April 24, 1990
TO: CLOSED-END FUND COMMITTEE NO. 11-90
RE: COMMENTS ON STOCKHOLDER QUORUM PROBLEMS
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In February, the Institute requested closed-end fund
members to inform us of any problems they have had relating to
stockholder quorums, especially with respect to obtaining
proxies from foreign shareholders and institutional
shareholders, and approaches that have been used to alleviate
those problems. (See Memorandum to Closed-End Fund Members No.
9-90, dated February 15, 1990).
Only several funds responded that they have had problems
obtaining a quorum for annual meetings. One fund reported that
they have not yet had any problems with their foreign
shareholders but that if they did, they would use the same
follow-up procedures that they use with their domestic
shareholders. These procedures are attached as Exhibit A. Two
funds responded that they use proxy soliciation firms that have
produced favorable results. One of those firms sent me a
summary of the procedures they utilize, which is attached as
Exhibit B. Finally, we were informed by a member that The
American Society of Corporate Secretaries publishes a Manual
for Solicitation of Proxies, which was helpful in developing
their procedures for proxy solicitation campaigns.
Several funds raised two other related issues. The first
issue concerns the New York Stock Exchange requirement that
funds hold annual board meetings. This has become especially
burdensome since many funds are incorporated in Maryland, which
no longer requires annual meetings. The second issue relates
to the characterization under NYSE Rule 452 of approval of a
management agreement as a "non-routine matter," which must be
voted on by the beneficial owners as opposed to the member
firm. It was suggested that the Institute seek exemptive
relief from the NYSE with respect to the first issue discussed
above and request that the Exchange change its position on the
second issue.
We have placed these issues, along with the general issue
of proxy solicitation, on the agenda for the May 2 committee
meeting to further discuss what action, if any, the Institute
should pursue on this matter.
Amy B. Rosenblum
Assistant General Counsel
Attachment