[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]
BILLING CODE 8010-01-M