The Supreme Court on Thursday permitted Franklin Templeton trustees to call a meeting of its unit holders to seek their consent for the closure of 6 mutual fund schemes during the Covid-19 pandemic while ordering a stay on requests of redemption from investors. The meeting will be held to get the consent of 50% or more of the unit holders for the closure of these schemes.
The Court pulled up the Securities Exchange Board of India (SEBI) for not intervening when unit holders had begun seeking redemption unlike the Reserve Bank of India that intervened to protect its depositors. According to SEBI, it had no role in the closure of schemes but had written to RBI about the case.
A division bench of Justices Abdul Nazeer and Sanjiv Khanna also observed that the meeting to get the approval of its unit holders should be without prejudice to rights of all Franklin Templeton trustees and appropriate steps in this regard should be taken in a week.
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Franklin Templeton had approached the Apex Court against the Karnataka High Court’s decision according to which prior consent of unit holders was required to close the six mutual fund schemes during the pandemic. While the closure was challenged for being illegal as no consent was taken, according to Franklin Templeton, it was under the impression that no prior consent or approval was required.