[Federal Register Volume 59, Number 196 (Wednesday, October 12, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25188]


[[Page Unknown]]

[Federal Register: October 12, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20598; International Series Release No. 724; File No. 812-
9182]

 

The Standard Bank of South Africa; Notice of Application

October 4, 1994.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of Application for Exemption under the Investment 
Company Act of 1940 (the ``Act'').

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APPLICANT: The Standard Bank of South Africa, Ltd. (``SBSA'').

RELEVANT ACT SECTIONS: Order requested under section 6(c) of the Act 
granting an exemption from section 17(f) of the Act.

SUMMARY OF APPLICATION: SBSA requests an order that would permit 
certain of its subsidiaries to act as custodian or subcustodian for 
investment company assets in certain African countries.

FILING DATE: The Application was filed on August 19, 1994.

HEARING OR NOTIFICATION OF HEARING: An order granting the application 
will be issued unless the SEC orders a hearing. Interested persons may 
request a hearing by writing to the SEC's Secretary and serving 
applicant with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on October 31, 
1994, and should be accompanied by proof of service on applicant, in 
the form of an affidavit, or for lawyers, a certificate of service. 
Hearing requests should state the nature of the writer's interest, the 
reason for the request, and the issues contested. Persons may request 
notification of a hearing by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549. 
Applicant, Standard Bank Centre, 9th Floor--5 Simmonds Street, 
Johannesburg 2001, South Africa; c/o Wallace L. Timmeny, Esq., and 
Clive R.G. O'Grady, Esq., McGuire, Woods, Battle & Boothe, 1627 Eye 
Street, NW., Suite 1000, Washington, DC 20006.

FOR FURTHER INFORMATION CONTACT:Bradley W. Paulson, Staff Attorney, at 
(202) 942-0147 or Robert A. Robertson, Branch Chief, at (202) 942-0564 
(Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application is available for a fee from the 
SEC's Public Reference Branch.

Applicant's Representations

    1. SBSA is a company organized and existing under the laws of South 
Africa. SBSA is authorized and regulated in South Africa by the Office 
of Banks, Registrar of Banks of South Africa. As of December 31, 1993, 
SBSA had shareholders' equity of 3.3 billion South African Rand 
(U.S.$945 million).
    2. SBSA requests an order to permit it, as the custodian or 
subcustodian of foreign securities, cash, and cash equivalents 
(collectively the ``Assets'') of investment companies (other than 
investment companies registered under section 7(d) of the Act), to 
maintain such assets in the custody of Stanbic Merchant Bank of 
Nigeria, Ltd. and Merchant Bank (Ghana), Ltd. (collectively, the 
``Foreign Affiliates'').
    3. SBSA is a wholly-owned subsidiary of Standard Bank Investment 
Corporation, Ltd. (``SBIC''). SBIC owns 40 percent of the voting stock 
of Stanbic Merchant Bank of Nigeria, Ltd. and 30 percent of the voting 
stock of Merchant Bank (Ghana), Ltd. Each Foreign Affiliate is a bank 
incorporated under the laws of a country other than the United States 
and is regulated as such by the relevant country's government or an 
agency thereof.

Applicant's Legal Analysis

    1. Section 17(f) of the Act provides that a registered investment 
company may place and maintain its securities and similar assets in the 
custody of a bank, or banks meeting the requirements of section 26(a) 
of the Act, a member firm of a national securities exchange, the 
investment company itself, or a system for the central handling of 
securities established by a national securities exchange. Section 
2(a)(5) of the Act defines ``bank'' to include banking institutions 
organized under the laws of the United States, member banks of the 
Federal Reserve System, and certain other banking institutions or trust 
companies doing business under the laws of any state or of the United 
States. Neither SBSA nor the Foreign Affiliates falls within the 
definition of ``bank'' as that term is defined in the Act.
    2. Rule 17f-5 specifies entities located outside the United States 
that are eligible to serve as custodian for investment company assets. 
One such entity is a banking institution or trust company incorporated 
or organized under the laws of a country other than the United States 
that is regulated as such by the country's government or an agency 
thereof and that has shareholders' equity in excess of U.S. $200 
million. SBSA qualifies as an eligible foreign custodian. The Foreign 
Affiliates do not qualify as eligible foreign custodians under rule 
17f-5 only because they do not meet the minimum shareholders' equity 
requirement.

Applicant's Conditions

    SBSA agrees that an order granting the requested relief may be 
conditioned upon the following:
    1. The proposed foreign custody arrangements regarding the Foreign 
Affiliates satisfy the requirements of rule 17f-5 in all respects other 
than the Foreign Affiliates' level of shareholders' equity.
    2. SBSA will deposit the Assets with a Foreign Affiliate only in 
accordance with an agreement (the ``Agreement'') required to remain in 
effect at all times during which the Foreign Affiliate fails to satisfy 
the requirements of rule 17f-5. Each Agreement will be a three-party 
agreement among SBSA, the Foreign Affiliate and the U.S. investment 
company (or its custodian). Under the Agreement, SBSA will undertake to 
provide specified custodial or subcustodial services for a U.S. 
investment company or its custodian, and will delegate to the Foreign 
Affiliate such of the duties and obligations of SBSA as will be 
necessary to permit the Foreign Affiliate to hold in custody the U.S. 
investment company's Assets in the relevant country. The Agreement will 
further provide that SBSA will be liable for any loss, damage, cost, 
expense, liability, or claim arising out of or in connection with the 
performance by the Foreign Affiliate of its responsibilities under the 
Agreement to the same extent as if SBSA had been required to provide 
custody services under such agreement.
    3. SBSA currently satisfies and will continue to satisfy the 
minimum shareholders equity requirement set forth in rule 17f-
5(c)(2)(i) under the Act.

    For the SEC, by the Division of Investment Management, pursuant 
to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-25188 Filed 10-11-94; 8:45 am]
BILLING CODE 8010-01-M