Millennium India Acquisition Company Inc.; Notice of Application, 74370-74372 [E7-25350]

Download as PDF 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 VerDate Aug<31>2005 20:08 Dec 28, 2007 Jkt 214001 PO 00000 Frm 00105 Fmt 4703 Sfmt 4703 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. E:\FR\FM\31DEN1.SGM 31DEN1 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). VerDate Aug<31>2005 20:08 Dec 28, 2007 Jkt 214001 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 PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 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. E:\FR\FM\31DEN1.SGM 31DEN1 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 PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 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.

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    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.
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    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.
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    \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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    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