February 8, 1993
TO: SEC RULES COMMITTEE NO. 13-93
STATE LIAISON COMMITTEE NO. 6-93
TRANSFER AGENT ADVISORY COMMITTEE NO. 14-93
RE: MARYLAND LEGISLATION INTRODUCED TO CLARIFY SMALL ACCOUNT
REDEMPTION PROCEDURE
__________________________________________________________
The Institute has introduced legislation in Maryland to
clarify the procedure for redemption of small accounts. House
Bill 392 provides that an investment company may redeem shares of
its stock if the investment company's charter expressly provides
for such, or certain conditions are met if the investment
company's charter does not expressly permit redemption of small
accounts. In addition, House Bill 392 would repeal the current
provision which grants shareholders the right to object to the
redemption.
As you may recall, this legislation is necessary since the
current statutory provision outlining the procedure for
redemption of small account could be construed to apply to all
mutual funds organized in Maryland. Section 2-310.1 specifically
requires the fund to give written notice to the shareholder that
is personally mailed or mailed by registered or certified mail,
establishes a date for redemption which is at least 45 days from
the date of the notice and grants the shareholder the right to
object to the redemption.
A copy of House Bill 392 is attached. We will keep you
advised of developments.
Patricia Louie
Associate Counsel
Attachment