The market regulator Securities and Exchange Board of India (SEBI) in its board meeting on December 28, made it mandatory for mutual fund (MF) trustees to take consent of unitholders’ when winding-up any MF scheme.
Franklin Templeton MF’s decision to wind-up six of its schemes in April 2020, had forced unitholders to move courts to question the legality of such a decision.
In the year-long legal tussle, the Supreme Court (SC) eventually upheld that unitholders’ approval was necessary for winding-up of any MF scheme.
SEBI in its board meeting stated that “the trustees shall obtain consent of the unitholders by simple majority of the unitholders present and voting on the basis of one vote per unit.”
However, if unitholders vote against such a wind-up, the scheme will be re-opened for investments and withdrawals from the second business day after the voting results are published.
SEBI also made changes to MF regulations on accounting standards. From financial year 2023-2024, mutual funds will need to follow Indian Accounting Standard (IND AS). Some other changes were made “with respect to accounting related regulatory provisions to remove redundant provisions and to bring more clarity.”