Franklin Templeton mutual fund investors can pick Deloitte over trustees

Unit holders will vote to moneitse the scheme assets.

The unit holders of the six wound-up schemes of Franklin Templeton Mutual Fund (FT MF) will have another option in the upcoming voting process as they could authorise audit and consulting firm Deloitte instead of the trustees, to moneitse the scheme assets.

“Investors will have two options on how the scheme assets should be monetised. Authorise the Trustees assisted by Kotak Mahindra Bank (Kotak) as independent advisor and supported by the asset management company (AMC) or authorise Deloitte Touche Tohmatsu India LLP assisted by the AMC with the AMC being advised by Kotak,” FT MF said in a note.

Investors will also have an option to vote ‘No’ for either of the two proposals, but the fund house said that “this will delay the monetisation of scheme assets”.

The fund house also said that the votes will be counted on the basis ‘one unitholder one vote’ rule, irrespective of the investment value of the unitholders. In an FAQ on whether an institutional investor will be treated differently from a retail investor, the fund house said all investors will be treated the same.

The exact dates and time of the voting will be mentioned in a separate public notice that will be published later. The unitholders will have a three-day window to participate in the e-voting process, which will be held in the last three days immediately preceding the video-conferencing (VC) with the unitholders.

The voting window will remain open during the unitholder meeting being held via video conferencing also. The dates and time for the same will also be mentioned in the notice.

Unitholders will have an option to participate in a discussion over a VC with the FT MF trustees.

The fund of funds (FoFs) which have been impacted by the wind-up move will also be treated as an ‘investor’ and get a vote. These include Franklin Templeton Dynamic Asset Allocation Fund of Fund (FoF), Multi-Asset Solution FoF and Life Stage FOF – 20’s, 30’s, 40’s and 50’s plus.

As per regulations, the proceeds of sale will be first utilised towards scheme liabilities and after making appropriate provision for meeting the expenses connected with such winding up, the balance shall be paid to the unitholders in proportion to their respective interest in the assets of the scheme. This would be assessed as on the date when decision for winding-up was taken (April 23, 2020).

FT MF also pointed out that two of the wind-up schemes -- Franklin India Dynamic Accrual Fund and Franklin India Ultra Short Bond Fund -- had brought their bank borrowing levels to “nil”.

Recently, FT MF roped in debt capital markets team of Kotak Mahindra Bank to assist the trustees with expediting the process of monetising the scheme assets.