Karnataka HC Restrains Franklin Templeton From Winding Up Schemes Without Investors’ Consent

“We hold that no interference is called for in the decision of trustees to winding up of the said schemes. We hold and declare that the decision of the trustees to winding up the six schemes cannot be implemented until consent from the unitholders is obtained in accordance with Sub Clause C of Regulation 15. Hence, we restrain the trustees to take any further steps based on the notice April 23, 2020 and May 28, 2020, issued till the consent of the unitholders is obtained. It will open for trustees to obtain the consent of unitholders and to take further steps,” the division bench stated in its 330-page order.

Market regulator SEBI should have played a more active role in the matter and it failed in its duty towards taking prompt actions, the court noted, adding that the forensic audit report in the case is tentative and doesn’t include final findings.