[Federal Register Volume 63, Number 47 (Wednesday, March 11, 1998)]
[Notices]
[Pages 11931-11933]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-6181]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 23058; 812-11016]
AMP Limited, et al.; Notice of Application
March 4, 1998.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for exemption under section 6(c) of the
Investment Company Act of 1940 (the ``Act'') from section 15(a) of the
Act.
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SUMMARY OF APPLICATION: Applicants seek an order to permit the
implementation, without prior shareholder approval, of new sub-advisory
agreements (``New Agreements'') between Seligman Henderson Co. (``Sub-
adviser'') and J.&W. Seligman & Co. Incorporated (``Seligman'')
relating to various registered investment companies (each a ``Fund''
and collectively, the ``Funds'') in connection with the acquisition of
Henderson plc (``Henderson'') by AMP Limited (``AMP''). The order would
cover a period of up to 150 days following the later of: (i) the date
on which the assignment of the existing investment sub-advisory
agreements (``Existing Agreements'') is deemed to have occurred (i.e.,
the date AMP is deemed to control the issued share capital of Henderson
(the ``Assignment Date'')), or (ii) the date upon which the requested
order is issued (but in no event later than October 1, 1998) (``Interim
Period''). The order also would permit the Sub-adviser to receive all
fees earned under the New Agreements during the Interim Period
following shareholder approval.
APPLICANTS: AMP, Henderson, and the Sub-adviser.
FILING DATES: The application was filed on February 18, 1998, and was
amended and restated on March 3, 1998.
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
applicants with a
[[Page 11932]]
copy of the request, personally or by mail. Hearing requests should be
received by the SEC by 5:30 p.m. on March 26, 1998, and should be
accompanied by proof of service on applicants 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 who wish to be notified of a
hearing may request notification by writing to the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C.
20549. Applicants: AMP, AMP Building, 33 Alfred Street, Sydney, NSW
2000, Australia; Henderson, 3 Finsbury Avenue, London EC2M 2PA,
England; Sub-adviser, 100 Park Avenue, New York, New York 10017.
FOR FURTHER INFORMATION CONTACT:
Edward P. Macdonald, Branch Chief, at (202) 942-0564 (Office of
Investment Company Regulation, Division of Investment Management).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
SEC's Public Reference Branch, 450 Fifth Street, N.W., Washington, D.C.
20549 (tel. 202-942-8090).
Applicants' Representations
1. AMP, an Australian limited company, together with its
consolidated subsidiaries, is a financial services company. Henderson
is a European investment management firm. The Sub-adviser is a 50:50
partnership formed between Seligman and Henderson International, Inc.,
a Delaware corporation and an indirect wholly-owned subsidiary of
Henderson.
2. The Sub-adviser has sub-advisory agreements with thirteen
registered investment companies and serves as sub-adviser to the Funds
pursuant to the Existing Agreements with Seligman, the Funds'
investment adviser. The Sub-adviser serves the sub-adviser for Seligman
Common Stock Fund, Inc., Seligman Growth Fund, Inc., Seligman Income
Fund, Inc., and Tri-Continental Corporation. The Sub-adviser also
serves as sub-adviser for the following portfolios of Seligman
Henderson Global Fund Series, Inc.: Seligman Henderson International
Fund, Seligman Henderson Emerging Markets Growth Fund, Seligman
Henderson Global Growth Opportunities Fund, Seligman Henderson Global
Smaller Companies Fund and Seligman Henderson Global Technology Fund;
and as the sub-adviser for the following portfolios of Seligman
Portfolios, Inc.: Seligman Henderson International Portfolio, Seligman
Henderson Global Growth Opportunities Portfolio, Seligman Henderson
Global Smaller Companies Portfolio, and Seligman Henderson Global
Technology Portfolio. Both Seligman and the Sub-adviser are investment
advisers registered under the Investment Advisers Act of 1940.
3. On February 3, 1998, the boards of directors for Henderson and
AMP announced that they had agreed on the terms of a recommended cash
offer (``Offer'') under which DLJ Phoenix Securities Limited on behalf
of AMP, through AMP's newly-formed indirect subsidiary, AMP Invest plc,
would seek to acquire all of the issued share capital of Henderson (the
``Transaction''). It is anticipated that all conditions to the Offer,
including receipt of all necessary regulatory approvals, will be
fulfilled on or after March 11, 1998.
4. Applicants state that the Transaction could be deemed to result
in an assignment and thus the automatic termination of the Existing
Agreements between Seligman and the Sub-adviser. Applicants request an
exemption to permit the implementation, without prior shareholder
approval, of the New Agreements. The requested exemption will cover the
Interim Period of not more than 150 days beginning on the later of the
Assignment Date or the date of the issuance of the requested order and
continuing with respect to each Fund through the date on which each New
Agreement is approved or disapproved by the Fund's shareholders, but in
no event after October 1, 1998. Applicants represent that, during the
Interim Period the New Agreements will contain identical terms and
conditions as the Existing Agreements, except in each case for
effective dates, execution dates, and termination dates.
5. Applicants state that the board of directors of each Fund (the
``Board'') will meet prior to the Assignment Date in accordance with
section 15(c) of the Act to evaluate whether the terms of the New
Agreements, including the escrow provisions described below, are in the
best interest of the Funds and their shareholders.\1\
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\1\ Applicants acknowledge that, to the extent that the Board of
any Fund cannot meet to approve a New Agreement prior to the
Assignment Date, such Fund may not rely on the exemptive relief in
this application.
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6. Applicants submit that it will not be possible to obtain
shareholder approval of the New Agreements in accordance with section
15(a) of the Act prior to the Assignment Date. Applicants state that
each Fund will promptly schedule a meeting of shareholders to vote on
the approval of the New Agreements to be held within 150 days after the
commencement of the Interim Period, but in no event later than October
1, 1998.
7. Applicants also request an exemption to permit the Sub-adviser
to receive from each Fund all fees earned under the New Agreements
during the Interim Period, if and to the extent the New Agreements are
approved by the shareholders of each Fund.\2\ Applicants state that the
fees to be paid during the Interim Period will not be greater than the
fees currently paid by the Funds.
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\2\ Applicants state that if the Assignment Date precedes
issuance of the requested order, the Sub-adviser will continue to
serve as sub-adviser after the Assignment Date (and prior to the
issuance of the order) in a manner consistent with its fiduciary
duty to continue to provide advisory services to the Funds even
though approval of the New Agreements has not yet been secured from
the Funds' shareholders. Applicants also state that the Funds may be
required to pay, with respect to the period until receipt of the
order, no more than the actual out-of-pocket costs to the Sub-
adviser for providing advisory services.
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8. Applicants propose to enter into an escrow arrangement with an
unaffiliated financial institution (the ``Escrow Agent''). The advisory
fees payable under the New Agreements during the Interim Period will be
paid into an interest-bearing escrow account maintained by the Escrow
Agent. The amounts in the escrow account (including interest earned on
such paid fees) will be paid to the Sub-adviser only after the New
Agreements are approved by the shareholders of the relevant Fund in
accordance with section 15(a) of the Act. If shareholder approval is
not given, the Escrow Agent will return the escrow amounts to the
appropriate Fund. Before the release of any such escrow amounts, the
Boards will be notified.
Applicants' Legal Analysis
1. Section 15(a) of the Act provides, in pertinent part, that it
shall be unlawful for any person to serve or act as an investment
adviser of a registered investment company, except pursuant to a
written contract that has been approved by the vote of a majority of
the outstanding voting securities of such registered investment
company. Section 15(a) of the Act further requires that such written
contract provide for its automatic termination in the event of its
``assignment.'' Section 2(a)(4) of the Act defines ``assignment'' to
include any direct or indirect transfer of an investment advisory or
investment sub-advisory contract by the assignor or of a controlling
block of the assignor's outstanding voting securities by a security
holder of the assignor.
[[Page 11933]]
2. Applicants state that it is possible that AMP may be deemed to
have obtained control of more than 25% of the voting securities of
Henderson as early as March 11, 1998. Accordingly, Applicants state
that an assignment of the Existing Agreements may then occur and the
Existing Agreements will terminate by their terms.
3. Rule 15a-4 provides, in pertinent part, that if an investment
advisory contract with a registered investment company is terminated by
an assignment the adviser may continue to serve for 120 days under a
written contract that has not been approved by the company's
shareholders, provided that: (a) The new contract is approved by that
company's board of directors (including a majority of the non-
interested directors); (b) the compensation to be paid under the new
contract does not exceed the compensation that would have been paid
under the contract most recently approved by the company's
shareholders; and (c) neither the adviser nor any controlling person of
the adviser ``directly or indirectly receives money or other benefit''
in connection with the assignment. Applicants state that because AMP,
Henderson and/or the Sub-adviser may be deemed to receive a benefit in
connection with the Transaction, there is a question as to the
Applicants' ability to rely on rule 15a-4.
4. Section 6(c) provides that the SEC may exempt any person,
security, or transaction from any provision of the Act, if and to the
extent that such exemption is necessary or appropriate in the public
interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act.
Applicants believe that the requested relief meets this standard.
5. Applicants note that the terms and timing of the Transaction
were determined by AMP and Henderson in response to a number of factors
beyond the scope of the Act and substantially unrelated to the Funds or
the Sub-adviser. Applicants state that it is not possible for the Funds
to obtain shareholder approval of the New Agreements prior to the
Assignment Date. Applicants submit that the Boards will meet to approve
the New Agreements prior to the Assignment Date, and the shareholders
of the Funds will be further protected by the establishment of the
escrow account described in the application.
6. Applicants submit that the Sub-adviser will take all appropriate
steps to ensure that the scope and quality of advisory and other
services provided for the Funds during the Interim Period will be at
least equivalent to the scope and quality of services previously
provided. During the Interim Period, the Sub-adviser will operate under
the New Agreement, which will have the same terms and conditions as the
respective Existing Agreements, except for the effective dates,
execution dates, and termination dates. Applicants assert that the
level of services provided by the Sub-adviser will remain the same
under the New Agreements as under the Existing Agreements.
7. Applicants also assert the allowing the implementation of the
New Agreements will ensure that there will be no disruption to the
investment program and the delivery of related services to the Funds
because the personnel that provide such services to the Funds will
remain substantially the same as before the Assignment Date.
Applicants' Conditions
Applicants agree as conditions to the issuance of the exemptive
order requested by the application that:
1. The New Agreements to be implemented following the commencement
of the Interim Period will have the same terms and conditions as the
respective Existing Agreements, except for the effective dates,
execution dates, and termination dates.
2. Fees payable to the Sub-adviser for the period covered by the
order will be maintained during the Interim Period in an interest-
bearing escrow account (including interest earned on such amounts), and
will be paid: (a) to the Sub-adviser after the requisite approval by
shareholders is obtained; or (b) in the absence of such approval, to
the relevant Fund.
3. Each Fund will promptly schedule a meeting of shareholders to
vote on approval of the New Agreements to be held within 150 days after
the commencement of the Interim Period, but in no event later than on
October 1, 1998.
4. Henderson, and not the Funds, will pay the costs of preparing
and filing the application and the costs relating to the solicitation
of approval of the Funds' shareholders of the New Agreements.
5. The Sub-adviser will take all appropriate steps to ensure that
the scope and quality of advisory and other services provided to the
Funds during the Interim Period will be at least equivalent, in the
judgment of the respective Boards, including a majority of the
directors who are not ``interested persons'' of the Funds, as defined
in section 2(a)(19) of the Act (``Disinterested Directors''), to the
scope and quality of services previously provided. In the event of any
material change in the personnel providing services pursuant to the New
Agreements, the Sub-adviser will apprise and consult with the Boards of
the affected Funds in order to assure that the Boards, including a
majority of the Disinterested Directors, are satisfied that the
services provided will not be diminished in scope or quality.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 98-6181 Filed 3-10-98; 8:45 am]
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