MUMBAI: Sebi has made it mandatory for mutual funds to obtain unitholder consent for winding up a scheme. The markets watchdog has also said that schemes with crypto-linked investments would not be allowed until laws are in place.
The order requiring unitholder consent is a fallout of Franklin Templeton’s decision to wind up six schemes in April 2020. The move triggered legal action by the unitholders. The Supreme Court then directed that unitholders need to vote for winding up of any scheme.
Under the new regulations, consent of unitholders has to be obtained by simple majority under the principle of one vote per unit held. In case the trustees fail to obtain the consent, the scheme shall open for business activities after the publication of results.
Earlier, mutual funds could wind up schemes if the trustees felt the same was required. Unitholders could also wind up a scheme if 75% of them pass a resolution to that effect. The regulator could also announce a scheme to be wound up if it felt it was in the interest of unitholders.
While trustees can initiate proceedings for winding up the scheme, the ultimate decision will need to be taken by unitholders.
The order requiring unitholder consent is a fallout of Franklin Templeton’s decision to wind up six schemes in April 2020. The move triggered legal action by the unitholders. The Supreme Court then directed that unitholders need to vote for winding up of any scheme.
Under the new regulations, consent of unitholders has to be obtained by simple majority under the principle of one vote per unit held. In case the trustees fail to obtain the consent, the scheme shall open for business activities after the publication of results.
Earlier, mutual funds could wind up schemes if the trustees felt the same was required. Unitholders could also wind up a scheme if 75% of them pass a resolution to that effect. The regulator could also announce a scheme to be wound up if it felt it was in the interest of unitholders.
While trustees can initiate proceedings for winding up the scheme, the ultimate decision will need to be taken by unitholders.
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