BENGALURU: The Karnataka high court on Saturday said Franklin Templeton Trustee Services Ltd has to obtain investors’ consent before proceeding with its decision to wind up six mutual fund schemes. The court restrained trustees from taking further steps on the basis of notices issued on April 23 and May 28, till consent of unit holders by simple majority is taken as per Regulation 18(15)(c) of Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.
Later, on the request of the trustees’ counsel, the court stayed operation of its judgment for six weeks on the condition that there should be no redemption as well borrowings during this period.
A division bench comprising Chief Justice Abhay Shreeniwas Oka and Justice Ashok S Kinagi, however, observed it won’t interfere with the trustees’ decision to wind up those schemes.
The six schemes are: Franklin India Low Duration Fund, Franklin India Ultra Short Bond Fund, Franklin India Short Term Income Plan, Franklin India Credit Risk Fund, Franklin India Dynamic Accrual Fund and Franklin India Income Opportunities Fund.
The trustees indicated they might challenge that portion of the order which requires them to seek the consent of unit holders.