Earlier, FTII had said that over 96% investors had voted in favour of the winding up process that took place from December 26-28, 2020.
“There were many grey areas in the procedure adopted, which raised doubts and apprehensions in the investor minds. Even FTMF did not have a clear idea about the procedures. This is because an exercise of this kind was done for the first time without clear guidelines,” the observer said in the report.
In the report, Krishnamurthy has pointed out that the procedure was alleged to create an impression that FTMF was pushing investors for “Yes” votes since that was in green colour and “No” was in red. This point was raised citing a complaint from a unit-holder. About 38 per cent of unit-holders participated ‘on an overall basis’ in the e-voting, the report said.
The observer’s report also highlighted that emails that were sent to 6,560 unit-holders had bounced and SMS delivery to 1,766 unit-holders failed and their emails too were not available. The email addresses of 10,548 unit-holders were not available. FTMF had also warned unitholders in their notices about the consequences of voting "No."
Regarding the ‘deviation’ from the Company’s act, the report pointed out that each unit-holder was given only one vote irrespective of the number of units held as on cut-off date and this is a deviation from the Company’s Act. In simple words, this means that unit-holders having bigger corpuses and those with very less money in the scheme were put on the same pedestal. The unit holders were given only one vote irrespective of the number of units they held as on cut-off date.
The report further flags that, “FTMF decided to conduct the e-voting on the basis of one-PAN one-vote for those who had PAN. For those who did not have a PAN “the voting was one unit one vote”. Hence, approval was based on a “simple” majority in FTMF e-voting.”
The observer has also raised questions on the cut-off date set by the company. As per the Company’s Act, the cut-off date for eligible voters cannot be earlier than seven days before the date of meeting. “If the rule had been applied, since the meeting was on December 29, the cut-off date could not have been earlier than December 22,” said the observer. However, the cut-off dates provided in this case did not go by the rules. The cut-off date had to consider unit-holders whose names appeared in the register as on April 23, 2020, the date on which the winding-up was announced. But, according to the Observer report, Franklin Templeton Mutual Fund provided voting rights to unit-holders who purchased units through off-market deals up to December 3, 2020. “The rationale for this deviation on the guidelines on cut-off date was not clear”, the report said.
Regarding Karvy Fintech’s appointed for providing the e-voting platform. The observer has said that, “no specific approval for KFin’s appointment was recorded by the board.”
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18 Comments on this Story
Praveen Gorthi37 days ago
Looks like no use of it post result. SEBI itself silent and supports the AMC rather than investors...
Debasish Datta41 days ago
SEBI observer, I think was appointed to ensure that the views of the investors are recorded properly and to ensure that majority of small investors get back the maximum investment back early. SEBI also should have issued guidence for proper voting. instead observer is finding faults and deviations and protecting interest of only those investors who had the resources to go to court and stall the refund process.
Vishal Pant43 days ago
if the SEBI observer had to make comments, he should have made comments neeche the procedure. He had many months to make these comments and fix the process. Why these comments now ? what about the rules for returning investors money back ? are there no rules for that ? why has he not covered the implications to investors in case there is further delay ? First priority of government should be to get the money back to investors. Rules are made to protect the investors. What's the point of citing rules and delaying investors money