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SC directs Franklin Templeton to pay Rs 684 crore to unit holders

While the order on other aspects of Franklin Templeton wind-up case is still pending, the apex court gave its view on how SEBI’s wind-up regulations should be interpreted.

August 04, 2022 / 03:48 PM IST
Representative image

Representative image


The Supreme Court of India ordered Franklin Templeton to pay the next round of payment of Rs 684 crore to its unitholders, according to CNBC-TV18. The next hearing in the matter will be held in December 2022.

The SC had ruled that consent of unitholders is mandatory when winding-up schemes of a mutual fund. While the order on other aspects of Franklin Templeton wind-up case is still pending, the apex court gave its view on how SEBI’s wind-up regulations should be interpreted.

Also Read: Franklin Templeton order: Supreme Court upholds consent of unitholders must in winding-up of mutual fund schemes

The SC took view that after wind-up notice is sent to unitholders, fresh investments and redemptions in the schemes can be frozen, but after this unitholders’ consent on winding-up needs to be taken before moving forward.

Last month, Franklin Templeton said it is not leaving the country and will be rebuilding the crisis-hit brand. "It would be silly to leave India, its president for India," Avinash Satwalekar, told reporters. "I can say categorically that we are not leaving India. "

Satwalekar acknowledged the speculation about the company following the footsteps of its other foreign peers in exiting India especially after the Sebi action in the debt schemes, but made it clear that it has no such plan.

He said the company, which has a 26-year presence in the country, has over Rs 56,000 crore of assets under management (AUM) from 20 lakh investors and its operations are incredibly profitable.

Also Read: It will be 'silly to leave India', says crisis-hit Franklin Templeton

In November 2020, capital markets regulator Securities and Exchange Board of India (SEBI) had issued a show cause notice to the crisis-hit company following its April 2020 decision to wind up six debt schemes having Rs 25,000 crore of AUM from three lakh investors, citing liquidity challenges because of the COVID-19 pandemic.

Eventually, the company was asked to pay Rs 5 crore as penalty, return over Rs 450 crore collected as 22-month investment management and advisory fees, and was banned from launching new debt schemes for alleged irregularities in running six of its debt schemes. The company has challenged the decision in tribunals and courts, and also returned a bulk of the investments.
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