October 30, 1989
TO: CLOSED-END FUND COMMITTEE NO. 46-89
RE: PENDING TENDER OFFER LEGISLATION
__________________________________________________________
Senator Shelby has introduced the "Investor Equality Act of
1989", which would amend the Securities Exchange Act of 1934 to
require additional disclosure with respect to corporate tender
offers and to impose certain substantive limitations on the
operations of certain issuers including closed-end investment
companies registered under the Investment Company Act of 1940. A
copy of the bill is attached.
Among other things, the bill would shorten the 10 day
window under Section 13(d) of the Exchange Act to 5 days and
require disclosure under the section to a nationally recognized
financial news service as well as the Securities and Exchange
Commission. The bill would also prohibit additional equity
purchases between the time that a statement was required to be
filed under Section 13(d) and the time such a statement was filed
and a public announcement made. The bill would also create civil
liabilities for violations of subsections (d), (f), and (g) of
Section 13 of the Exchange Act.
In addition, the bill would require any tender offer to
remain open for 35 days and generally would prohibit a person
from acquiring more than 25 percent of any class of equity
securities other than by tender offer. Moreover, the bill would
prohibit greenmail unless it has been approved by shareholder
vote or the same offer is made available to all shareholders.
Similarly, golden parachutes and poison pills would be prohibited
unless approved (or, if preexisting, ratified) by shareholders.
Finally, the bill would require confidential proxy voting
procedures and provide 10% shareholders with increased access to
the proxy process.
We will keep you informed of developments.
Mary K. Bellamy
Associate General Counsel
Attachment