Winding-up of Franklin Schemes: Fund House to Soon Start Voting Process - Outside View by PersonalFN

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Winding-up of Franklin Schemes: Fund House to Soon Start Voting Process
May 19, 2020

It's been over 20 days since Franklin Templeton decided to wind up six schemes of its debt schemes. The decision took the mutual fund industry and its investors by surprise. Investors in the schemes were left with no choice but to wait for the fund house to make repayments.

Few days ago in my article, I mentioned the payout timeline of various Franklin Templeton schemes, i.e. by when investors are likely to receive payouts. It is imperative to know that the fund will have to discharge its liabilities, including borrowings, before it can start making payout to the investors.

As per regulation, the fund house needs to take an important step to initiate the payout process.

Regulation 41 of SEBI (Mutual Fund) Regulation 1996 requires unitholders to complete a voting exercise so that the Trustees can take the next steps in the liquidation of portfolios. Payment schedule/payouts can only be finalized and implemented, post the successful completion of the voting process.

Trustees are an independent body appointed by mutual funds to ensure that the SEBI regulations are complied with and that the interest of the unitholders are protected.

[Read: Should Retail Investors Stay Away From Debt Mutual Funds Altogether?]

SEBI regulation states that in case of winding up of schemes, the Trustees will have to call a meeting of the unitholders. At the meeting, unitholders by way of their vote can authorize the Trustees or any other person to take steps for winding up of the scheme. A simple majority of the unitholders present will be required to enable the Trustees to take the next steps.

The voting activity for each of the six schemes will be conducted separately. If you are an investor in one or more of the wound up schemes, you will be required to vote separately for each scheme.

--- Advertisement ---
You Missed This Yesterday

Our urgent mega summit 'Rebound Riches' went LIVE yesterday.

For those who missed the summit, we've made the replay available for a limited time.

Watch as we reveal the details of 3 high potential stocks to buy for exponential gains.

Potentially 200%, 400%, or even 900% in the coming years.

Click here to watch now...
------------------------------

Unitholders whose names appear in the register of unitholders as on close of business hours of April 24, 2020 will be entitled to vote on the resolution.

The schemes that were wound up:

Investors in the said schemes will receive an e-mail with a notice related to the voting process over the next few days. The vote can be cast electronically through registered E-mail IDs.

Will it be wise on investors' part to vote?

Some of you may have a misconception that by voting in the 'Negative' the winding up will be reversed and that the six schemes will recommence the redemption and subscription process.

However, FTMF has clarified that this is not true.

The purpose of the voting process is to enable Trustees to take the next steps for disposal of the assets of the scheme and distribution of the proceeds to the unitholders in accordance with regulations. If Trustees do not receive authorization to proceed with disposal of assets of the scheme, it may delay the process of monetizing such assets and distribution of proceeds.

In other words, the liquidation of the schemes will get stuck and payouts to investors will be delayed if investors do not authorize the Trustees to proceed.

--- Advertisement ---
Want to Make Big Money? Then Follow Actions of Oil Giants

Do you know what giant oil companies are doing these days?

They are chasing a new opportunity... a new technology... where they see exponential growth for years ahead.

Everyone is in the race... Royal Dutch Shell, France's Total, British Petroleum, America's ExxonMobil.

Here in India, one tech company is smartly tapping into this multi-billion dollar opportunity.

Today, very few people know about the potential of this company.

But once the broader market gets a whiff of it... there is no limit to how high the stock price of this company may rise.

Click here for the full details...
------------------------------

Do note that the SEBI regulation does not mention the process to be followed if the majority of investors vote in negative.

In such a case, the only feasible option will be to enable the Trustees to go ahead and expedite the process of returning money by way of voting.

FTMF has reiterated that the decision was the only viable way to preserve value for investors, despite the immediate challenges this may bring. The fund stated that it is receiving inflows regularly and that there has been a marked reduction in borrowing levels across some of the funds.

[Read: Who Is to Blame for the Franklin Templeton Fiasco?]

At PersonalFN, we arrive at top rated funds using our SMART Score Model. If you wish to select worthy mutual fund schemes, I recommend you to subscribe to PersonalFN's unbiased premium research service, FundSelect.

Additionally, as a bonus, you get access to PersonalFN's popular debt mutual fund service, DebtSelect.

If you are serious about investing in a rewarding mutual fund scheme, Subscribe now!

Author: Divya Grover

This article first appeared on PersonalFN here.

Join Now: PersonalFN is now on Telegram. Join FREE Today to get 'Daily Wealth Letter' and Exclusive Updates on Mutual Funds

PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.

Disclaimer:

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

Equitymaster requests your view! Post a comment on "Winding-up of Franklin Schemes: Fund House to Soon Start Voting Process". Click here!

  

More Views on News

Are You Assuming Money in Bank Deposits as Safe? Watch Out! (Outside View)

Aug 7, 2020

There are numerous such instances of investors having lost their hard-earned money with bank.

How to Buy Stocks at 50% Off (Fast Profits Daily)

Aug 7, 2020

In this video I'll show you how to enter into a long trade at the right price.

Banking Stocks Are in a Sweet Spot Again (Profit Hunter)

Aug 7, 2020

The RBI's policy decisions yesterday will give a big boost to banking stocks.

Can You Win a Stock Market Championship Using My Penny Stock Strategy? Let's Find Out podcast (Views On News)

Aug 6, 2020

Rahul Shah invites you to a hypothetical stock picking contest where he builds a penny stock portfolio using his blueprint.

Future Retail Group Debt Default comes as a Fresh blow to Franklin Templeton Investors (Outside View)

Aug 6, 2020

PersonalFN explains how debt default by Future Group of companies impact investors in wound up schemes of Franklin Templeton.

More Views on News

Most Popular

These 5 Smallcaps Deserve a Place in Your Coffee Can Portfolio (Profit Hunter)

Jul 28, 2020

When it comes to quality stocks, doing less is more.

Before You Buy Your First Electric Vehicle Consider Buying this Stock (Profit Hunter)

Jul 29, 2020

As competition intensifies in the electric vehicle space, only few will create huge wealth over the years.

Large Opportunities Are Coming Our Way

Aug 5, 2020

Kenneth Andrade tells us why stocks will bounce back strongly and what he's bullish on.

How to Buy Gold and Silver (Fast Profits Daily)

Jul 27, 2020

In this video I'll show you how to buy bullion the right way.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Aug 7, 2020 (Close)

MARKET STATS