Investors want paper ballots in Franklin MF voting, overseen by ex-CECs

Investor association seeks changes in Franklin Templeton voting process

An investor association has written to the stock market regulator seeking offline voting options to decide on the winding up of six schemes of Franklin Templeton Asset Management (India). Voting is set to happen electronically between December 26th to December 28th.  This is to be followed by a virtual meeting through video conferencing.

Postal ballots would help senior citizens and others who are not as conversant with electronic means, according to the letter that Midas Touch Investors Association sent to the regulator dated December 8th.  The paper trail makes the process more transparent suggested the note.  

 “…consent be obtained through post, which could be identified and subsequently verified easily, to set doubts, if any, at rest. In addition, voting through electronic medium be made optional,” said a statement from association president Virendra Jain.

The Supreme Court had earlier asked the Securities and Exchange Board of India (Sebi) appoint an observer to oversee the process.

“Sebi shall appoint an observer regarding the e-voting of unit holders which is scheduled between 26th December to 29th December, 2020… It is made clear that the trustees are undertaking the exercise of e-voting and Sebi in terms of our directions is appointing an observer,” said the Supreme Court order dated 9th December.

The investor association in its letter suggested that former chief election commissioners including T.S. Krishna Murthy and S.Y. Quraishi could be roped in to ensure transparency for investors who had Rs 28,000 crore stuck in the schemes when Franklin announced their winding up. T. S. Krishna Murthy said that the terms of reference and logistical issues would have to be looked into before any firm commitment can be made as he lives in Chennai.

"I have no problem...provided all support is made available in Chennai (and) terms of reference are clear," he said.

S.Y. Quraishi didn't immediately respond to a request for comment.

The fund house announced the winding up of six schemes on April 23rd. The Covid-19 pandemic had affected the liquidity of their investments. The six affected schemes were Franklin India Low Duration Fund, Franklin India Ultra Short Bond Fund, Franklin India Short Term Income Plan, Franklin India Credit Risk Fund, Franklin India Dynamic Accrual Fund, and Franklin India Income Opportunities Fund. The lack of liquidity affected the fund house’s ability to sell their investments and return money to investors when they made redemption requests. It decided to stop all redemption and investments while it waited for things to normalise.  

Investors subsequently moved court over the decision.  The Supreme Court passed interim orders in December. It is set to hear the matter after voting in the third week of January.

“The result of the e-voting would not be announced and would be produced before us in a sealed cover along with the report of the observer appointed by the Sebi,” the Supreme Court order had said.

An email sent to the regulator and Franklin Templeton did not receive a response.