1December 23, 1993
TO: CLOSED-END FUND COMMITTEE NO. 28-93
SEC RULES COMMITTEE NO. 114-93
RE: SEC PROPOSES AMENDMENTS TO INVESTMENT COMPANY PROXY RULES
__________________________________________________________
The Securities and Exchange Commission has issued proposed amendments to
the rules governing proxy materials for registered investment companies. The
amendments are intended to update and improve the disclosure that must be
provided to shareholders and to simplify the preparation of proxy materials.
They incorporate several of the changes proposed by the Institute in a 1986
letter to the Division of Investment Management. A copy of the release
describing the proposed amendments is attached.
Under the proposal, disclosure requirements currently set forth in Rules
20a-2 and 20a-3 under the Investment Company Act of 1940 would be modified and
consolidated into a new item 22 to Schedule 14A under the Securities Exchange Act
of 1934. Rules 20a-2 and 20a-3 would be rescinded. Certain conforming
amendments to the general requirements for proxies in Regulation 14A under the
Exchange Act and to Forms N-1A, N-2 and N-3, as well as revisions to Form N-14
(relating to investment company business combinations), also are proposed.
Significant proposed changes include:
(1) Proxy statements containing proposals affecting more than one
investment company (or series of an investment company) would be required to
include on one of the first three pages a tabular summary of the proposals, and
to indicate which shareholders are solicited with respect to each proposal;
(2) Proxy statements seeking approval of proposals that would increase
fees and expenses would be required to present a comparative fee table showing
current fees and expenses and the amount of fees and expenses that would have
been paid had the matter being voted on been in effect;
(3) Proxy statements relating to the election of directors would have to
include a compensation table for all fund directors, and for the three highest
paid executive officers that have received aggregate compensation from the fund
in excess of $60,000 in the last fiscal year, showing (i) aggregate
compensation received from the fund, (ii) total compensation received from all
funds in a fund complex (as defined in the proposed amended rules), (iii) pension
or retirement benefits accrued during the year and (iv) estimated annual benefits
upon retirement;
(4) In connection with soliciting the approval of an investment advisory
contract, funds would no longer be required to provide a certified balance sheet
of the adviser in the proxy materials;
(5) Specific disclosure requirements would apply to proxy statements
seeking approval of Rule 12b-1 plans or amendments thereto; and
(6) A note to the amended rules would set forth conditions under which an
annual report provided to shareholders more than two months before the date of
2the proxy materials would be deemed to satisfy the requirement that fund proxy
materials be accompanied or preceded by an annual report to shareholders.
Comments on the proposed amendments must be filed by March 18, 1994. The
Institute has scheduled a meeting at 2:00 p.m. on Wednesday, January 12 at Loew's
L'Enfant Plaza, 480 L'Enfant Plaza, S.W., to discuss the proposed amendments and
the Institute's comment letter. Please call Chimeme Taylor at (202) 326-5823 if
you or another representative from your firm will be attending the meeting.
Frances M. Stadler
Associate Counsel
Attachment