to June 11. The move comes a day after the Gujarat High Court dismissed a plea by the fund house for vacating the stay granted by the court on the voting process earlier in May. “Pursuant to the order dated 8th June 2020 issued by the Honourable High Court of Gujarat, the e-voting scheduled for 9-11 June 2020 and unitholders meeting on June 12, 2020, related to the schemes under winding up, stands suspended till further communication,” Franklin Templeton said in a statement.

With the suspension of voting, Franklin Templeton will not be able to liquidate six of its debt mutual fund schemes, as it had announced earlier in April this year. The Gujarat High Court said that it has been rightly submitted that “amidst the allegation of mismanagement of funds and fraud, the unit-holders would not be having the opportunity of informed decision making while casting the E-votes for the option given by the applicants.” The court confirmed the stay, which was granted earlier, till the forensic audit report comes in public domain. Electronic voting process for winding up of six debt mutual fund schemes was scheduled for June 9-11 and a unitholders’ meet that was to be held on June 12 has also been deferred.

The E-voting process that was to be held by Franklin Templeton was to ask investors to vote, either to monetise the assets by the trustees of the fund house or by hiring a third party to conduct the process. The six mutual fund schemes shut by Franklin Templeton, citing redemption pressure 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 and Franklin India Income Opportunities Fund.

With this, Franklin Templeton, which has been asked by the Securities and Exchange Board of India to focus on returning investor money, faces yet another obstacle. The six funds shut by the fund house had an Asset Under Management of nearly Rs 30,000 crore. Franklin Templeton has been busy fire-fighting since the day it announced its decision to wound up the six schemes. Amidst this the fund house also found itself in the cross-hairs of the market regulator for comments made by Jennifer Johnson, CEO of Franklin Templeton’s parent company based out of the United States of America.

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