If there is one thing that shines through the Franklin Templeton India’s winding-up process of 6 mutual funds, it is their intent to be transparent and fair to their investors. Franklin Templeton, India’s President, Sanjay Sapre and his team have been spending lots of time on ensuring that they sort the queries and concerns of the investors. These actions go a long way in establishing trust in the minds of investors.
Sanjay Sapre spoke to Finance Bloggers and Vloggers through a Video Chat and Interactive Q&A Session of DiaryOfAnInsaneWriter was part of this session.
The salient points for the session were:
A. About the Notice and Voting Requirement
B. Guidelines on E-Voting and Unitholders Meet
C. Timelines, Dates and Process for E-Voting and Unitholders Meet
D. Returning Investors Money
Here are some questions that were asked by the participants and answered by Sanjay Sapre during the session.
Why is the Unitholder’s vote necessary?
As per regulation 41 of SEBI (Mutual Fund) Regulation 1996, it requires the approval of the unitholders to take steps for winding up of the scheme. The schemes can be wound up only after repaying the amount due to the unitholders. The steps to wind-up the schemes include active monetization of assets and return of the investment proceeds to the unitholders. In the absence of authorization, the winding-up process will be delayed as further steps will be possible only after seeking fresh authorization from the unitholders.
What are the top 10 things that Unitholders need to know about Voting?
- E-Voting and the Unitholder Meet are two separate activities.
- The Trustees of Franklin Templeton have partnered with “K Fintech” for the electronic voting process and the Unitholders Meet. Voting will take place on June 9–June 11, 2020, and the Unitholder meets (one per fund) on June 12, 2020. Unitholders will have the advantage of attending the meeting from their place through Video Conferencing offered by K Fintech.
- To take part in both these activities, unitholders must have a valid registered email id / mobile number with Franklin Templeton.
- The last date for registration of email ids is June 8, 2020.
- Login credentials have been sent by K Fintech via email to Unitholders with registered email IDs.
- If unitholders have a registered mobile number but no registered email ID, login credentials have been sent by K Fintech to the registered mobile number via SMS.
- The email / SMS will have a link to the K Fintech website, a user id and a password. This user id is unique and is unique also for each scheme that the Unitholder has invested in. Therefore, if unitholders have invested in more than one scheme, they would have received a separate email / SMS with a different user id and password for each scheme.
- There will be a separate unitholder meet for every scheme and there is a specific time-slot allocated to unitholders of each scheme. Please check the Notice you have received for further details. The information is also available on Franklin Templeton website.
- Unitholders who attend the Video Conference meeting and have not cast their vote between June 9-11,2020 can cast their vote during the meeting on June 12, 2020.
- The details of how to take part in the Unitholders meet is mentioned in each notice and a comprehensive table regarding the same is also available in the FAQ document on our website.
Why Kotak and Deloitte?
Kotak and Deloitte are reputed names and were selected after a careful analysis. Kotak Mahindra Group is one of India’s leading financial services conglomerates. The Debt Capital Markets team at Kotak has been active in the debt markets for over 25 years. They have comprehensive experience across the entire product suite of fixed income assets which includes credit bonds. Over the last 4 years, the team has been actively involved in various marquee transactions in the Debt Capital Market Space.
Deloitte is a preeminent professional services firm for liquidation, resolution, restructuring and debt advisory in India with a dedicated Restructuring and Corporate Finance team comprising over 40 senior professionals who are specialists and experts in these fields. Deloitte in India has handled several assignments involving stressed
debt with successful deal closures of over 30+ deals in the same period. The AMC will bear the fees payable to both Deloitte and Kotak. The AMC is also not charging any
investment management fees for these 6 funds starting April 24, 2020.
Timelines for Notice, E-Voting and Unitholder’s Meet via Video Conference (VC)
- Unitholders will have a 3-day window to take part in the e-voting process on June 9 – 11, 2020.
- Franklin Templeton will hold the Unitholder VC on June 12, 2020–These will be separate for each scheme. The table below has the time bands for each scheme.
- The e-voting window will be re-opened for each scheme during the Unitholder VC for that respective scheme
- The Trustees of Franklin Templeton have partnered with “K Fintech” for the electronic voting process.
- Unitholders will receive an email / SMS from “K Fintech” on their registered email id / mobile number for each scheme that they have invested in.
- The email / SMS will have a link to the K Fintech website, a user id and a password.
This user id is unique for each scheme that the Unitholder has invested in.
- Therefore, if Unitholders have invested in more than one scheme, they would have received a separate email / SMS with a different user id and password for each scheme.
- Unitholders need to click on the website link and enter their user id and password.
- Each user id and password entitle a Unitholder to only “one vote” for that scheme.
- When you log in to the e-voting portal, you will first see two choices – “Yes” and “No”.
- By choosing “Yes”, unitholders are authorizing the liquidation of the assets.
- On selecting “Yes”, two additional sub-options will open-up.
- By selecting Option 1, Unitholders are authorizing the Trustee to monetize the assets with the assistance of the AMC and Kotak Mahindra Bank as an independent advisor.
- By selecting Option 2, Unitholders are authorizing DELOITTE TOUCHE TOHMATSU INDIA LLP to monetize the assets with the help of the AMC and Kotak as an independent advisor. In this option, the Trustee’s role will be restricted to the distribution of proceeds to unitholders after payment of liabilities and expenses under Regulation and the Trustee will not be responsible for disposal or realisation of Scheme assets
What happens if you choose the option “No”?
- By selecting “No” Unitholders are not authorizing the liquidation of the assets.
- It will require the Trustee to propose other options to Unitholders and will have to seek their authorization by a subsequent voting exercise, which may cause delay in monetizing the Scheme assets and distributions to the unitholders.
Please note that voting ‘No’ to the Authorization will not change the winding-up status of the Scheme.
The Trustee believes that both Deloitte and Kotak have strong capabilities to discharge their respective roles. Unitholders will have the advantage of professional services from Deloitte and Kotak (as an agent and advisor
to the AMC and providing independent advice, wherever required) in option 2. The Trustee is equally supportive of both options.
Process for Unitholders Meet via Video Conference (VC)
- The Trustees of Franklin Templeton have partnered with “K Fintech” for the unitholder VC.
- Unitholders need to use the same website link that they used for the e-voting.
- They need to enter the same user id and password they used for the e-voting to attend the VC.
- The user id and password are the same that they have received for the e-voting exercise
- Each user id and password entitle only one Unitholder to attend the VC.
- They will accommodate a minimum of 2000 participants in the VC. The maximum number will be based on the provisions of the technology platform used by K Fintech.
- They will apply the first come first serve rule for attending the VC meeting.
- The meet is held for the Trustees to address the Unitholders and for the Unitholders to ask questions, if any.
- Unitholders can pre-submit questions for the Trustees by writing to firstname.lastname@example.org.
- If investors have already voted prior to the Unitholders meet, they cannot change their vote.
In case of any further queries, unitholders can call Franklin Templeton’s dedicated helpline at 1-800-258-4255 or 1-800-425-4255 from 8 a.m. to 9 p.m., Monday to Saturday. Alternatively, you can also e-mail them at email@example.com.
Source of information: Franklin Templeton Website & Video Conference with Sanjay Sapre, President Franklin Templeton, India.