FRANKLIN TEMPLETON DEBACLE- AFTERMATH AND LACUNAE

Abstract

On April 23, 2020, Franklin Templeton shut down not one but six debt fund schemes. There are many reasons that are attributable to such fiasco in the market. In the light of COVID-19 Pandemic, liquidity issues, poor risk management, and many loopholes in the system were exposed. In terms of regulatory mechanism, there were many questions regarding the vagueness of provisions under the SEBI Mutual Fund Regulations, 1996 regarding the shut down of Mutual fund schemes, the approval mechanism of such shut down. This paper attempts to analyse the decisions of Karnataka High Court and Supreme Court with regards to aforesaid regulatory concerns. It also analyses the reasons for the shut down, aftermath of the Supreme Court decision and lacunas in the current regime.

 

 

Key Words: Franklin Templeton, SEBI Mutual Fund Regulation, consent of unit holders, shutdown of scheme

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I. Introduction

COVID-19 Pandemic shook the economies of many countries. The lockdown in March 2020 particularly led to major turmoil in the financial sector of India. In the Mutual Fund Industry, the pandemic led to decreased net asset value which resulted in decrease of investor income. Franklin Templeton Mutual Fund, one of the biggest AMCs of the country, declared winding up of its six mutual funds due to volatile and illiquid debt markets. The pandemic was cited as the main reason behind the closure. However, on a closer look we can observe that there were many factors leading up to such a situation. Apart from that, it also raised many regulatory questions before the market regulator. The case shook investor confidence and is a prime example of purposive and pragmatic interpretation of law in an effort to safeguard the investor interest.

The history of mutual funds in India can be traced back to the establishment of Unit Trust of India (“UTI”). UTI was founded in 1963 as the mutual fund industry in India had its start at the initiative of the Indian government and reserve bank. It is possible to generally categorise the development of mutual funds in India into four major phases. From the establishment of UTI in 1963, then the non-UTI mutual funds introduced by Life Insurance Corporation and General Insurance Corporation, then to the entry of the private sector in Mutual funds and introduction of Mutual Fund Regulation, 1996 to the present scenario. The Indian mutual fund industry has increased in size by each phase.

 

II. Franklin Templeton Case History

A. About Franklin Templeton

Franklin Resources Inc. is a multinational company based in the USA. The Indian office of Franklin Templeton was set up in 1996 as Templeton Asset Management India Private Limited and entered into the mutual fund industry in September 1996 with the Templeton India Growth Fund scheme.[1]

Credit strategies are a hallmark of Franklin Templeton mutual funds. Franklin Templeton was able to produce a larger return than its counterparts because of the portfolio risk they were assuming. All of this was put under stress when the COVID-19 epidemic struck. There was little liquidity in the bond market as foreign investors began to abandon Indian bonds. Because of this, only government bonds and papers with the highest ratings had adequate liquidity to trade. FT faced additional redemption pressure, forcing them to sell some of the bonds and borrow money to pay for the redemptions.[2]

B. Closure of the schemes

The aggregate Assets Under Management (AUM) of the six schemes as of October 31, 2019, was roughly USD 7 billion. By the end of March, this AUM had decreased to about USD 4 billion. The sharp decline (approximately 43%) in AUM was caused as a result of the COVID-19 pandemic and the economic slump.[3] Franklin Templeton decided to end six credit scheme operations after taking into account all of the aforementioned criteria so that these schemes were no longer open to trades.

Ultimately, due to this, FT announced the winding down of six debt products in April 2020: the Franklin India Income Opportunities Fund, Franklin India Ultra Short Bond Fund, Franklin India Low Duration, Franklin India Dynamic Accrual, Franklin India Credit Risk, and Franklin India Short Term Income Plan. SBI Mutual Fund had been given the task of selling the assets belonging to the closed schemes and distributing the funds accrued from there to unitholders in 2021.[4] This resulted in numerous lawsuits and significant investor unrest.

C. Need for closure

Santosh Kamath, FT's chief investment officer for fixed-income, was in charge of all six of the shut-down schemes. The market for purchasing debt instruments with ratings lower than AAA, the highest possible for private debt, is credited to Kamath. This indicates that Kamath's funds invested in firms that did not have the best debt ratings and thus had to pay substantially inflated rates of interest to acquire credit. Investors who were willing to keep these instruments received better returns as a result of these higher rates, albeit there was a greater risk if the corporations couldn't make their payments on time.[5]

Investors began withdrawing their funds from these funds due to the severe economic damage caused by the pandemic. The business initially tried borrowing money to repay investors. However, it was quite likely that no one else would have purchased those instruments because their underlying assets were under the risky category. Consequently, FT made the decision to shut the schemes in the hopes of recovering the value of the underlying assets through sales or maturation.

D. Other Contributing Factors

• Rates from one day to three months skyrocketed to absurd heights.

• There were no buyers, only sellers.

• Exit of FPI from the Debt and Equity Markets made things worse

• Additional pressures were brought on by year-end redemptions and advance tax withdrawals.

• The economy was completely stagnant.

• Rating agencies were not permitted to revise their ratings for some of these weaker corporations.[6]

E. Consequences and Actions taken by RBI

Existing investors were not allowed to trade in any manner once the debt schemes were closed.[7] Thus, RBI introduced a special liquidity window for mutual funds with a limit of 50,000 crore in order to alleviate the issue. In accordance with the plan, the RBI will carry out repo (repurchase agreement) operations for banks with a 90-day tenor at a set repo rate of 4.40% which means that banks can use the money from this facility only to meet the liquidity needs of mutual fund houses.[8] 

The Governor of RBI, Shaktikanta Das said that without the creation of liquidity, the impact of the Monetary Policy Committee's rates would not be achievable. Ample liquidity has boosted other financial market categories as well. Since the Franklin Templeton incident, in particular, mutual funds have stabilised as a result of active efforts by RBI.[9]

F. Forensic Audit by SEBI 

A forensic audit/inspection ("Forensic Audit") was launched with regard to FT-MF in accordance with Regulation 66 of the Mutual Funds Regulations to confirm compliance with the provisions of securities laws. Thus, M/s. Chokshi and Chokshi LLP, Chartered Accountants ("Auditor") was appointed by SEBI to carry out the inspection of FT-MF, with respect to the aforementioned six debt schemes. In a letter dated May 27, 2020, SEBI informed the Trustees of the selection of the Auditor.[10] The Forensic Audit's conclusions were then relayed to FT-MF. SEBI issued a show cause notice based on the conclusions.

The audit revealed that more than 15,300 crore had been taken out of the six debt schemes of the FTMF just a few weeks prior to the announcement of the suspension of redemption in these schemes. These redemptions were deemed "exceptional" by the audit because they were more than three times the typical amounts recorded by the fund.[11] Before the fund house closed the six schemes, a few top FT management personnel also withdrew their own investments. Franklin Templeton sent detailed responses to SEBI’s claims that it engaged in unfair trading practices. They maintained that their major interests and those of their investors were compatible.[12]

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III. Overview of the Case

There were a plethora of challenges in court after the announcement of winding up of six debt mutual funds was made. For the purpose of the analysis, the focus is made on the decision of Karnataka High Court, Gujarat High Court and the Supreme Court decision.

• Karnataka HC[13]

In the Gujarat, Delhi, and Madras High Courts, several complaints and legal cases were pending. In order to provide a speedy settlement for program investors, the Supreme Court delegated to the Karnataka High Court all legal matters connected to the termination of the six programs. The SC also mandated that the case be resolved in three months.[14] The Karnataka court held that the unit holders’ approval is required for any decision to shut down the said schemes. The Court also addressed a number of other concerns, concluding that it can use its writ power to issue instructions to private parties, that the SEBI (Mutual Funds) Regulations, 1996 are constitutional, and that SEBI should have taken a more aggressive role in this important matter.[15]

• Gujarat HC[16]

For the purpose of obtaining investor consent to shut down six debt schemes that had seen rapid redemption, FT had already initiated the electronic voting procedure. A handful of disappointed investors had, however, petitioned the Gujarat High Court to stay the action.[17] The Franklin Templeton Asset Management Company's account must undergo a forensic audit, according to the Gujarat High Court, and a report must be submitted as an ad-interim relief. In the meanwhile, Franklin Templeton had urged the Court to rescind the ad-interim relief so that it may start the winding up process and liquidate the schemes' assets as quickly as possible to reimburse investors.[18] The Gujarat High Court denied this motion and stated that in accordance with mutual fund regulations set forth by the Securities and Exchange Board of India, trustees must get the approval of unitholders before winding up units.

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IV. Decision of the Supreme Court[19]

Against the order of Karnataka High Court, Franklin Templeton approached the Supreme Court. The court had two primary issues to solve. Firstly, whether consent of unitholders was required to wind up the scheme. Secondly, the court was to check the procedural compliance of the meeting of the investor and the voting process. The court primarily focused on the former issue and provided the much needed clarification in the winding up process of mutual funds.

A. Consent of Majority of Unitholder must be obtained

The primary issue of the case was regarding the requirement of the consent of the unitholders. The Mutual Fund Regulations were interpreted by the court to clear the ambiguity. It is, therefore, pertinent that we understand the related regulations. Regulation 39 of the SEBI (Mutual Fund) Regulation, 1996[20] deals with the winding up procedure. The section envisages three possible scenarios of winding up of the scheme. Firstly, when the trustees are of the opinion that the scheme requires winding up based on occurrence of any event.[21] Secondly, when the board directs winding up in the interest of the unitholders.[22] And lastly, when seventy-five percent of the unitholders pass resolution for the winding up.[23] The bone of contention in the present case is the last scenario. The language of the code is ambiguous as it does not specify whether the Regulation 39(2)(b) mandates the consent from 75% of the unitholders or not. The court also took into account Regulation 18(15)(c), which provides that when trustees intend to wind up the plan under Regulation 39(2)(a), they shall get the permission of the unitholders.[24]

The trustees in the case had contended that Regulation 39(2)(b), that mandates resolution be passed by majority (75%) of the unitholder, can only be applied when the unitholders want to wind up the scheme. In the present case, the trustees have decided to wind up the scheme, therefore, the consent of the unitholders is not required.

The court applied the rule of harmonious construction. The court tried to interpret Regulation 39 to 42 along with Regulation 18(15)(c). The court observed that the underlying object is to keep the unitholders acquainted with the information regarding the winding up of the scheme and provide an opportunity to accept or reject the same.[25] The consent of the unitholders is necessary to be obtained before the trustees decide to wind up the scheme.  Also considering Regulation 41 that required the trustees to organise the meeting of the investor, it can be inferred that unit holders are provided the opportunity in deciding the matter.[26]

B. Type of Unit Holders eligible to vote

However, the court had not gone much into details of the meeting and the counting process of the resolution. The court simply accepted the decision of the investors. One of the areas where the court did provide certain clarity was on the aspect of what kind of unit holders will take part in the voting process.

There are three categories of unitholders in the present situation.

1. Majority of all unit holder, or

2. Majority of unitholders present and voting, or

3. Majority of unitholders who hold units

The court while interpreting the same applied a very practical approach. The court held that the majority of the unitholders present and voting is required. It is an unworkable idea to mandate the majority of all unitholders, some of whom may not even have the ‘commercial wisdom’ or the expertise in deciding such matters. It will create an unnecessary burden on the shoulders of the trustees to obtain the majority of all unitholders. Since the code has not specified anything on this aspect, the court went with the pragmatic approach. The same was adopted by SEBI, in the subsequent amendment[27] to the Mutual Fund Regulation.

C. Dissenting Shareholders

Another argument that was raised by the dissenting unitholders was that the winding up of the scheme is to be binding only upon those unitholders who consent to the scheme and not those who voted against it. The argument was straightforwardly rejected by the court stating that it will be an absurd solution to the problem. The decision of winding up is a collective decision and not an individual decision.[28]

D. Fraudulent and Unfair Trade Practices

Another issue that had arisen in the present case was whether the redemption of shares by the Director immediate relative of the Director of Asset Management Company, while the mutual scheme were being wound up, would be considered as fraudulent and unfair trade practice under the SEBI (Prohibition of Fraudulent and Unfair Trade Practice) Regulation, 2003.

As per the forensic Audit/ Inspection that was ordered by the SEBI in FTMF winding up of the scheme, it was found that the Director and his immediate relative had redeemed certain units in the impugned debt scheme. It is believed that the director at that time might be having access to material non-public information.

In the separate order by the SEBI, it noticed that Vivek Kudva and his wife had engaged in unfair trading. SEBI noticed that it is reasonable to assume that the director was in possession of the material non-public information and the redemption of the shares were done during the period of such knowledge. The court held that the redemption of the units while being in possession of material non-public information, in this case, is ‘unfair trade practice’ and in violation of Regulation 4(1) of PFUTP 2003. Both the Director and his wife were restrained from accessing the securities market for a period of one year.

E. Appointment of Liquidator

The Supreme Court appointed SBI mutual fund as the administrator with a task to liquidate the assets lying in the portfolio of the six funds and return the amount payable to the investors. SBI Fund Management will issue the money through electronic means or via demand drafts, cheque to all the eligible unitholders. As on April 2020, the total amount in the six shut schemes was around INR 27,109.34 crore and as on April 2022, INR 26,098 crore has been paid back. [29]

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V. Aftermath of the decision

The case had certainly emphasised the importance of consent of unitholders before winding up of a mutual fund scheme. It was also an instrumental case considering the amount of money involved. The abrupt winding up of six debt schemes by FTMF was a major blow to SEBI. In light of the judgment, SEBI took steps to make sure that a similar situation does not arise in future.

A. Amendment to Mutual Fund Regulation

In an effort to integrate the Supreme Court's ruling, SEBI recommended a change to the Mutual Fund Regulation in December 2021.[30] The goal was to protect the investors' interests. Before closing down or prematurely redeeming the units of a close-ended scheme, mutual fund trustees are required by SEBI to get the approval of the majority of trustees.

By a simple majority of the present and voting unitholders, the trustees must acquire the consent of the unitholders. One vote will be cast for each unit that is held during the voting. Within 45 days of the publishing of the notice outlining the events that gave rise to winding up, the vote results will be announced.

If trustees are unable to get this consent, the plan will not be deemed wound up and will remain operational as usual starting on the second working day following the publication of the voting results.

B. SEBI Circular

SEBI has also issued a circular[31] that mandated all the Key Employees of the Mutual Fund Scheme to invest a certain percentage of their salaries in their own scheme. The purpose was to secure the interest of the unitholders as the key Employees will also have some skin in the game. However, the issue with this proposition is that it can also lead to conflict of interest and insider trading instances. There must be adequate safeguards placed to keep such instances in check.

C. Accounting Tweaks

The market regulator has also asked the mutual funds to follow Ind AS from 2023-24 financial year onwards. This step can make the task of SEBI easier to compare the financial statements and accounts of the mutual fund schemes to other mutual fund companies.

SEBI also made certain small changes in the framework pertaining to accounting provisions to make the process clear and transparent. SEBI mandated mutual funds to mark every investment to market. It was also instructed that the investments in the balance sheet be valued at market value.

SEBI also mandated that the mutual funds are required to recognise all realised gains or losses on sale or redemption, unrealised appreciation or depreciation in the financial statements.

The aggregate market value of investment in securities must be put separately under each type of the investments. It shall also be further bifurcated into those securities that are listed on the stock exchange and those privately placed.

D. Prohibition from transacting in scheme while in possession of material non-public information

SEBI vide its order dated October 28,2021[32] prohibited the directors, board members, employee from transacting in any scheme while in possession of the information that is not available in public and can have material impact on the price of NAV of mutual fund if made public.

E. Minimum Cash Holding in Debt Funds

Liquidity management is an important issue in the debt fund scheme as we have established. SEBI issued a circular[33] in November 2020 that mandates all debt mutual funds to keep 10% of their Assets in liquid assets. It can include government Securities, T-bills, cash and repo on government securities.[34]

A committee to look into the liquidity and stress testing issues for debt mutual fund schemes had also been constituted by SEBI.[35]

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VI. Lacunas in the current legislation

A. Extension of Insider Trading Regulation in Mutual Fund

As we observed in the present case, the issue regarding fraudulent and unfair trade practices had also been raised. SEBI in its Consultation Paper recommended the expansion of the SEBI (Prohibition of Insider Trading Regulations) to Mutual Fund Units as well. The Franklin Templeton case was an example of unfair trade practice by redemption of mutual fund units by the insiders using the information that is not disclosed to the public at large.

The present Insider Trading Regulation provides exemption to the mutual fund by not including it in the purview of the definition of ‘securities’. The consultation paper had suggested to include trading in mutual Fund units under ‘Trading’ and ‘Unpublished Price Sensitive Information’ (UPSI) to include information that can impact the Net Asset Value of the Mutual Fund.

Even though SEBI has from time to time placed restrictions on the employees and managers of AMC from dealing in the securities market. The idea to put trading in mutual fund units under purview of PTI might be a way to consolidate the previous rules as well.[36]

Even though the idea is commendable, it will also face certain difficulties in enforcement. As in the cases of insider trading the burden of proof is on SEBI.[37] SEBI will be required to be equipped with much more resources to tackle the issues.

B. Backstop Mechanism

In India, the corporate debt market is relatively illiquid even in normal situations. In a situation of crisis, as it happened in COVID-19 in the present case, the situation becomes even worse. Backstop mechanisms will make it possible for entities to trade in comparatively less liquid investment-grade corporate bonds and will make it simple to purchase bonds from various market players during times of crisis. However, the same is also under consideration by SEBI, Ministry of Finance and other stakeholders. If such a mechanism is adopted, it will certainly help in curbing cases like Franklin Templeton.[38]

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VII. Conclusion

Mutual Funds have been long termed as “Mutual Funds Sahi hai” (Translation: Mutual Funds are Beneficial). However, it is not without its shortcomings. The debacle of Franklin Templeton had certainly exposed lacunas in the winding up process of the mutual fund scheme. The Supreme Court’s decision upheld the democracy of unit holders by mandating the approval of them before winding up. The case also showcased how vulnerable the debt mutual fund market is. Risk Management has to be done from both the sides i.e. the investor and the Mutual Fund.

SEBI has indeed taken steps to make sure that such events do not repeat themselves. The mandate of minimum cash holding, Key Employee’s skin in the game and proposals to extend insider trading laws within the purview of mutual funds will certainly boost the trust of investors and bring more accountability and transparency in the fund management business. However, investors should also remain cautious while investing in Risky but high yield debt funds.

 

 

[1]Franklin Templeton India, https://www.franklintempletonindia.com/about-us/fti-india (last visited Mar. 14, 2023).

[2]Choice International Limited, Franklin Templeton Mutual Fund shuts 6 schemes: What Next?, Choice, (Sep. 30, 2022), https://choiceindia.com/blog/franklin-templeton-mutual-fund-shuts-6-schemes/.

[3] Rounak Jain, Franklin Templeton reassures Indian investors that their money is safe — and the delay in repayments is due to cash crunch, Business Insider India (May 7, 2020), https://www.businessinsider.in/finance/news/franklin-templeton-reassures-indian-investors-that-their-money-is-safe-and-the-delay-in-repayments-is-due-to-cash-crunch/articleshow/75595294.cms#:~:text=The%20Coronavirus%20crisis%20coupled%20with,it%20comes%20to%20debt%20funds.

[4] Franklin Templeton case: SC directs SBI to hold next tranche of payment until further notice, Mint (Sep. 30, 2022), https://www.livemint.com/companies/franklin-templeton-case-sc-directs-sbi-mf-to-hold-next-tranche-of-payment-until-further-notice-11649942694572.html.

[5] Rohan Venkataramakrishnan, Explainer: What happened at Franklin Templeton and what that means for Indian mutual funds, Scroll.in (Oct. 2, 2022), https://scroll.in/article/960431/explainer-what-happened-at-franklin-templeton-and-what-that-means-for-indian-mutual-funds.

[6] Raj Talati, How the franklin fiasco happened and what we learned from it, The Economic Times (Sep. 28, 2022), https://economictimes.indiatimes.com/mf/analysis/how-franklin-fiasco-happened-and-what-we-learnt-from-it/articleshow/82210625.cms?from=mdr.

[7]  Aseem Thapliyal, Coronavirus impact: Franklin Templeton Mutual Fund shuts six schemes, Rs 30,800 crore investor wealth stuck, BusinessToday.in (Oct. 1, 2022), https://www.businesstoday.in/mutual-funds/story/coronavirus-crisis-franklin-templeton-mutual-fund-shuts-six-schemes-256413-2020-04-24.

[8] Ashish Rukhaiyar, Why has the Reserve Bank of India opened a liquidity window for mutual funds?, The Hindu (Sep. 25, 2022), https://www.thehindu.com/business/Industry/why-has-the-reserve-bank-of-india-opened-a-liquidity-window-for-mutual-funds/article31490886.ece.

[9] Kshitij Bhargava, Lessons from Franklin Templeton: RBI liquidity helping mutual funds stabilise, says Shantikanta Das, Financial Express (Sep. 30, 2022), https://www.financialexpress.com/market/reserve-bank-of-india-monetary-policy-committee-liquidity-actions-helped-mutual-funds-post-franklin-templeton/2046716/.

[10] Securities and Exchange Board of India Order in the Matter of Inspection of Six Debt Schemes of Franklin Templeton Mutual Fund, WTM/GM/IMD/ 08 /2021–22.

[11] Palak Shah, SEBI asks Franklin Templeton to explain ‘unusual’ redemptions of $2 b, The Hindu Businessline (Oct. 2, 2022), https://www.thehindubusinessline.com/markets/stock-markets/sebi-asks-franklin-templeton-to-explain-unusual-redemptions-of-2-b/article62183030.ece.

[12] Reena Zachariah, Sebi issues notices to Franklin Templeton, The Economic Times (4 March 2021), https://economictimes.indiatimes.com/mf/mf-news/sebi-issues-notices-to-franklin-templeton/articleshow/81321237.cms?from=mdr.

[13] SEBI v. Franklin Templeton Trustees Services Pvt. Ltd. & Ors., 2020 SCC OnLine Kar 1650.

[14] Diya Grover, Franklin Templeton: Did Forensic Audit Report Find Wrongdoings by the Management Team?, Personal FN (Sep. 28, 2022), https://www.personalfn.com/dwl/mutual-funds/franklin-templeton-did-forensic-audit-report-find-wrongdoings-by-the-management-team.

[15] Umakanth Varottil, Karnataka High Court Decision in the Franklin Templeton Case, India Corp Law (Sep. 28, 2022), https://indiacorplaw.in/2020/10/karnataka-high-court-decision-in-the-franklin-templeton-case.html.

[16] Areez Phirozsha Khambatta and Ors. V. SEBI and Ors, Civil Application No.7201 of 2020.

[17] Suresh P. Iyengar, Franklin Templeton moves Gujarat HC to vacate stay on debt schemes closure, The Hindu Businessline (Sep. 29, 2022), https://www.thehindubusinessline.com/markets/stock-markets/franklin-templeton-moves-gujarat-hc-to-vacate-stay-on-six-debt-scheme-closure/article31766195.ece.

[18] Shivani Bazaz, Gujarat HC stays Franklin Templeton’s e-vote on winding up of six schemes, The Economic Times (Sep. 30, 2022), https://economictimes.indiatimes.com/mf/mf-news/gujarat-hc-stays-franklin-templetons-e-vote-on-winding-up-of-six-schemes/articleshow/76180636.cms?from=mdr.

[19] Franklin Templeton Trustees Services Pvt. Ltd & Anr. v. Amruta Garg & Ors., AIR 2021 SC 1078.

[20] SEBI (Mutual Funds) Regulations, 1996, Regulation 39, Gazette of India, pt. III sec. 4 (Dec. 9, 1996).

[21] SEBI (Mutual Funds) Regulations, 1996, Regulation 39(2)(a), Gazette of India, pt. III sec. 4 (Dec. 9, 1996).

[22] SEBI (Mutual Funds) Regulations, 1996, Regulation 39(2)(c), Gazette of India, pt. III sec. 4 (Dec. 9, 1996).

[23] SEBI (Mutual Funds) Regulations, 1996, Regulation 39(2)(b), Gazette of India, pt. III sec. 4 (Dec. 9, 1996).

[24] SEBI (Mutual Funds) Regulations, 1996, Regulation 18(15)(c), Gazette of India, pt. III sec. 4 (Dec. 9, 1996).

[25] Neha Koppu, Lessons From The Franklin Templeton Debacle, The CBCL Blog (Oct. 2, 2022), https://cbcl.nliu.ac.in/capital-markets-and-securities-law/lessons-from-the-franklin-templeton-debacle/.

[26] Sakshi Shairwal, Legal Takeaways from franklin templeton case, Lexology (Sep. 28, 2022), https://www.lexology.com/library/detail.aspx?g=a8d9fe1a-a2fb-4e5c-ad4a-258c854ead11.

[27] SEBI (Mutual Funds) Regulations, 1996, Gazette of India, pt. III sec. 4 (Dec. 9, 1996).

[28] Umakanth Varottil, Franklin Templeton: Supreme Court Rules on Unitholder Democracy, India Corp Law (Sep. 30, 2022), https://indiacorplaw.in/2021/02/franklin-templeton-supreme-court-rules-on-unitholder-democracy.html.

[29]Franklin Templeton India, https://www.franklintempletonindia.com/market-insights/winding-up-of-specific-schemes (last visited Mar. 14, 2023).

[30] SEBI (Mutual Funds) Regulations, 1996, Gazette of India, pt. III sec. 4 (Dec. 9, 1996).

[31] SEBI Circular on Alignment of interest of Key Employees of Asset Management Companies (AMCs) with the Unitholders of the Mutual Fund Schemes, Circular No. SEBI/HO/IMD/IMD-I/DOF5/P/CIR/2021/553, Apr. 28, 2021.

[32] SEBI Circular on Investment/ trading in securities by employees and Board members of AMC(s) and Trustees of Mutual Funds, Circular No. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2021/ 654, Oct. 28, 2021.

[33] SEBI Circular on Prudential norms for liquidity risk management for open ended debt schemes, Circular No. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/583, June 25, 2021.

[34] Neil Borate, Sebi requires debt funds to hold 10% of corpus in liquid assets, Mint (Sep.29, 2022), https://www.livemint.com/news/india/sebi-requires-debt-funds-to-hold-10-of-corpus-in-liquid-assets-11604669112836.html.

[35] Sebi clarifies rules on holding of liquid assets in debt mutual funds- A test article, The Times of India (Sep. 28, 2022), https://timesofindia.indiatimes.com/business/wealth/mutual-funds/sebi-clarifies-rules-on-holding-of-liquid-assets-in-debt-mutual-funds-a-test-article/articleshow/83986687.cms.

[36] Ajitesh Arya, Extension of Insider Trading Regulations to Mutual Funds, India Corp Law (Sep. 25, 2022), https://indiacorplaw.in/2022/08/extension-of-insider-trading-regulations-to-mutual-funds.html.

[37] Balram Garg v. SEBI, (2022) 9 SCC 425.

[38] Sebi in process to finalise modalities to set up backstop facility for corp debt market, The Economic Times (Sep. 27,2022https://economictimes.indiatimes.com/mf/mf-news/sebi-in-process-to-finalise-modalities-to-set-up-backstop-facility-for-corp-debt-market/articleshow/85091214.cms.