Millennium India Acquisition Company Inc.; Notice of Application, 74370-74372 [E7-25350]
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74370
Federal Register / Vol. 72, No. 249 / Monday, December 31, 2007 / Notices
5. Both the full Board and the
Committee will review periodically the
potential impact that the issuance of
Restricted Stock under the Plans could
have on the Company’s earnings and
NAV per share, such review to take
place prior to any decisions to grant
Restricted Stock under the Plans, but in
no event less frequently than annually.
Adequate procedures and records will
be maintained to permit such review.
The Board will be authorized to take
appropriate steps to ensure that the
grant of Restricted Stock under the
Plans would not have an effect contrary
to the interests of the Company’s
shareholders. This authority will
include the authority to prevent or limit
the granting of additional Restricted
Stock under the Plans. All records
maintained pursuant to this condition
will be subject to examination by the
Commission and its staff.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7–25357 Filed 12–28–07; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
request a hearing by writing to the
Commission’s Secretary and serving
Applicant with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on January 15, 2008, and
should be accompanied by proof of
service on Applicant, in the form of an
affidavit or, for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
Secretary, Securities and
Exchange Commission, 100 F Street, NE,
Washington, DC, 20549–1090.
Applicant, c/o Mr. F. Jacob Cherian,
Millennium India Acquisition Company
Inc., 330 East 38th Street, New York, NY
10016.
ADDRESSES:
Jean
E. Minarick, Senior Counsel, at (202)
551–6811, or Janet M. Grossnickle,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Office of Investment Company
Regulation).
FOR FURTHER INFORMATION CONTACT:
Millennium India Acquisition Company
Inc.; Notice of Application
The
following is a summary of the
application. The complete application
may be obtained for a fee at the
Commission’s Public Reference Branch,
100 F Street, NE., Washington, DC
20549–0102 (tel. 202–551–5850).
December 21, 2007.
Applicant’s Representations
SUPPLEMENTARY INFORMATION:
[Investment Company Act Release No.
28083; 812–13464]
Securities and Exchange
Commission (‘‘Commission’’).
ACTIONS: Notice of application for an
order under section 6(c) of the
Investment Company Act of 1940 (the
‘‘Act’’) granting an exemption from
section 12(d)(3) of the Act.
sroberts on PROD1PC70 with NOTICES
AGENCY:
1. Applicant, a Delaware corporation,
is registered as a non-diversified,
closed-end management investment
company under the Act. Applicant was
formed in March 2006 as a special
purpose acquisition company to serve as
a vehicle to effect a merger, asset
Applicant: Millennium India
acquisition or other business
Acquisition Company Inc.
combination with one or more
(‘‘Applicant’’).
businesses that have operations
Summary of Application: Applicant
primarily in India.
seeks an order under section 6(c) of the
2. SMC Global Securities Limited
Act to permit Applicant to invest in the
(‘‘SMC’’) and SAM Global Securities
securities of two issuers that each
Limited (‘‘SAM’’), together with their
derives more than 15% of its gross
respective subsidiaries, comprise the
revenues from securities related
activities as defined in rule 12d3–1(d)(1) SMC Group of Companies (the ‘‘SMC
Group’’). The SMC Group, which is
under the Act, in excess of the
based in New Delhi, India, provides
limitations in rule 12d3–1(b).
various financial services, including
Filing Dates: The application was
equities and commodities brokerage,
filed on December 18, 2007, and
mutual fund and initial public offering
amended on December 21, 2007.
Hearing or Notification of Hearing: An distribution, and depository and
clearing services. More than 15% of
order granting the requested relief will
be issued unless the Commission orders SMC’s and SAM’s gross revenues are
derived from ‘‘securities related
a hearing. Interested persons may
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20:08 Dec 28, 2007
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activities’’ as defined in rule 12d3–
1(d)(1) under the Act.1
3. On May 12, 2007, Applicant
entered into two substantially identical
share subscription agreements (the
‘‘Subscription Agreements’’) to invest in
14.9% of the equity securities of each of
SMC and SAM, subject to shareholder
approval and other conditions (the
‘‘Acquisition Transaction’’).2 In
addition, Applicant has entered into a
set of substantially identical option
agreements that grant Applicant an
option, exercisable within 30 days of the
closing date of the corresponding
Acquisition Transaction and subject to
applicable law, to require SMC or SAM
or both to begin regulatory approval
proceedings that would permit it to
issue global depositary shares to
Applicant, which upon conversion into
equity shares, represent an additional
6% of the equity share capital of SMC
or SAM, as the case may be.
4. The Applicant will not actively
manage a portfolio. Rather, after the
Acquisition Transaction closes, the
Applicant intends to invest at least 80%
of its assets in the securities of the SMC
Group, U.S. government securities and
other short-term instruments, unless or
until such time as it raises additional
capital. Upon consummation of the
Acquisition Transaction and the related
global depositary share acquisition, over
90% of Applicant’s assets would be
invested in the SMC Group. If the
Applicant raises additional capital it
may, if then permitted by Indian law
and other regulatory requirements, make
additional investments in the SMC
Group or it may invest in one or more
other Indian companies. Applicant does
not seek an exemption from section
12(d)(3) of the Act for investment in the
securities of any company other than
the SMC Group.
5. Applicant’s certificate of
incorporation requires that the holders
of a majority of Applicant’s publicly
listed common stock approve the
Acquisition Transaction at a
stockholders’ meeting convened to
consider proposals to approve such
transactions. Moreover, shareholders
who do not approve of the transactions
may elect to have their publicly-traded
shares converted into cash. Applicant
will be precluded from proceeding with
1 Subparagraph (d)(1) of rule 12d3–1 defines
‘‘securities related activities’’ to mean a person’s
activities as a broker, dealer, underwriter, or
investment adviser to a registered investment
company.
2 As described more fully in the application,
Applicant does not seek to acquire more than
14.9% of the equity securities of SMC or SAM due
to certain restrictions and lack of clarity in the
regulatory approval process and timelines under
Indian law.
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Federal Register / Vol. 72, No. 249 / Monday, December 31, 2007 / Notices
the Acquisition Transaction if more
than 19.99% of Applicant’s
shareholders vote against the
Acquisition Transaction and exercise
their right to convert their shares to
cash. Applicant filed definitive proxy
materials on December 21, 2007, and
expects to mail them to its shareholders
on or about December 27, 2007. The
shareholders’ meeting is scheduled for
January 10, 2008.
6. Applicant believes that permitting
Applicant to invest in the equity
securities of SMC and SAM in excess of
the quantitative limitations set forth in
rule 12d3–1(b) would benefit Applicant
and be in the best interests of
shareholders. Applicant will comply
with all other requirements of rule
12d3–1.
sroberts on PROD1PC70 with NOTICES
Applicant’s Legal Analysis
1. Section 12(d)(3) of the Act, with
limited exceptions, prohibits a
registered investment company from
purchasing or otherwise acquiring any
securities issued by any person who is
a broker, a dealer, is engaged in the
business of underwriting, or is either an
investment adviser of a registered
investment company or a registered
investment adviser. Rule 12d3–1 under
the Act exempts the acquisition of
securities of an issuer that derived more
than 15% of its gross revenues in its
most recent fiscal year from ‘‘securities
related activities,’’ provided that, among
other things, immediately after such
acquisition, (i) the acquiring company
has invested not more than five percent
of the value of its total assets in
securities of the issuer and (ii) the
acquiring company owns not more than
5% of the outstanding securities of that
class of the issuer’s equity securities.
Section 6(c) of the Act provides that the
Commission may conditionally or
unconditionally exempt any person,
security or transaction from any
provision of the Act or any rule
thereunder, if and to the extent that
such exemption is necessary or
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the Act.
2. Applicant requests an order
pursuant to section 6(c) of the Act
exempting Applicant from the
provisions of section 12(d)(3) of the Act
to the extent necessary to permit
Applicant to invest in the equity
securities of SMC and SAM, each an
issuer that derives more than 15% of its
gross revenues from ‘‘securities related
activities,’’ in excess of the quantitative
limitations set forth in rule 12d3–1(b).
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20:08 Dec 28, 2007
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3. Applicant states that section
12(d)(3) was intended (a) to prevent
investment companies from exposing
their assets to the entrepreneurial risks
of securities related businesses, (b) to
prevent potential conflicts of interest
and to eliminate certain reciprocal
practices between investment
companies and securities related
businesses, and (c) to ensure that
investment companies maintain
adequate liquidity in their portfolios.
4. Applicant believes that its
investment in the SMC Group does not
raise the same type of entrepreneurial
risks that may have concerned Congress
in enacting section 12(d)(3). Applicant
states that the ownership structure of
most securities related businesses has
changed since the time of enactment
from partnership to a corporate form
resulting in the limited liability status of
these entities. In this case, Applicant
argues that shareholders choosing to
invest in Applicant have sought
exposure to a vehicle that that provides
a non-diversified investment in one or
more businesses with operations
primarily in India,3 and Applicant’s
shareholders will have the opportunity
to approve or reject the proposed
investment after full disclosure of the
transactions and the attendant risks.
5. Applicant also believes that the
Acquisition Transaction will not create
potential conflicts of interest for
Applicant or its shareholders. One
potential conflict could occur if an
investment company purchased
securities or other interests in a brokerdealer to reward that broker-dealer for
selling fund shares, rather than solely
on investment merit. Applicant notes
that, as a condition to the granting of
exemptive relief, the SMC Group and its
affiliated persons within the meaning of
section 2(a)(3) of the Act and affiliated
persons of such affiliated persons
(collectively, ‘‘Affiliates’’) will not sell
any securities issued by Applicant and
will not act as agent or as broker in
connection with the sale of any shares
of Applicant.4
3 The information that Applicant’s shareholders
will receive after the Acquisition Transaction
demonstrates Applicant’s role as a vehicle for U.S.
investors to invest in an Indian company. As
described more fully in the application, Aopplicant
generally will file Forms 8–K furnishing the
quarterly and annual financial statements translated
into U.S. GAAP of SMC and SAM within five
business days of receipt from SMC and SAM and
also file promptly Forms 8–K furnishing any
material information publicly disclosed by SMC
and SAM under the Indian securities regulatory
scheme or that would be required if the underlying
securities were being registered under the Securities
Act of 1933, as amended.
4 The terms and conditions of the application will
be made binding on SMC Group through an
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74371
6. Applicant states that another
potential conflict of interest is that a
broker-dealer could be influenced to
recommend to its clients certain
investment companies that invest in
such broker-dealer, thereby using the
assets of the investment companies to
boost the price of the broker-dealer.
Applicant notes that, as a condition to
the requested order, the SMC Group and
its Affiliates will not sell any securities
issued by Applicant as an underwriter,
will not make a market in any securities
issued by Applicant and will not act as
agent or a broker in connection with the
sale of any shares of the Applicant.
7. Applicant states that another
purpose of section 12(d)(3) is to prevent
investment companies from directing
brokerage to a broker-dealer in which
the investment company has invested to
enhance the broker-dealer’s profitability
or to assist it during financial difficulty,
even though that broker-dealer may not
offer the best price and execution.
Applicant represents that it is not a
trading vehicle and will not actively
trade in securities of SAM, SMC or
securities of other issuers. Further, as a
condition to the requested order,
Applicant and its Affiliates will not use
the SMC Group or its Affiliates as a
broker-dealer for the purchase or sale of
any portfolio securities.
8. Applicant also believes that section
12(d)(3) reflects a concern with respect
to the liquidity of an investment
company’s portfolio. Because
shareholders invested in Applicant for
the specific purpose of buying and
holding a vehicle that would provide a
non-diversified investment in an Indian
enterprise, liquidity of the Applicant’s
portfolio is not a concern for
Applicant’s shareholders. Moreover,
Applicant is a closed-end investment
company that does not offer redeemable
securities; therefore, there are no
minimum liquidity standards applicable
to Applicant under the Act.
9. Applicant believes that the
Acquisition Transaction does not
present the potential for the risks and
abuses section 12(d)(3) is intended to
eliminate, including the risk of
reciprocal practices. Applicant believes
that the standards set forth in section
6(c) have been met.
Applicant’s Conditions
Applicant agrees that the order
granting the requested relief will be
subject to the following conditions:
1. The Acquisition Transaction will
not be consummated unless it is
approved by the holders of a majority of
undertaking by the SMC Group or amendments to
the Subscription Agreements.
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74372
Federal Register / Vol. 72, No. 249 / Monday, December 31, 2007 / Notices
the Applicant’s publicly-listed shares of
common stock present in person or by
proxy at a stockholders’ meeting
convened to consider proposals to
approve the Acquisition Transaction
and unless holders of less than 20% of
the Applicant’s publicly-listed shares of
common stock seek to convert their
shares to cash.
2. Applicant will not invest in any
financial services companies other than
the SMC Group. Applicant will not
actively trade in securities of SAM, SMC
or securities of other issuers.
3. The SMC Group and its Affiliates
will not sell any securities issued by
Applicant as an underwriter, will not
make a market in any securities issued
by Applicant and will not act as agent
or as a broker in connection with the
sale of any shares of the Applicant.
4. Applicant and its Affiliates will not
use the SMC Group or its Affiliates as
a broker-dealer for the purchase or sale
of any portfolio securities.
5. The SMC Group and its Affiliates
will not act as custodian for Applicant
and its Affiliates nor will they provide
any other services to Applicant and its
Affiliates.
6. No officer of Applicant or member
of Applicant’s board of directors
(‘‘Board’’) shall be affiliated with the
SMC Group or its Affiliates (other than
as a result of the Acquisition
Transaction discussed herein).
7. Applicant’s Chief Compliance
Officer will monitor and report to
Applicant’s Board no less than annually
on compliance with these conditions.
8. Applicant will comply with the
provisions of rule 12d3–1 under the Act,
except for paragraph (b) solely to the
extent necessary to permit Applicant to
have more than 5% of the value of its
total assets invested in more than 5% of
the outstanding securities of the classes
of SMC Group’s equity securities that
are described in this application.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Nancy M. Morris,
Secretary.
[FR Doc. E7–25350 Filed 12–28–07; 8:45 am]
BILLING CODE 8011–01–P
sroberts on PROD1PC70 with NOTICES
[Investment Company Act Release No.
28080; 812–13453]
The UBS Funds, et al.; Notice of
Application
December 19, 2007.
Securities and Exchange
Commission (‘‘Commission’’).
AGENCY:
20:08 Dec 28, 2007
The
following is a summary of the
application. The complete application
may be obtained for a fee at the
Commission’s Public Reference Branch,
100 F Street, NE., Washington, DC
20549–0104 (telephone (202) 551–8090).
SUPPLEMENTARY INFORMATION:
SECURITIES AND EXCHANGE
COMMISSION
VerDate Aug<31>2005
investment company. The Trusts offer
separate series (‘‘Funds’’) that may
invest in other registered investment
companies in reliance on section
12(d)(1)(G) of the Act and rule 12d1–2
Summary of Application: Applicants
under the Act (‘‘Underlying Funds’’).1
request an order to permit funds of
Applicants propose that the Funds be
funds relying on rule 12d1–2 under the
permitted to invest in futures contracts,
Act to invest in certain financial
options on futures contracts, swap
instruments.
agreements, derivatives, and other
Applicants: The UBS Funds, SMA
financial instruments that may not be
Relationship Trust, UBS Investment
securities within the meaning of section
Trust, UBS Index Trust, UBS Series
2(a)(36) of the Act (‘‘Other
Trust, and UBS Relationship Funds
Investments’’) in addition to the
(collectively, the ‘‘Trusts’’); UBS Global
Underlying Funds.2
Asset Management (Americas) Inc. (the
2. The Advisor is a Delaware
‘‘Advisor’’); and UBS Global Asset
corporation and an indirect, whollyManagement (US) Inc. (‘‘UBS Global
owned subsidiary of UBS AG, an
AM (US)’’).
internationally diversified organization
Filing Dates: The application was
with operations in many aspects of the
filed on November 23, 2007, and
financial services industry. The Advisor
amended on December 14, 2007.
is registered as an investment adviser
Hearing or Notification of Hearing: An under the Investment Advisers Act of
order granting the application will be
1940 and serves as investment adviser
issued unless the Commission orders a
to the Funds. UBS Global AM (US), also
hearing. Interested persons may request a Delaware corporation and an indirect,
a hearing by writing to the
wholly-owned subsidiary of UBS AG, is
Commission’s Secretary and serving
registered as a broker-dealer under the
applicants with a copy of the request,
Securities Exchange Act of 1934 Act
personally or by mail. Hearing requests
(‘‘Exchange Act’’) and serves as the
should be received by the Commission
principal underwriter to The UBS
by 5:30 p.m. on January 15, 2008 and
Funds, SMA Relationship Trust, UBS
should be accompanied by proof of
Investment Trust, UBS Index Trust, and
service on applicants, in the form of an
UBS Series Trust.
affidavit or, for lawyers, a certificate of
Applicants’ Legal Analysis
service. Hearing requests should state
the nature of the writer’s interest, the
Section 12(d)(1)(A) of the Act
reason for the request, and the issues
provides that no registered investment
contested. Persons who wish to be
company (‘‘acquiring company’’) may
notified of a hearing may request
acquire securities of another investment
notification by writing to the
company (‘‘acquired company’’) if such
Commission’s Secretary.
securities represent more than 3% of the
acquired company’s outstanding voting
ADDRESSES: Secretary, Commission, 100
stock or more than 5% of the acquiring
F Street, NE., Washington, DC 20549–
company’s total assets, or if such
1090; Applicants, c/o Mark F. Kemper,
securities, together with the securities of
UBS Global Asset Management
other investment companies, represent
(Americas) Inc., One North Wacker
more than 10% of the acquiring
Drive, Chicago, IL 60606.
company’s total assets. Section
FOR FURTHER INFORMATION CONTACT:
12(d)(1)(B) of the Act provides that no
Lewis Reich, Senior Counsel, at (202)
registered open-end investment
551–6919, or Nadya B. Roytblat,
company may sell its securities to
Assistant Director, at (202) 551–6821
(Division of Investment Management,
1 Applicants request that the relief apply to all
Office of Investment Company
existing and future series of the Trusts and all other
Regulation).
management investment companies and their series
Notice of an application under
section 6(c) of the Investment Company
Act of 1940 (‘‘Act’’) for an exemption
from rule 12d1–2(a) under the Act.
ACTION:
Jkt 214001
Applicants’ Representations
1. Each Trust organized as a Delaware
statutory trust or a Massachusetts
business trust and is registered under
the Act as an open-end management
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registered under the Act that are in the same group
of investment companies, as defined in section
12(d)(1)(G) of the Act, as the Trusts. All Funds that
currently intend to rely on the order have been
named as applicants. Any other existing or future
entity that relies on the order in the future will do
so only in accordance with the terms and
conditions in the application.
2 As part of its strategy to invest in securities,
Other Investments and Underlying Funds, an
Applicant Fund also may, pursuant to rule
12d1–2 under the Act, invest in securities issued by
another registered investment company that is not
in the same group of investment companies as the
Fund (a ‘‘Non-Group Fund’’) consistent with
section 12(d)(1)(A) or 12(d)(1)(F) of the Act.
E:\FR\FM\31DEN1.SGM
31DEN1
]]>Agencies
[Federal Register Volume 72, Number 249 (Monday, December 31, 2007)]
[Notices]
[Pages 74370-74372]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-25350]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 28083; 812-13464]
Millennium India Acquisition Company Inc.; Notice of Application
December 21, 2007.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTIONS: Notice of application for an order under section 6(c) of the
Investment Company Act of 1940 (the ``Act'') granting an exemption from
section 12(d)(3) of the Act.
-----------------------------------------------------------------------
Applicant: Millennium India Acquisition Company Inc.
(``Applicant'').
Summary of Application: Applicant seeks an order under section 6(c)
of the Act to permit Applicant to invest in the securities of two
issuers that each derives more than 15% of its gross revenues from
securities related activities as defined in rule 12d3-1(d)(1) under the
Act, in excess of the limitations in rule 12d3-1(b).
Filing Dates: The application was filed on December 18, 2007, and
amended on December 21, 2007.
Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving Applicant with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on January 15, 2008, and should be accompanied by proof of
service on Applicant, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street,
NE, Washington, DC, 20549-1090. Applicant, c/o Mr. F. Jacob Cherian,
Millennium India Acquisition Company Inc., 330 East 38th Street, New
York, NY 10016.
FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel, at
(202) 551-6811, or Janet M. Grossnickle, Branch Chief, at (202) 551-
6821 (Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
Commission's Public Reference Branch, 100 F Street, NE., Washington, DC
20549-0102 (tel. 202-551-5850).
Applicant's Representations
1. Applicant, a Delaware corporation, is registered as a non-
diversified, closed-end management investment company under the Act.
Applicant was formed in March 2006 as a special purpose acquisition
company to serve as a vehicle to effect a merger, asset acquisition or
other business combination with one or more businesses that have
operations primarily in India.
2. SMC Global Securities Limited (``SMC'') and SAM Global
Securities Limited (``SAM''), together with their respective
subsidiaries, comprise the SMC Group of Companies (the ``SMC Group'').
The SMC Group, which is based in New Delhi, India, provides various
financial services, including equities and commodities brokerage,
mutual fund and initial public offering distribution, and depository
and clearing services. More than 15% of SMC's and SAM's gross revenues
are derived from ``securities related activities'' as defined in rule
12d3-1(d)(1) under the Act.\1\
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\1\ Subparagraph (d)(1) of rule 12d3-1 defines ``securities
related activities'' to mean a person's activities as a broker,
dealer, underwriter, or investment adviser to a registered
investment company.
---------------------------------------------------------------------------
3. On May 12, 2007, Applicant entered into two substantially
identical share subscription agreements (the ``Subscription
Agreements'') to invest in 14.9% of the equity securities of each of
SMC and SAM, subject to shareholder approval and other conditions (the
``Acquisition Transaction'').\2\ In addition, Applicant has entered
into a set of substantially identical option agreements that grant
Applicant an option, exercisable within 30 days of the closing date of
the corresponding Acquisition Transaction and subject to applicable
law, to require SMC or SAM or both to begin regulatory approval
proceedings that would permit it to issue global depositary shares to
Applicant, which upon conversion into equity shares, represent an
additional 6% of the equity share capital of SMC or SAM, as the case
may be.
---------------------------------------------------------------------------
\2\ As described more fully in the application, Applicant does
not seek to acquire more than 14.9% of the equity securities of SMC
or SAM due to certain restrictions and lack of clarity in the
regulatory approval process and timelines under Indian law.
---------------------------------------------------------------------------
4. The Applicant will not actively manage a portfolio. Rather,
after the Acquisition Transaction closes, the Applicant intends to
invest at least 80% of its assets in the securities of the SMC Group,
U.S. government securities and other short-term instruments, unless or
until such time as it raises additional capital. Upon consummation of
the Acquisition Transaction and the related global depositary share
acquisition, over 90% of Applicant's assets would be invested in the
SMC Group. If the Applicant raises additional capital it may, if then
permitted by Indian law and other regulatory requirements, make
additional investments in the SMC Group or it may invest in one or more
other Indian companies. Applicant does not seek an exemption from
section 12(d)(3) of the Act for investment in the securities of any
company other than the SMC Group.
5. Applicant's certificate of incorporation requires that the
holders of a majority of Applicant's publicly listed common stock
approve the Acquisition Transaction at a stockholders' meeting convened
to consider proposals to approve such transactions. Moreover,
shareholders who do not approve of the transactions may elect to have
their publicly-traded shares converted into cash. Applicant will be
precluded from proceeding with
[[Page 74371]]
the Acquisition Transaction if more than 19.99% of Applicant's
shareholders vote against the Acquisition Transaction and exercise
their right to convert their shares to cash. Applicant filed definitive
proxy materials on December 21, 2007, and expects to mail them to its
shareholders on or about December 27, 2007. The shareholders' meeting
is scheduled for January 10, 2008.
6. Applicant believes that permitting Applicant to invest in the
equity securities of SMC and SAM in excess of the quantitative
limitations set forth in rule 12d3-1(b) would benefit Applicant and be
in the best interests of shareholders. Applicant will comply with all
other requirements of rule 12d3-1.
Applicant's Legal Analysis
1. Section 12(d)(3) of the Act, with limited exceptions, prohibits
a registered investment company from purchasing or otherwise acquiring
any securities issued by any person who is a broker, a dealer, is
engaged in the business of underwriting, or is either an investment
adviser of a registered investment company or a registered investment
adviser. Rule 12d3-1 under the Act exempts the acquisition of
securities of an issuer that derived more than 15% of its gross
revenues in its most recent fiscal year from ``securities related
activities,'' provided that, among other things, immediately after such
acquisition, (i) the acquiring company has invested not more than five
percent of the value of its total assets in securities of the issuer
and (ii) the acquiring company owns not more than 5% of the outstanding
securities of that class of the issuer's equity securities. Section
6(c) of the Act provides that the Commission may conditionally or
unconditionally exempt any person, security or transaction from any
provision of the Act or any rule thereunder, if and to the extent that
such exemption is necessary or appropriate in the public interest and
consistent with the protection of investors and the purposes fairly
intended by the policy and provisions of the Act.
2. Applicant requests an order pursuant to section 6(c) of the Act
exempting Applicant from the provisions of section 12(d)(3) of the Act
to the extent necessary to permit Applicant to invest in the equity
securities of SMC and SAM, each an issuer that derives more than 15% of
its gross revenues from ``securities related activities,'' in excess of
the quantitative limitations set forth in rule 12d3-1(b).
3. Applicant states that section 12(d)(3) was intended (a) to
prevent investment companies from exposing their assets to the
entrepreneurial risks of securities related businesses, (b) to prevent
potential conflicts of interest and to eliminate certain reciprocal
practices between investment companies and securities related
businesses, and (c) to ensure that investment companies maintain
adequate liquidity in their portfolios.
4. Applicant believes that its investment in the SMC Group does not
raise the same type of entrepreneurial risks that may have concerned
Congress in enacting section 12(d)(3). Applicant states that the
ownership structure of most securities related businesses has changed
since the time of enactment from partnership to a corporate form
resulting in the limited liability status of these entities. In this
case, Applicant argues that shareholders choosing to invest in
Applicant have sought exposure to a vehicle that that provides a non-
diversified investment in one or more businesses with operations
primarily in India,\3\ and Applicant's shareholders will have the
opportunity to approve or reject the proposed investment after full
disclosure of the transactions and the attendant risks.
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\3\ The information that Applicant's shareholders will receive
after the Acquisition Transaction demonstrates Applicant's role as a
vehicle for U.S. investors to invest in an Indian company. As
described more fully in the application, Aopplicant generally will
file Forms 8-K furnishing the quarterly and annual financial
statements translated into U.S. GAAP of SMC and SAM within five
business days of receipt from SMC and SAM and also file promptly
Forms 8-K furnishing any material information publicly disclosed by
SMC and SAM under the Indian securities regulatory scheme or that
would be required if the underlying securities were being registered
under the Securities Act of 1933, as amended.
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5. Applicant also believes that the Acquisition Transaction will
not create potential conflicts of interest for Applicant or its
shareholders. One potential conflict could occur if an investment
company purchased securities or other interests in a broker-dealer to
reward that broker-dealer for selling fund shares, rather than solely
on investment merit. Applicant notes that, as a condition to the
granting of exemptive relief, the SMC Group and its affiliated persons
within the meaning of section 2(a)(3) of the Act and affiliated persons
of such affiliated persons (collectively, ``Affiliates'') will not sell
any securities issued by Applicant and will not act as agent or as
broker in connection with the sale of any shares of Applicant.\4\
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\4\ The terms and conditions of the application will be made
binding on SMC Group through an undertaking by the SMC Group or
amendments to the Subscription Agreements.
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6. Applicant states that another potential conflict of interest is
that a broker-dealer could be influenced to recommend to its clients
certain investment companies that invest in such broker-dealer, thereby
using the assets of the investment companies to boost the price of the
broker-dealer. Applicant notes that, as a condition to the requested
order, the SMC Group and its Affiliates will not sell any securities
issued by Applicant as an underwriter, will not make a market in any
securities issued by Applicant and will not act as agent or a broker in
connection with the sale of any shares of the Applicant.
7. Applicant states that another purpose of section 12(d)(3) is to
prevent investment companies from directing brokerage to a broker-
dealer in which the investment company has invested to enhance the
broker-dealer's profitability or to assist it during financial
difficulty, even though that broker-dealer may not offer the best price
and execution. Applicant represents that it is not a trading vehicle
and will not actively trade in securities of SAM, SMC or securities of
other issuers. Further, as a condition to the requested order,
Applicant and its Affiliates will not use the SMC Group or its
Affiliates as a broker-dealer for the purchase or sale of any portfolio
securities.
8. Applicant also believes that section 12(d)(3) reflects a concern
with respect to the liquidity of an investment company's portfolio.
Because shareholders invested in Applicant for the specific purpose of
buying and holding a vehicle that would provide a non-diversified
investment in an Indian enterprise, liquidity of the Applicant's
portfolio is not a concern for Applicant's shareholders. Moreover,
Applicant is a closed-end investment company that does not offer
redeemable securities; therefore, there are no minimum liquidity
standards applicable to Applicant under the Act.
9. Applicant believes that the Acquisition Transaction does not
present the potential for the risks and abuses section 12(d)(3) is
intended to eliminate, including the risk of reciprocal practices.
Applicant believes that the standards set forth in section 6(c) have
been met.
Applicant's Conditions
Applicant agrees that the order granting the requested relief will
be subject to the following conditions:
1. The Acquisition Transaction will not be consummated unless it is
approved by the holders of a majority of
[[Page 74372]]
the Applicant's publicly-listed shares of common stock present in
person or by proxy at a stockholders' meeting convened to consider
proposals to approve the Acquisition Transaction and unless holders of
less than 20% of the Applicant's publicly-listed shares of common stock
seek to convert their shares to cash.
2. Applicant will not invest in any financial services companies
other than the SMC Group. Applicant will not actively trade in
securities of SAM, SMC or securities of other issuers.
3. The SMC Group and its Affiliates will not sell any securities
issued by Applicant as an underwriter, will not make a market in any
securities issued by Applicant and will not act as agent or as a broker
in connection with the sale of any shares of the Applicant.
4. Applicant and its Affiliates will not use the SMC Group or its
Affiliates as a broker-dealer for the purchase or sale of any portfolio
securities.
5. The SMC Group and its Affiliates will not act as custodian for
Applicant and its Affiliates nor will they provide any other services
to Applicant and its Affiliates.
6. No officer of Applicant or member of Applicant's board of
directors (``Board'') shall be affiliated with the SMC Group or its
Affiliates (other than as a result of the Acquisition Transaction
discussed herein).
7. Applicant's Chief Compliance Officer will monitor and report to
Applicant's Board no less than annually on compliance with these
conditions.
8. Applicant will comply with the provisions of rule 12d3-1 under
the Act, except for paragraph (b) solely to the extent necessary to
permit Applicant to have more than 5% of the value of its total assets
invested in more than 5% of the outstanding securities of the classes
of SMC Group's equity securities that are described in this
application.
For the Commission, by the Division of Investment Management,
under delegated authority.
Nancy M. Morris,
Secretary.
[FR Doc. E7-25350 Filed 12-28-07; 8:45 am]
BILLING CODE 8011-01-P
