The Securities and Exchange Board of India (Sebi) has appointed Taruvai Subayya Krishnamurthy, former chief election commissioner of India, as an ‘observer’ of the e-voting process for the winding up of Franklin Templeton’s six mutual fund schemes.

The apex court had on December 9 asked the market regulator to appoint an observer for the e-voting scheduled for December 26-29.

On Friday, Chennai Financial Markets and Accountability (CFMA) said it has filed an application in the Supreme Court alleging that despite its December 9 order, “no apparent steps’’ have been taken by Sebi to appoint an observer in the matter.

“The concern of CFMA is, though the aforesaid order was passed on the 9th of this month, there has been no apparent steps taken by Sebi to appoint an observer. The voting is scheduled to commence from December 26 and there is no update about who the observer is, or his/her e-mail id and contact information,” CFMA had said.

In a statement issued on Saturday, Sebi said it has also constituted a technical assistance team that will help the observer.

Members of the team are —B.N. Sahoo, chief general manager of Sebi, Nayana Ovalekar, chief operating officer of Central Depository Services, K. Sriram, company secretary and scrutiniser. It also includes assistant directors of the Central Forensic Science Laboratory, Hyderabad — M Krishna and Ch E Sai Prasad.

The Supreme Court had then also said that the result of the e-voting would not be announced and would be produced before the apex court in a sealed cover along with the report of the observer.

“Accordingly, Sebi has appointed Taruvai Subayya Krishnamurthy, the former chief election commissioner of India, as the ‘observer’ on December 18, 2020,” Sebi said in a statement on Saturday.

The six schemes are Franklin India Low Duration Fund, Franklin India Ultra Short Bond Fund, Franklin India Short Term Income Plan, Franklin India Credit Risk Fund, Franklin India Dynamic Accrual Fund and Franklin India Income Opportunities Fund.

The fund house had announced the closure of these six debt mutual fund schemes on April 23, citing redemption pressure and lack of liquidity in the bond market.

Recently, the fund house had said in a statement that the electronic voting will take place from December 26-28 and the meeting of unitholders of the relevant schemes on December 29.

nitholders will have to take a call on whether to give consent to the winding up decision or withhold it, which would allow the schemes to reopen for purchase and redemption.

Franklin Templeton MF had said the objective of the voting exercise is to seek, by simple majority, the consent of the unitholders for the decision made by the trustee of the fund house to wind up the six fixed income schemes in an orderly fashion.

Consent will be sought from unitholders for each scheme separately.

Franklin Templeton MF believes that it will be beneficial for unitholders to vote 'Yes' to the resolution as this will allow schemes to monetise assets without resorting to distress sales and will maximise value to unitholders.

“If the decision to wind up the schemes in an orderly manner is not implemented, it would precipitate a rush of redemptions, which would force a distress sale of the portfolio securities, likely resulting in a reduction in the net asset value (NAV) of the schemes and substantial losses for unitholders,’’ the fund house had said.