Mumbai: The Supreme Court on Wednesday empowers investors in a mutual fund scheme to have the final word about the closure after the guardian who manages giving “reasoning” to lift it.
In the current rules, the trustee only has the right to decide on the closure of the scheme.
The landmark decision was present in the case relating to the Six Six Franklin Templeton MF debt scheme.
In April 2020, the guardian of Franklin Templeton MF had agreed to close the scheme because of the severe liquidity crisis in the debt market after covid-induced locking.
SC also upholds the validity of the SBI mutual fund regulation where this scheme is closed.
The court argues that SEBI can see the decision of the guardianship in the case of the closing of a scheme.
SC assessment came in the appeal submitted by Franklin Templeton MF against the Karnataka High Court order that has requested home funds to get investor approval with a simple majority with his decision to end six schemes.
Some disadvantaged investors have also moved SC to challenge the validity of the MF SBI regulation.
In the order of 77 of their pages, Judge Sanjul Nazeer and Sanjiv Khanna dealing with the interpretation of the rules and regulations in connection with the problem of winding the scheme and the process followed during the same thing.
They also said that to begin the winding process, Guardian will provide public notifications in the newspaper to reveal the situation that leads to their decision to close the scheme.
Khanna’s justice says that they have “ordering on the observation (from Karnataka HC) for simple reasons that if there is a violation of regulations …
by Trustee or AMC, it is open to peers to continue in accordance with the law”.
The Apex Court said that SBI had the power to continue instructions under Section 11 and 11B of the Sebi Law that handled the protection of investors’ interests.
SC, however, said that the Guardian certainly did not need to accept the agreement as time to decide to close the scheme.
On February 12, SC has allowed the e-voting process to lift six MF schemes.
In December last year, investors had chosen their approval for the decision to close six schemes but the final result of voting was not disclosed until February 12 in the APEX court order.
SC has also allowed disbursed funds to investors in this scheme under the supervision of SBI MF.
According to a disbursement schedule, at the end of the week almost Rs 21,100 Crore will be distributed to investors from six FTMF schemes, the release from Fund House said last week.
The six schemes are low Duration FTMF funds, ultra short bond funds, short-term income plans, credit risk funds, dynamic accrual funds, and income opportunity funds.