Most shareholders of Franklin MF favour closing of 6 schemes

An “overwhelming majority” of unitholders of the Franklin Templeton MF’s six debt schemes that the company proposed to wind up on April 23 has voted in favour of the move, the Supreme Court said, while reading the observers’ report.

The SC said more than 97% investors of the six schemes are in favour of the winding up. The e-voting to seek the consent of the unitholders was held on December 26-28. Sebi, on the directions of the SC, had appointed former chief election commissioner TS Krishnamurthy as observer to the process.

While 97.22% unitholders of Franklin India Low Duration Fund voted in favour of winding up, 96.78% unitholders of Franklin India Ultra Short Bond Fund voted for the same. In case of Franklin India Short Term Income Plan, 97.61% voted for winding up while 97.97% of unitholders of Franklin India Credit Risk Fund voted in favour. In case of Franklin India Dynamic Accrual Fund and Franklin India Income Opportunities Fund, 97.62% and 96.89%, respectively, voted favourably.

The court gave various parties, including Sebi and unitholders, three days to file their objections to how the voting was conducted. It also sought suggestions from Sebi and Franklin Templeton trustees on how to proceed further on disbursement of funds if objections to voting results are rejected in the next hearing.

While posting the matter for further hearing on January 25 to decide on the procedure for disbursement of funds to the unitholders, the apex court clarified that it would not stop disbursal of refunds for want of audit report.

Solicitor general Tushar Mehta, appearing for Sebi, said there was no need to panic for any investor. The impression should not go that there is something seriously wrong and there should not be any distress sale by anyone, he said, while refusing to make public the Franklin’s forensic audit report.

Five of these six schemes are now cash positive, with the cash available at over Rs 9,000 crore as of January 15, fund house’s counsel Harish Salve told the Bench.

The SC also refused to entertain the objections raised by few investors, saying one or two people can’t stall the process. “Lakhs of people want to withdraw money. Our intention is to ensure unitholders get their money and good value. This difficulty will be there, some people will object, some will be in favour,” the court said.