In Brief
Franklin Templeton sought to wind up six mutual fund schemes. The Supreme Court clarified the interpretation of mutual fund regulations governing winding up. The Court held that while trustees can form an opinion to wind up schemes, they must obtain consent of the majority of unitholders voting (not all unitholders). Consent is required after public notice publication, not before. The Court rejected challenges to the constitutional validity of winding-up regulations, finding adequate safeguards: trustees must disclose reasons, are subject to SEBI oversight, and two-thirds must be independent. The Court affirmed SEBI's broad regulatory powers to investigate trustee decisions and issue directions if trustees act beyond prescribed scope.
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