In a note sent out to distributors and financial advisors the Asset Management Company (AMC) said that in the key e-voting process the investors will have two options
Over a month after the 6 debt schemes were shut down by Franklin Templeton India, investors have another option on monetising the underlying assets for quicker refunds.
In a note sent out to distributors and financial advisors the Asset Management Company (AMC) said that in the key e-voting process the investors will have two options. Either authorize the trustees of Franklin assisted by Kotak Mahindra Bank (Kotak) as independent advisor and supported by the AMC for winding up or they could authorize Deloitte Touche Tohmatsu India LLP (DTTILLP) assisted by the AMC and with the AMC being advised by Kotak.
Simply put in the first option trustees of Franklin will oversee the asset monetisation and refund to 300,000 investors and in the second option independent consultant Deloitte will oversee the process. In both the options Kotak will act as an advisor.
If majority of investors select Deloitte, the trustee’s role will be restricted to distribution of proceeds to unitholders after payment of liabilities and expenses, said Franklin.
"Investors will also have an option to vote “No’ for either of the 2 proposals (option 3), but this will delay the monetization of scheme assets ," said Franklin in the note, which has ben reviewed by Mint. The e-voting notices will be sent in a couple of days. The investors will have 3-day window to participate in the e-voting process, which will be followed by a video conferencing which will serve as a unitholders meeting. The investors could continue to vote during the video conferencing.
A minimum of 1000 participants will be accommodated in the video conferencing and it is being facilitated by K Fintech .
Each unitholder according to Franklin notice will be entitled to only one vote per scheme, irrespective of the number of units. Same holds for institutional investors.
"Unitholders who have invested in more than one scheme, will get a separate email / SMS for each scheme," said Franklin.
Soon after prepayments and payments are received from underlying bond issuers the AMC would first use the proceeds to extinguish their liabilities and balance payment will be made to investors. So far two of the schemes - Franklin India Dynamic Accrual Fund and Franklin India Ultra Short Bond Fund have brought their bank borrowing levels to “nil".
With the addition of Deloitte the investors now have three options to exit from the funds and get refunds. A trustee monitored monetisation process, Deloitte monitored monetisation process and finally listing the units on exchanges. The option of listing units might get investors quicker exit but a steeper haircut.
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