Franklin needs investors’ nod for closure of debt funds: HC

The Karnataka high court on Saturday restrained Franklin Templeton Mutual Fund from winding up some of its debt funds without obtaining the consent of investors.The HC, which has been hearing the cases since June, ruled that while it does not want to interfere with Franklin’s decision, it should seek consent of unit holders.The board of the mutual fund cannot implement the “decision to wind up” as they are bound to obtain consent of the unit holders, said advocate Abhinav Shrivastava, a partner at law firm GSL Chambers, which represented one of the investors, citing the court orders.

The fund house was facing four separate sets of suits by its investors in Gujarat, Delhi and Madras High Courts. In July, the Supreme Court clubbed all the cases and directed Karnataka HC to hear the matter expeditiously. Franklin shut six of its fixed-income and credit-risk funds run by its Indian unit in April after a liquidity crisis compelled the firm to freeze investor withdrawals. “We are considering the order and will take appropriate steps in consultation with our legal experts,” Franklin Templeton’s spokesperson said.