TagMutual Funds

Franklin Templeton: Supreme Court Rules on Unitholder Democracy

The winding up of six mutual fund schemes of Franklin Templeton has been mired in legal dispute. Last year, the Karnataka High Court ruled (discussed here) that the winding up of the schemes require the approval of the unitholders thereof. Upon appeal, the Supreme Court permitted the trustee of Franklin Templeton to call for a meeting of the unitholders under certain conditions prescribed by the...

A Review of “Investment Funds in India – A Legal Handbook”

[Ganesh Rao is a partner at Trilegal] Alok Verma and Karan Trehan’s Investment Funds in India – A Legal Handbook focuses on the legal regime governing investment funds in India and, in doing so, is probably one of the first books to be published in this field. The Securities and Exchange Board of India’s (“SEBI”) SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”) are...

Karnataka High Court Decision in the Franklin Templeton Case

The Karnataka High Court yesterday issued its 336-page ruling on the highly contested winding up of six schemes of the Franklin Templeton Mutual Fund (“FTMF”). FTMF’s decision was the subject matter of challenge before various High Courts, and the Supreme Court directed a transfer of all related petitions to the Karnataka High Court, which held a mammoth virtual hearing over several days before...

Asset Allocation for Multi-Cap Funds

[Divya Rau is a final-year law student at Jindal Global Law School] The Securities Exchange Board of India (“SEBI”) issued new guidelines regarding asset allocation by multi-cap funds on 11 September 2020 (“New Circular”). A multi-cap fund refers to “an open ended equity scheme investing across large-cap, mid-cap, small-cap stocks”.  Large-caps refer to the top 100 firms by market capitalisation...

Revisiting Side-Pocketing in Mutual Funds: Question of Investor Protection

[Prankul Boobana is a fourth year student at NALSAR University of Law, Hyderabad] With one of the bigger mutual fund houses winding up six of its debt schemes recently, the mutual fund (MF) industry, which was already facing liquidity issues, suffered a huge setback. In the past few months, the MF industry has witnessed various debt-laden companies defaulting and, resultantly, making delayed...

Amendments to the Portfolio Management Regulations: A Blessing for Retail Investors

[Aditya Bhayal is a 4th Year, B.A.LLB (Hons.) student at NALSAR University of Law, Hyderabad] On 20 November 2019, the Securities and Exchange Board of India (“SEBI”) introduced certain amendments to the SEBI (Portfolio Management) Regulations, 1993 (the “Regulations”). In doing so, SEBI considered the recommendations of a working group formed for suggesting changes, and comments received from...

Participation of Mutual Funds and Insurance Companies under the RBI’s Stressed Assets Framework

[Sachin Santuka is a B.B.A LL.B. candidate at the National Law University Odisha] After the Supreme Court in Dharini Sugars v Union of India struck down the Reserve Bank of India (RBI) circular dated 12 February 2018, the RBI on 7 June 2019 introduced a revised framework for the resolution of stressed assets. The provisions of the framework are applicable to Scheduled Commercial Banks, All India...

Calcutta High Court Allows Trial Against Directors of a Mutual Fund Trustee Company

It is well-known that directors of a mutual fund trustee company carry onerous responsibilities, both under the Companies Act, 2013 as well as the SEBI (Mutual Funds) Regulations, 1996. The trustee company of a mutual fund and its directors are responsible for ensuring that transactions carried out by the fund are in accordance with the relevant regulations. This is despite the fact that the day...

Union Budget: Tax Policy Concerns for Capital Gains and Dividend Distribution on Mutual Funds

[Hardeep Singh Chawla is an Advocate practicing in the M&A & PE Tax Department of a Big4 in Gurgaon, Haryana. Views expressed are his own. The author may be reached at [email protected]] “The only difference between death and taxes is that death doesn’t get worse every time Congress meets” – Will Rogers Recently the Finance Minister tabled the Finance Bill, 2018 (‘Bill’)...

Side-pocketing: A plausible liquidity management tool for the Indian mutual fund industry

[Param Pandya is a Research Fellow in the Corporate Law and Financial Regulation vertical at Vidhi Centre for Legal Policy. The author is thankful to Prof. Jayanth R Varma, Indian Institute of Management, Ahmedabad for his valuable comments. Views are personal. This post was first published in the Oxford Business Law Blog] An illiquid asset may lead to reduced returns and increased redemptions in...

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