Franklin Templeton MF to conduct voting on Dec 26-28
It has sought consent of the unitholders for the orderly winding up of six fixed income schemes
New Delhi: Franklin Templeton Mutual Fund on Monday said it has sought consent of the unitholders for the orderly winding up of the six fixed income schemes.
The electronic voting will take place from December 26-28 and the meeting of unitholders of relevant schemes on December 29, Franklin Templeton MF said in a statement. The unitholders would have to take a call on whether to give consent to the winding up decision or withholding it, which would allow the schemes to reopen for purchase and redemption.
The move comes after Supreme Court on Thursday asked Franklin Templeton MF to initiate steps within one week for calling a meeting of unit holders to seek their consent for closure of six mutual fund scheme. Franklin Templeton MF said the objective of the voting exercise is to seek, by 'simple majority', consent of the unitholders for the decision made by the trustee of the fund house to wind up the six fixed income schemes in an orderly fashion. Consent will be sought from unitholders for each scheme separately.
Fintech has been entrusted by the fund house to carry out the electronic voting process. Franklin Templeton MF believes that it will be beneficial for unitholders to vote 'Yes' to the proposed resolution as this will allow schemes to monetise assets without resorting to distress sales and will maximise value to unitholders.
"If the decision to wind up the schemes in an orderly manner is not implemented, it would precipitate a rush of redemptions, which would force a distress sale of the portfolio securities, likely resulting in a reduction in the net asset value (NAV) of the schemes and substantial losses for unitholders," the fund house noted.
Franklin Templeton MF closed six debt mutual fund schemes on April 23, citing redemption pressure and lack of liquidity in the bond market.