[Federal Register Volume 63, Number 108 (Friday, June 5, 1998)]
[Notices]
[Pages 30786-30788]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-14922]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 23230; 812-11156]
The Asia Tigers Fund, Inc., et al.: Notice of Application
June 1, 1998.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of an application under section 6(c) of the Investment
Company Act of 1940 (``Act'') for an exemption from section 15(a) of
the Act.
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SUMMARY OF THE APPLICATION: The requested order would permit the
implementation, without prior shareholder approval, of a new investment
advisory agreement in connection with the sale of Barclays Global
Investors Hong Kong Limited (``BGIHK'') to AXA Investment Managers SA
(``AIM''). The order would cover a period of up to 120 days following
the later of: (i) the date on which the sale is consummated, or (ii)
the date on which the requested order is issued (but in no event later
than October 1, 1998) (``Interim Period''). The order also would
permit, following shareholder approval, the payment to AXA Asset
Management Partenaires (``AAM-P'') of all fees it earns under the new
investment advisory agreement during the Interim Period.
APPLICANTS: The Asia Tigers Fund, Inc. (``Fund''), AAM-P, and Barclays
Bank PLC (``Barclays'').
FILING DATES: The application was filed on May 29, 1998. Applicants
have agreed to file an amendment, the substance of which is included in
this notice, during the notice period.
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 June 23, 1998, 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 by writing to the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C.
20549. Applicants: Fund, CIBC Oppenheimer Tower, 31st Floor, One World
Financial Center, 200 Liberty Street, New York, NY 10281; AAM-P, 46
Avenue de la Grande Armee, 75017 Paris, France; and Barclays, c/o
Barclays Global Investors, N.A., 45 Freemont Street, San Francisco, CA
94105.
FOR FURTHER INFORMATION CONTACT: Rachel H. Graham, Senior Counsel,
(202) 942-0583, or Nadya B. Roytblat, Assistant Director, (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 may be obtained for a fee from
the SEC's Public Reference Branch, 450 Fifth Street, N.W., Washington,
D.C. 20549 (telephone (202) 942-8090).
Applicants' Representations
1. The Fund is a Maryland corporation that is registered under the
Act as a non-diversified, closed-end management investment company.
2. Barclays Global Investors International, Inc. (``BGII''), an
investment adviser registered under the Investment Advisers Act of
1940, serves as an investment adviser to the Fund pursuant to an
investment advisory contract (``Current Agreement''). BGII is a wholly-
owned subsidiary of Barclays USA, Inc., which in turn is a wholly-owned
subsidiary of Barclays. BGII provides advisory services to the Fund
through persons based in Hong Kong who are associated both with BGII
and with BGIHK, which is also a subsidiary of Barclays (``BGIHK
Personnel'').
3. On May 12, 1998, Barclays and AIM entered into an agreement
pursuant to which Barclays will sell BGIHK to AIM (``Transaction'').
Upon consummation of the Transaction, BGIHK will be renamed ``AXA
Investment Managers Hong Kong Limited,'' and the BGIHK Personnel will
become associated with AAM-P. AAM-P is a wholly-owned subsidiary of
AIM, which in turn is the global investment arm of AXA Group. AAM-P
will be providing investment advisory services to the Fund pursuant to
a new investment advisory contract (``New Agreement''). Applicants
expect consummation of the Transaction during the first week of June,
1998.
4. Applicants believe that the Transaction will result in a
transfer of the Current Agreement from Barclays and its affiliates to
AIM and its affiliates and, therefore, that there could be an
assignment, and thus automatic termination, of the Current Agreement.
Applicants request an exemption to permit (i) the implementation,
during the Interim Period and prior to
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obtaining shareholder approval, of the New Agreement, and (ii0 AAM-P to
receive all fees that it earns under the New Agreement during the
Interim Period, upon approval of the New Agreement by the Fund's
shareholders.\1\ The requested exemption would cover the Interim
Period, which would begin on the later of (i) the date on which the
Transaction is consummated or (ii) the date on which the requested
order is issued, and would continue through the earlier of (i) 120 days
or (ii) the date on which the New Agreement is approved or disapproved
by the Fund's shareholders (but in no event later than October 1,
1998). Applicants state that the terms and conditions of the New
Agreement will be substantially identical to those of the Current
Agreement, except for the parties, dates of commencement and
termination, and the escrow provision described below.
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\1\ If the Transaction is consummated prior to receipt of the
requested exemptive order, AAM-P will be paid no more than its
actual out-of-pocket costs for providing advisory services to the
fund until the order is received or the shareholder vote occurs,
whichever is first.
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5. On May 20, 1998, the Fund's Board of Directors (``Board'') met
in person to evaluate whether the terms of the New Agreement are in the
best interests of the Fund and its shareholders. At that meeting, the
Board, including a majority of the members who are not ``interested
persons'' of the Fund, as that term is defined in section 2(a)(19) of
the Act (``Independent Directors''), approved the New Agreement and
voted to recommend that the Fund's shareholders approve the New
Agreement. Proxy materials for the shareholders meeting will be mailed
in June, 1998.
6. Fees earned by AAM-P under the New Agreement during the Interim
Period will be maintained in an interest-bearing escrow account with an
unaffiliated financial institution. The escrow agent will release the
amounts held in the escrow account (including any interest earned): (i)
to AADM-P upon approval of the New Agreement by the Fund's
shareholders; or (ii) to the Fund, if the Interim Period has ended and
the Fund's shareholders have not approved the New Agreement. Before any
such release is made, the Board, including the Independent Directors,
will be notified.
Applicants' Legal Analysis
1. Section 15(a) of the Act provides, in relevant part, that it is
unlawful for any person to serve as an investment adviser to 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 the investment company. Section 15(a) further
requires the written contract to 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 a contract
by the assignor.
2. Applicants state that the Transaction will result in a transfer
of the Current Agreement from Barclays and its affiliates to AIM and
its affiliates. Applicants believe, therefore, that the Transaction
could be deemed to result in an assignment of the Current Agreement and
that the Current Agreement will terminate according to its terms.
3. Rule 15a-4 under the Act provides, in relevant 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: (i) the new contract is approved
by that company's board of directors (including a majority of the non-
interested directors); (ii) 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 (iii) 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 they
may not be entitled to rely on rule 15a-4 because AIM may be deemed to
receive a benefit in connection with the Transaction.
4. Section 6(c) of the Act provides that the SEC may exempt any
person, security, or transaction from any provision of the Act or any
rule thereunder to the extent that such exemption is necessary or
appropriate in the public interest and consistent with both 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 state that the form and timing of the Transaction
were determined in response to a number of business factors primarily
unrelated to the Fund. Applicants assert that there is insufficient
time to obtain shareholder approval of the New Agreement before the
Transaction is consummated. Applicants further assert that the
requested relief would prevent any disruption in the delivery of
investment advisory services to the Fund during the Interim Period.
6. Applicants represent that, under the New Agreement during the
Interim Period, the Fund will receive the same scope and quality of
services provided by essentially the same investment management
personnel as it receives under the Current Agreement. Applicants state
that, in the event of any material change in personnel providing
material services pursuant to the New Agreement, AAM-P will apprise and
consult with the Board to assure that the Board, including a majority
of the Independent Directors, are satisfied that the services provided
by AAM-P will not be diminished in scope and quality.
7. Applicants note that the fees payable to AAM-P under the New
Agreement during the Interim Period will be at the same rate as the
fees currently payable under the Current Agreement and that the Current
Agreement has been approved by the Board, including a majority of the
Independent Directors, and by the Fund's shareholders.
Applicants' Conditions
Applicants agree that the order granting the requested relief will
be subject to the following conditions:
1. The New Agreement will have substantially identical terms and
conditions as the Current Agreement except for the parties, dates of
commencement and termination, and the escrow provision.
2. Fees earned by AAM-P during the Interim Period in accordance
with the New Agreement will be maintained in an interest-bearing escrow
account with an unaffiliated bank, and amounts in such account
(including interest earned on such paid fees) will be paid: (i) to AAM-
P upon approval of the New Agreement by the Fund's shareholders, or
(ii) to the Fund, in the absence of such approval.
3. The Fund will hold a meeting of its shareholders to vote on
approval of the New Agreement on or before the 120th day following
consummation of the Transaction (but in no event later than October 1,
1998).
4. AAM-P or its affiliates, but not the Fund, will pay the costs of
preparing and filing the application and the costs relating to the
solicitation of shareholder approval of the New Agreement. If such
solicitation occurs in conjunction with the Fund's annual shareholders
meeting at which other matters also are considered, a portion of the
costs associated with those other matters may be allocated to the Fund.
5. AAM-P will take all appropriate steps so that the scope and
quality of
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advisory and other services provided to the Fund during the Interim
Period will be at least equivalent, in the judgment of the Board,
including a majority of the Independent Directors, to the scope and
quality of services provided under the Current Agreement. If personnel
providing material services during the Interim Period change
materially, AAM-P will apprise and consult with the Board to assure
that the Board, including a majority of the Independent Directors, are
satisfied that the services provided will not be diminished in scope or
quality.
For the SEC, by the Division of Investment Management, under
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-14922 Filed 6-4-98; 8:45 am]
BILLING CODE 8010-01-M