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October 3, 1989
TO: SEC RULES MEMBERS NO. 53-89
STATE SECURITIES MEMBERS NO. 33-89
UNIT INVESTMENT TRUST MEMBERS NO. 50-89
CLOSED-END FUND MEMBERS NO. 45-89
RE: AMENDMENTS TO NEW YORK ABANDONED PROPERTY LAW
__________________________________________________________
Attached is a copy of a notice from the office of the New
York State Comptroller concerning recent amendments to the New
York Abandoned Property Law, which changed the status of
investment company shares held in book entry form, including unit
investment trusts.
Specifically, book entry shares will no longer be treated
as "securities" for purposes of the abandoned property law.
Securities, which formerly included fund shares, are deemed
abandoned where for three successive years: (a) all amounts, if
any, payable thereon or with respect thereto have remained unpaid
to the shareholder; (b) no written communication has been
received from such resident by the fund; and (c) where the
security is held by the issuing corporation [such as in book
entry shares], all regular corporate notices required by law to
be given to security holders which have been sent, via first
class mail, to the shareholder at his last known address have
been returned to the fund by the postal authorities for inability
to locate such resident.
Under the new law, shares held in book entry form by an
investment company are considered "outstanding shares" rather
than securities for purposes of the act. A new provision states
that outstanding shares will be deemed abandoned where, for five
successive years: (a) all amounts, if any, payable thereon or
with respect thereto have remained unpaid to the shareholder; and
(b) no written communication has been received from the
shareholder by the fund.
The new provision specifically provides that the payment of
a dividend or other distribution pursuant to a reinvestment plan
does not constitute the payment of an amount for purposes of the
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first element of abandonment. In addition, the third element of
abandonment under the section governing securities, which
requires that mail be returned to the fund by the post office,
has been eliminated. Thus, as the New York authorities have
stated, "if a mutual fund shareholder has a dividend reinvestment
plan, and he neither makes any additions or withdrawals nor
communicates in writing with the paying agent within five years,
his shares will be deemed abandoned notwithstanding that his
reinvested dividends are automatically used to purchase
additional shares."
Furthermore, the statute requires funds to notify each
shareholder whose shares are about to be delivered to the state
by certified mail that the shares will be turned over to the
state unless the fund receives written communication from the
shareholder indicating knowledge of such shares before they are
turned over. The deadline for such mailings is September 30 of
the calendar year prior to the year in which the shares would be
required to be delivered to the state.
We will keep you informed of further developments.
Kathy D. Ireland
Assistant General Counsel
Attachment