High court said – Trustees did not take action as per SEBI Regulations Franklin Templeton India closed 6 date scheme on April 23
The Karnataka High Court has stayed the decision of the fund house Franklin Templeton India to close 6 debt schemes. According to the order passed by the High Court on Monday, the general consent of the unitholders is mandatory for the closure of these schemes.
Prohibited proceedings of trustees
The High Court has stated that until the general consent of the unitholders is reached, the trustees will not take any action to discontinue these 6 schemes. This means that the consent of the unitholders is mandatory for the action to close these schemes.
The decision will apply after 6 weeks
The High Court has said that the Supreme Court is currently on leave. Therefore, this decision will come into force 6 weeks later to give Franklin Templeton an appeal. Till then the status quo on refund, redemption will remain. Also, the court has also banned fresh burrowing of these 6 schemes.
Trustees did not act as per rules
A bench of Chief Justice Abhay Srinivas Oka and Justice Ashok S. Kinagi said that no merit has been received for interference in the decision of the trustees under SEBI Regulations 39-40. But the trustees have not taken action as per rules in closing these schemes.
Taking legal advice on the decision
Meanwhile, Franklin Templeton India has issued a statement saying that the decision of the Karnataka High Court is being studied. After this, necessary steps will be taken in the interest of the unitholders by taking legal advice.
These 6 date schemes were closed on 23 April
Franklin Templeton closed its 6 date schemes on 23 April. The schemes that were discontinued include Franklin India Low Duration Fund, Franklin India Dynamic Acrylic Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund and Franklin India Income Opportunities Fund.
15 October 8302 crores received from closed schemes
According to a recent statement by Franklin Templeton, the 6 discontinued debt schemes have received Rs 8302 crore as of October 15. This amount is received through maturity, pre-payment and coupon payment. As of 22 April, their total asset under management i.e. AUM was Rs 25,856 crore till 22 April.