Winding-up process to be delayed in absence of investors' authorisation: Franklin Templeton MF

Franklin Templeton Mutual Fund further said that investors who do not have an e-mail ID or mobile number registered with the fund house will not be able to participate in the voting process.

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Franklin Templeton Mutual Fund has said the winding-up process will be delayed in the absence of authorisation from investors and further steps will be possible only after seeking fresh approval from them. The fund house wound up six of its debt schemes on April 23.

The fund house cited redemption pressures and lack of liquidity in the bond markets while shutting down its schemes. These schemes - together having an estimate amount of over Rs 25,000 crore assets under management - were 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.

Franklin Templeton Mutual Fund further said that investors who do not have an e-mail ID or mobile number registered with the fund house will not be able to participate in the voting process.


The date at which the voting would start has not been disclosed yet.

Over the next few days, the trustees will send a notice related to the voting process and unitholders' meet to the participants in the six schemes being closed. The notice will be sent for each scheme separately, the fund house said in a letter to its distribution partners.

The voting activity and the unitholders meet will be an electronic exercise and it will be conducted separately for each of the six schemes.
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Apart from the letter, the fund also issued answers to frequently asked questions (FAQs).

Investors are being asked to vote as schemes can be wound up only after repaying the amount due to the unitholders.

The steps to wind up the schemes include active monetisation of assets and return of the investment proceeds to the unitholders.

“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 unitholders,” Franklin Templeton MF said in the FAQs.
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K Fintech, which will carry out the voting process for the fund house, will send an e-mail link to the registered e-mail IDs of the primary account holders of each scheme.

In case the e-mail ID has not been registered, then the notice will be sent to the registered mobile number and the notice will have a link that will give access to the e-voting platform.
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Investors who do not have an e-mail ID or mobile number registered with the fund house will not be able to vote.

“Registration of an e-mail ID/mobile number in our records is mandatory for receiving user ID and password to access the e-voting platform,” the fund house said.

The unitholders will have a three-day window to participate in the e-voting process.

It further said that each unitholder is entitled to vote only once per scheme that they have invested in, irrespective of the number of units.

The fund house said that investors will have two options on how the scheme assets should be monetised — “authorise the trustees assisted by Kotak Mahindra Bank as independent advisor and supported by the asset management company (AMC) or authorise Deloitte Touche Tohmatsu India LLP assisted by the AMC with the AMC being advised by Kotak”.

If majority of unitholders select Deloitte, the trustee's role will be restricted to distribution of proceeds to unitholders after payment of liabilities and expenses.

Investors will also have an option to vote 'no' for either of the two proposals, but this will delay the monetisation of scheme assets.

The payouts to investors can be finalised and implemented only after the successful completion of the voting process.

Franklin Templeton MF said that the proceeds of sale will be first utilised towards discharge of liabilities which are due and payable under the scheme.

After making appropriate provision for meeting the expenses connected with such winding up, the balance will be paid to the unitholders in proportion to their respective interest in the assets of the scheme.

It, further, said it is the endeavour of trustees to liquidate the assets in an orderly manner and distribute the proceeds to the unitholders in the earliest possible opportunity.


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