May 12, 1992
TO: BOARD OF GOVERNORS NO. 33-92
RE: OFFSHORE FUNDS AS ASSOCIATE PERSONS OF THE INSTITUTE
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The Executive Committee recommends the adoption of an
amendment to the Institute's by-laws that would allow offshore
funds that are advised by a member of the Institute or an
affiliate thereof to become an Associate Person of the Institute.
A number of members of the Institute sponsor offshore
investment companies (i.e., non-SEC registered funds that offer
their shares abroad). Some of these members have asked ICI
Mutual to extend insurance coverage to include their offshore
funds. ICI Mutual has decided it will extend such coverage on a
case-by-case basis; however, ICI Mutual and ICI have previously
agreed that ICI Mutual will require all funds insured by it to be
members of the Institute. In light of that policy and the
probability that the Institute will provide a variety of
informational and statistical services to offshore funds in the
future, the Executive Committee has determined that it would be
appropriate to offer associate person membership to such funds.
Because the services that the Institute could perform for
these foreign funds would, at least initially, be considerably
more limited than those provided to U.S.-registered funds, the
Institute will offer such funds Associate Person status under a
modest dues scale similar to that in effect for Investment
Adviser Associate members. The proposed dues scale is as
follows:
Aggregate Assets of
Offshore Funds in a
Group Dues
$0 - 100 million $300
$100 - 1,000 million $600
Over $1,000 million $1,200
The by-laws amendment to allow this will provide that no
offshore fund advised by a member adviser or an affiliate of such
adviser may become an Associate Person of the Institute unless
all offshore funds under common control with that fund are also
Associate Persons. This is consistent with the current
requirement in Article III, Section 7 of the by-laws, that no
U.S.-registered fund may become a Member unless all U.S.-
registered funds under common control with that fund are also
Members.
The corporation law of Delaware, the state in which the
Institute is incorporated, provides that amendments to a
certificate of incorporation and by-laws must be submitted to the
members of the Board of Governors with a resolution of the
corporation's board setting forth the amendments and the
advisability of their adoption. If approved by the Board of
Governors, the proposed amendment to the by-laws will be
submitted to a vote of the members in accordance with Article XIX
of the Institute's by-laws.
C. Richard Pogue
Executive Vice President
Attachment