Business Standard

Franklin Templeton case: HC sows seeds of democracy in governance of MFs

The court has given impetus to the principle that the domain of the trustees to unilaterally decide on winding up without declared confirmation by majority investors is non-negotiable

Topics
Franklin Templeton | Franklin India | High Court

Mukesh Butani & Tarun Jain 

The effect of the pandemic has not been confined to health and has extended to other interesting debates in various fields of law. One issue which has caught the public eye is the controversy surrounding the decision of Trustees (FTT) to foreclose their debt fund schemes, purportedly to pre-empt losses weeks after nationwide shutdown. Considering the wide-ranging challenges to the decision in various high courts, including public interest suits, criminal charges, etc, the Supreme Court consolidated all matters and transferred them for an expedited consideration of the Karnataka High Court, which has issued a detailed decision. A first in the space of mutual fund governance and delineating the empowerment of the trustees versus the rights of contributions of the unit holders, the verdict assumes significance as it not just addresses the controversy, but also reflects on a larger landscape – democratising governance.

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First Published: Mon, December 28 2020. 07:40 IST
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