MUMBAI: In ruling on an appeal by Franklin’s trustees against the Karnataka high court ruling, the Supreme Court has allowed the trustees to hold a vote on the liquidation of six Franklin Templeton debt mutual fund schemes.
Unable to cope with bailout pressure, Franklin Templeton had frozen repayments on six debt funds on April 23, with combined assets of around Rs 26 billion. The Supreme Court has ordered steps to be taken to allow voting within a week. However, the superior court refused to enter the forensic audit report of Franklin Templeton’s schemes.
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In October, the Karnataka high court ruled against the liquidation of the schemes by Franklin Templeton without the consent of the unit holders, but had suspended its own order until December 5.
Franklin Templeton had filed an appeal against the higher court’s decision, even when he approached the markets regulator Securities and Exchange Board of India for permission to hold a vote on the liquidation. While calling for a vote to be held, the Supreme Court also suspended reimbursements for the six schemes. The expiration of the Karnataka HC’s stay on 5 December would have reopened the plans, possibly leading to a disorderly liquidation in the absence of a stay.
The Supreme Court has included the matter for its hearing next week, without prejudice to the final vote.
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