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With the Supreme Court permitting distribution of Rs 9,122 crore (available cash in the schemes as of January 15, 2021) to the respective unitholders in proportion to their holdings in the 5 Franklin Templeton schemes under winding up, here are details about how the process of distribution will work.

The Supreme Court, as agreed by all the parties, has directed that SBI Funds Management Pvt. Ltd. (SBI) be entrusted with the activity of distributing available cash to unitholders. Franklin Templeton MF has started working closely with the SBI team and is providing the assistance SBI Funds Management requires to ensure distribution of available cash at the earliest.

Since 5 schemes of the 6 being proposed to be wound up are cash-positive, unitholders of those 5 schemes will get cash. Franklin Ultra Short Bond investors will get Rs 5,075 crore, followed by Rs 1,625 crore for Franklin Low Duration among the biggest gainers. Unitholders of Franklin India Dynamic Accrual will get Rs 1,026 crore, Franklin India Credit Risk will get Rs 926 crore and Franklin India Short Term Income will get Rs 469 crore. 

Payment will be made by extinguishing proportionate units at the prevailing NAV on the date of processing.

Payment to all investors whose accounts are KYC compliant with all details available will be made during the week of February 15, 2021. You can check the status of investor accounts in the schemes under winding up. 

Note that the distribution for unitholders, whose PAN/KYC, FATCA/UBO, Minor through guardian or Transmission details / documentation are not available/invalid, will be made after completion of the regulatory/ compliance requirements.

The payment will be made by SBI from the bank accounts (one per scheme) opened by them for this purpose, and the payment will be made electronically to all eligible customers.

In case the unitholder’s bank account is not eligible for an electronic payment, a demand draft/cheque will be issued and sent to their registered address.

Unitholders will receive an account statement from Franklin Templeton showing the details of units extinguished and payment made.

Capital Gains statements will also be made available. Unitholders may request the same via FT MF website, call centre or from their registered email ID.

Do note that Franklin Templeton will be responsible for deduction of TDS and issue of TDS certificates for NRI investors.

Franklin Templeton MF said in a statement: “We are pleased to inform that the Hon’ble Supreme Court, in its order dated 12 February 2021 has upheld the results of the e-voting u/r 18(15)(c) held in December 2020 and confirmed the winding up of 6 schemes. The Hon’ble Supreme Court has also appointed SBI Funds Management Pvt. Ltd. as the authorized person under regulation 41 to take next steps on monetization. Franklin Templeton Mutual Fund will provide all assistance and cooperation to SBI Funds Management to monetize the assets. The decision of the Hon’ble Supreme Court to dispense with voting u/r 41 reduces any potential delay in commencing active monetization of assets. We are thankful to our unitholders for voting overwhelmingly in favour of the orderly winding up in all 6 schemes. We deeply appreciate the continued patience and support of our investors and partners during these challenging times.”

Unitholders in 5 debt schemes of Franklin Templeton MF can hope to get some cash in the next 20 days. 

This is after the Supreme Court on Tuesday directed that Rs 9,122 crore, the cash available for distribution as on January 15, in the to-be-wound up debt schemes of Franklin Templeton MF be disbursed to unitholders in proportion to their respective interest in the assets of the scheme, reports say. Do note that 5 of 6 debt funds are cash-positive.

The Bench of Justice S Abdul Nazeer and Sanjiv Khanna entrusted SBI Mutual Fund will carry out the exercise of disbursement, after counsel appearing for all parties agreed to the same, the reports said.

The distribution of money to unitholders is required to be completed within twenty days from today. The Court also gave the parties the room to move applications in case of any difficulty arising out of the process.

As on January 15, individually, Franklin India Low Duration Fund, Franklin India Ultra Short Bond Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund and Franklin India Short Term Income Plan have 63%, 50%, 41%, 26% and 9% of their respective AUM in cash. Unitholders of these 5 schemes will get cash due to the SC order.

Borrowing levels in Franklin India Income Opportunities Fund stood at 6% of AUM (assets under management) on January 15, and so it is still cash-negative. Unit holders of this scheme will not get any cash distribution. 

Franklin Templeton spokesperson said: “We are pleased that, as requested by us, and in the best interests of Unitholders, the Hon’ble Supreme Court has directed the distribution of INR 9,122 crore (distributable surplus as of 15 January 2021) to the respective unitholders in proportion to their holdings in the schemes under winding up, subject to fund running expenses.

As previously stated, we went ahead with the difficult decision of winding up these schemes because of our firm belief that this was the right decision to preserve value for investors, as evidenced by the generation of cash in these schemes over the last 9 months. We believe the distribution of monies will provide unitholders with much needed liquidity and look forward to working with the Regulator and SBI Mutual Fund to distribute the cash within the period stipulated by the Court.”