Franklin Templeton trustees call EGM to consider indemnity for directors

Recently, the Securities and Exchange Board of India (Sebi) has ordered an audit of the six schemes under wind-up by FT MF.

Franklin Templeton Trustee Services has called for an extraordinary general meeting (EGM) on Thursday. A resolution will be considered to grant indemnity to directors of the trustee company, in relation to any liability with the decision to wind up six debt schemes of the mutual fund (MF) arm.    

The notice for the EGM read, “… in accordance with the articles of association of FT Trustee Services (the company), the company shall indemnify all directors to the fullest extent permitted by such articles and applicable law, in connection with liability that any of them may incur in connection with the decision to wind up six debt schemes of FT MF…”

It is also being proposed to widen the scope of indemnity. This would include covering any liability that may result from regulatory action. It would also be applicable in case of negligence, default, breach of duty, and breach of trust by any person under this indemnity.

“We confirm a notice has been issued to conduct an EGM of the members of  Franklin Trustee Services with regard to indemnification of the directors of the company. It is standard practice to offer directors and officers indemnification in the performance of their duties. The notice is publicly available on our website,” said a spokesperson for Franklin MF.

Further, this would include advancement or direct payment by the company of any “reasonably incurred legal or travel costs” borne by any person under the indemnity.

The notice pointed out the articles of association of the company offers indemnity cover to every director against liability in respect of matters which arise from “acts or omission of such person in the ordinary course of discharging his/her authorised duties in good faith and in the company’s best interests”.

Recently, the Securities and Exchange Board of India (Sebi) had ordered an audit of the six schemes under wind-up. On Tuesday, Sebi filed a letter patent appeal (LPA) in the Gujarat High Court (HC). The appeal was filed seeking remedy from the order of a single-judge Bench. 

After an LPA is allowed, the matter can be heard before a larger Bench in the same court.

Meanwhile, the fund house has appealed to the Supreme Court to hear the matter pertaining to Gujarat HC’s stay order on the e-voting process. The HC had ordered the stay would be in force till the findings of the forensic audit are made public.

The unitholders’ e-voting was scheduled on June 9. The e-voting process would have given the unitholders of Franklin’s schemes options on the manner in which the wind-up process and scheme asset monetisation could be taken forward.