Will seek unitholders’ consent for winding up 6 schemes: Franklin letter

Franklin Templeton Mutual Fund, in a letter to investors, has said it will seek the consent of unitholders for winding up six debt schemes. This move comes after the SC on Thursday permitted the trustees to hold the meeting with unit holders of six schemes that were shuttered on April23.

In a letter to investors, Sanjay Sapre, president at Franklin Templeton Asset Management (India), said the fund house will now seek unitholders’ consent for winding up of the schemes under regulation 18(15)(c) of SEBI (Mutual Fund)Regulation 1996.

“In order to ensure maximum participation, the process of seeking unitholder’ consent will be through an “electronic vote”, followed by  a meeting through video conference. As stated above, the details and modalities of the same will be shared with you soon. The objective of the voting exercise is to seek consent, by a “simple majority”, to implement the decision taken by the trustee to wind up the six fixed income schemes and thereby enable an orderly liquidation of assets and distribution of investment proceeds. Consent will be sought from the unitholders for each scheme separately,” said Saprein the letter.

During the voting process, unitholders will have two choices— to vote ‘Yes’ in favour of orderly winding up or ‘No’ against the orderly winding up. “We seek your consent for the orderly winding up and believe this will result in the best possible outcomes for unitholders under the current circumstances. In normal market conditions, the opportunity to liquidate assets at fair value will increase with time,” said Sapre.

From April 24 to November 27, the schemes received over `11,576 crore from maturities, pre-payments, and coupons. Of this, `2,836 crore was received in November. “You are aware that four out of the six schemes are already cash positive. Even though the schemes could not actively monetize the portfolio, the  cash available for disbursement as on November 27,2020 stands at `7,226 crore for these four schemes, subject to fund running expenses,” the letter said. “Once we receive a majority “Yes” vote in favour of the orderly winding up of the schemes, we will immediately proceed with a second vote to seek approval of unit holders as required under regulation 41 of SEBI (Mutual Fund) Regulation 1996 to authorise the trustee, or any other person, to proceed with the winding up of the schemes,” said Sapre.