January 4, 1989
TO: INVESTMENT ADVISERS COMMITTEE NO. 1-89
RE: ICI COMMENTS ON PROPOSED REGULATION S
__________________________________________________________
The Institute filed the attached comment letter with
the SEC on its proposed Regulation S intended to clarify
the applicability of the registration requirements of the
Securities Act of 1933 to offshore transactions.
Our comment letter notes that U.S. investment companies
and advisers owning securities of certain foreign issuers have
been denied, due to uncertainty regarding the applicability of
the 1933 Act, certain ownership-related benefits such as
participation in rights offerings, warrants, and dividend
reinvestment plans. The Institute, therefore has requested that
the Commission adopt an exclusion for such transactions when they
relate to the foreign security holdings of U.S. institutional
investors.
The Institute also commented that the presence of a U.S.
person as fiduciary to accounts of non-U.S. persons should not,
by itself, cause an offer or sale to be deemed an offer or sale
to a U.S. person. For example, under the proposal an offer or
sale to a U.S. resident adviser purchasing for a fund located
offshore and sold only to non-U.S. persons might nonetheless be
deemed an offer or sale to a U.S. person because of the U.S.
status of the adviser.
The proposal expressly excludes offshore sales by
investment companies. The Institute disagrees with the
reasons stated in the release for this exclusion, but reserves
the right to later address the appropriateness of applying 1933
Act registration requirements to offshore sales by investment
companies.
We will keep you posted of any further developments.
Susan P. Hart
Assistant General Counsel
Attachment