Aberdeen Asset Management Inc., et al., 14068-14073 [2018-06567]
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Federal Register / Vol. 83, No. 63 / Monday, April 2, 2018 / Notices
customer orders.20 Allowing marketmakers and specialists to place orders in
the COB following a number of COAs
for the same strategy on the same side
of the market could allow a market
maker to determine to provide
additional liquidity for customer orders,
within the market-maker’s risk controls,
in circumstances where the marketmaker’s system has stopped responding
to COAs.21 The Commission notes that
Cboe Options has represented that it
will have surveillance to monitor
compliance with the requirements of the
rule.22
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,23 that the
proposed rule change (SR–CBOE–2018–
016) is approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Jill Peterson,
Assistant Secretary.
[FR Doc. 2018–06569 Filed 3–30–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33058; 812–14670]
Aberdeen Asset Management Inc., et
al.
March 27, 2018.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
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AGENCY:
Notice of application for an order
under sections 6(c) and 17(b) of the
Investment Company Act of 1940
(‘‘Act’’) for exemptions from section
17(a) of the Act, and under section 17(d)
of the Act and rule 17d–1 thereunder to
permit certain joint transactions.
SUMMARY OF APPLICATION: Applicants
requests an order to permit certain
registered open-end and closed-end
management investment companies or
series thereof to invest in a private
investment vehicle established by their
investment advisers for the purpose of
investing in China A Shares and certain
other Chinese securities.
APPLICANTS: Aberdeen Asset
Management Inc. (‘‘AAMI’’), Aberdeen
Asset Managers Limited, (‘‘AAML’’),
Aberdeen Asset Management Asia
20 See
Notice, 83 FR at 7093.
id.
22 See id. at 7094.
23 15 U.S.C. 78s(b)(2).
24 17 CFR 200.30–3(a)(12).
21 See
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Limited (‘‘AAMAL,’’ and together with
AAMI and AAML, the ‘‘Initial
Advisers’’), Aberdeen Funds (the
‘‘Trust’’), Aberdeen Greater China Fund,
Inc. (‘‘GCH’’), and Aberdeen
Institutional Commingled Funds, LLC
(the ‘‘Commingled LLC’’).
FILING DATES: The application was filed
on July 20, 2016, and amended on
February 10, 2017, September 22, 2017,
January 18, 2018, and March 19, 2018.
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
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on April 23, 2018, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Pursuant to rule 0–5 under the
Act, hearing requests should state the
nature of the writer’s interest, any facts
bearing upon the desirability of a
hearing on the matter, 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, U.S. Securities
and Exchange Commission, 100 F Street
NE, Washington, DC 20549–1090.
Applicants: 225 Liberty Street, New
York, NY 10281.
FOR FURTHER INFORMATION CONTACT:
Kieran G. Brown, Senior Counsel, at
(202) 551–6773, or Robert H. Shapiro,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
website by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicants’ Representations:
1. The Trust is a Delaware statutory
trust and is registered under Act as an
open-end management investment
company. GCH is a Maryland
corporation and is registered under the
Act as a closed-end management
investment company. Each of Aberdeen
Asia-Pacific (ex-Japan) Equity Fund,
Aberdeen Emerging Markets Fund and
Aberdeen China Opportunities Fund
(together with GCH, collectively, the
‘‘Initial Funds’’) is a series of the Trust.
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2. The Commingled LLC is a limited
liability company under the Delaware
Limited Liability Company Act, which
relies on the exemption from
registration under the Act provided by
section 3(c)(7) of the Act.1
3. Each Adviser is registered as an
investment adviser under the
Investment Advisers Act of 1940
(‘‘Advisers Act’’), and AAMI, AAML
and AAMAL are wholly-owned
subsidiaries of Aberdeen Asset
Management PLC. AAMI serves as the
investment adviser to the series of the
Trust pursuant to an investment
advisory agreement between AAMI and
the Trust, on behalf of its series (the
‘‘AAMI Agreement’’). AAMAL and
AAML both serve as sub-advisers
(collectively, and in this capacity, the
‘‘Sub-Advisers’’) to certain series of the
Trust, including Aberdeen Asia-Pacific
(ex-Japan) Equity Fund, Aberdeen
Emerging Markets Fund and Aberdeen
China Opportunities Fund, pursuant to
sub-advisory agreements by and among
the Trust, AAMI and the respective SubAdviser (the ‘‘Sub-Advisory
Agreements’’). The Initial Advisers also
serve as sub-adviser to a number of
other registered management investment
companies or series thereof.2 AAMAL
1 Each entity that currently intends to rely on the
requested relief, other than the Initial Sub-Advised
Funds (defined below), has been named as an
applicant. Any existing or future registered openend or closed-end management investment
companies or series thereof for which an Initial
Adviser, or an Initial Adviser’s successor, or any
person controlling, controlled by, or under common
control with an Initial Adviser (an ‘‘Aberdeen
Affiliate’’) acts as investment adviser or sub-adviser
(each such Initial Adviser or Aberdeen Affiliate
acting as investment adviser or sub-adviser, an
‘‘Adviser’’) that may rely on the requested relief in
the future is a ‘‘Future Fund’’. For purposes of the
requested order, the term ‘‘successor’’ is limited to
an entity that results from a reorganization into
another jurisdiction or a change in the type of
business organization. The Initial Funds, SubAdvised Funds (as defined below) and Future
Funds are referred to collectively as the ‘‘Funds’’ or
individually as a ‘‘Fund’’. Each Fund or other entity
that may rely on the requested relief in the future
will do so only in accordance with the terms and
conditions of the requested order.
2 The following registered management
investment companies or series of registered
management investment companies are sub-advised
by an Adviser and, to the Adviser’s knowledge,
currently intend to rely on the requested relief,
subject to approval by their respective primary
investment advisers and boards of directors or
trustees: First Trust/Aberdeen Emerging
Opportunity Fund, Brighthouse/Aberdeen Emerging
Markets Equity Portfolio, Emerging Markets Equity
Portfolio, Thrivent Partner Emerging Markets Equity
Fund, Thrivent Partner Worldwide Allocation
Fund, Thrivent Partner Emerging Markets Equity
Portfolio and Thrivent Partner Worldwide
Allocation Portfolio (collectively, the ‘‘Initial SubAdvised Funds,’’ and together with any other
existing or future registered open-end or closed-end
management investment company or series thereof
that is sub-advised by an Adviser that may rely on
the requested relief in the future, the ‘‘Sub-Advised
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serves as the investment manager to
GCH pursuant to an investment
management agreement (together with
the AAMI Agreement and Sub-Advisory
Agreements, the ‘‘Advisory
Agreements’’). The Initial Advisers are
responsible for making investment
decisions for the Initial Funds and
Initial Sub-Advised Funds that they
advise or sub-advise, as applicable, and
for administering the business and
affairs of such Initial Funds. The Initial
Advisers are entitled, under the terms of
the Advisory Agreements, to receive
management fees directly from the
Initial Funds, or in the case of the SubAdvisers, from AAMI, in each case at
specified rates. In the case of the Initial
Sub-Advised Funds, the Initial Advisers
receive a sub-advisory fee from the
applicable Unaffiliated Manager
(defined below) at specified rates.3 As
investment adviser, investment manager
and/or sub-adviser, AAMI’s, AAML’s
and AAMAL’s activities are subject to
the oversight of the Board of Trustees of
the Trust and the Board of Directors of
GCH, as applicable (each Fund’s Board
of trustees/directors, a ‘‘Board’’), at least
a majority of whose members are not
‘‘interested persons’’ of the Trust or
GCH, as defined in section 2(a)(19) of
the Act (the members of a Fund’s Board
who are not ‘‘interested persons’’ of the
relevant Fund, as defined in Section
2(a)(19) of the Act, the ‘‘Independent
Board Members’’).
4. The Advisers also advise or may
advise collective investment trusts,
private pooled investment vehicles and
investment companies registered in
other jurisdictions (together, the ‘‘Other
Vehicles’’), as well as separately
managed accounts (together with the
Other Vehicles, ‘‘Other Accounts’’).4
Applicants state that these Other
Accounts may have similar investment
objectives and strategies as the Funds
and will invest in an Aberdeen China A
Fund Series (defined below) along with
one or more Funds.
5. The Funds desire to purchase and
redeem limited liability company
interests (‘‘Interests’’) of separately
identified series of the Commingled LLC
(each separate series of the Commingled
LLC, an ‘‘Aberdeen China A Fund
Funds’’). Only the portion of a Sub-Advised Fund
managed by an Adviser would be permitted to make
investments into an Aberdeen China A Fund Series
(defined below) in reliance on the requested order.
3 Pursuant to condition 10, an Unaffiliated
Manager (defined below) would be required to
contractually agree to comply with the applicable
conditions of the requested order as a prerequisite
to a Sub-Advised Fund’s reliance on the requested
order.
4 The Applicants acknowledge that they are
neither seeking nor receiving relief with respect to
the separately managed accounts.
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Series’’). Each Aberdeen China A Fund
Series invests in securities of Chinese
companies, including without
limitation, class A Shares listed on
People’s Republic of China (‘‘PRC’’)
stock exchanges, rights to invest in such
class A Shares or other equivalent
securities authorized by the China
Securities Regulatory Commission for
purchase by non-Chinese investors or
‘‘qualified foreign institutional
investors’’ (‘‘QFII’’), corporate or
government bonds listed on PRC stock
exchanges or traded in the over-thecounter markets of the PRC and
warrants listed on PRC stock exchanges
(together, ‘‘Chinese Securities’’).5
Notwithstanding the foregoing, a
security will only be a ‘‘Chinese
Security’’ if it is subject to the quota
systems described in the application (as
such quota systems may be amended or
altered from time to time). Interests in
the Aberdeen China A Fund Series will
be sold only to the Funds and the Other
Accounts. The initial Aberdeen China A
Fund Series will be the China A Share
Equity Fund (the ‘‘Initial Aberdeen
China A Fund’’).
6. Applicants assert that, for a variety
of reasons, it is not practical or
economical for the Funds to invest a
significant amount of assets directly in
Chinese Securities. Applicants state
that, until 2002, the Chinese
government restricted investment in
China A Shares and other Chinese
Securities to domestic (i.e., Chinese)
investors.6 According to Applicants,
since 2002, the Chinese Government has
permitted certain non-Chinese investors
to invest in China A Shares and
gradually has liberalized applicable
rules to permit non-Chinese investors to
invest in other types of Chinese
Securities. However, subject to limited
exceptions described in the application,
to do so, a foreign investor must receive
a license as a QFII or Renminbi
Qualified Foreign Institutional Investor
(‘‘RQFII’’) and be allotted a quota,
representing the amount in renminbi of
Chinese Securities that the investor may
purchase. As described more fully in the
application, individual applications on
behalf of each Fund or Other Account
would generally not be practical or
feasible. Accordingly, AAMAL has
obtained QFII and RQFII licenses and
5 Applicants represent that the Aberdeen China A
Fund Series will not invest in derivatives or in
other pooled investment vehicles.
6 Applicants assert that, for a variety of reasons,
China A Shares are a more attractive means to
invest in Chinese companies than are other
categories of stock that are available on the
Shanghai, Shenzhen and Hong Kong Stock
Exchanges (which is where a significant majority of
publicly traded Chinese companies list their
shares).
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quota so that it can invest in Chinese
Securities on behalf of the Funds and
Other Accounts and the Advisers are
applying for additional quota under the
RQFII to be made available to the Initial
Aberdeen China A Fund and the Other
Accounts.
7. Applicants state that while some of
the Initial Funds currently invest in
China A Shares (pursuant to quota
allocated by AAMAL) and other Chinese
Securities, the use of the Aberdeen
China A Fund Series would allow the
Funds, and Other Accounts, to gain
dedicated exposure to Chinese
Securities and provide numerous
additional investment opportunities for
the Funds that are consistent with their
investment objectives and policies.
Additionally, being able to pool
investments into China A Shares with
Future Funds and Other Accounts will
provide more diversification with
respect to China A Share investments.
Future Funds would obtain access to
China A Shares without having to
obtain individual licenses as QFIIs or
RQFIIs, and without having to comply
with the reporting required for each
fund or account that is allocated quota
from an Adviser with an existing QFII
or RQFII license. Applicants state that
each Aberdeen China A Fund Series
will invest only in Chinese securities
and cash and cash equivalents.
8. The Commingled LLC is organized
as a Delaware limited liability company.
AAMI serves as the managing member
of the Commingled LLC. The
Commingled LLC does not have a board
of directors or trustees. Each Fund or
Other Account may purchase interests
of an Aberdeen China A Fund Series; if
there is more than one Aberdeen China
A Fund Series, a Fund or Other Account
may invest in some or all of the different
Aberdeen China A Fund Series.7 Each
Aberdeen China A Fund Series will
have its own portfolio manager or
portfolio management team at AAMI
and/or AAMAL who will be responsible
for selecting particular Chinese
Securities for investment by that
Aberdeen China A Fund Series. Each
Fund or Other Account investing in an
Aberdeen China A Fund Series will
hold Interests which will represent a
proportionate share of the Aberdeen
China A Fund Series’ net assets and a
proportionate claim on the Aberdeen
China A Fund Series’ net income.
Interests in an Aberdeen China A Fund
7 Applicants state that one Aberdeen China A
Fund Series is contemplated, but in the future
additional Aberdeen China A Fund Series may be
established to invest in different issuers, or types,
of Chinese Securities based generally on the
particular characteristics of those issuers, or types,
of Chinese Securities.
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Series used by the Funds will be valued
daily in accordance with the Funds’
valuation procedures as approved by
each Fund’s Board and in accordance
with section 2(a)(41) of the Act. Each
Interest would have the same rights as
any other Interest, and the Aberdeen
China A Fund Series would not issue
preferred interests.
9. The Advisers will not charge
advisory fees to an Aberdeen China A
Fund Series used by the Funds. The
Advisers will, however, be entitled to
receive applicable advisory fees from
the Funds or Other Accounts. Expenses
of the Aberdeen China A Fund Series
will be charged to the Aberdeen China
A Fund Series as a whole and accrue on
a daily basis.8 The books of each
Aberdeen China A Fund Series will be
accounted for under standard
accounting principles and in accordance
with U.S. Generally Accepted
Accounting Principles (‘‘GAAP’’), and
they will be audited annually by a
nationally recognized and PCAOBregistered audit firm in accordance with
U.S. Generally Accepted Auditing
Standards (‘‘GAAS’’).9 An Aberdeen
China A Fund Series in which a Fund
invests will not engage in leverage or
borrow except that an Aberdeen China
A Fund Series may borrow in amounts
not exceeding 5% of its total assets for
temporary or emergency purposes or for
the clearance of transactions, but not for
speculative investment purposes, and
may pledge its assets to secure such
borrowings.
10. A Fund’s decision to invest in an
Aberdeen China A Fund Series will be
made by a Fund’s portfolio manager(s).
Although daily repatriation is permitted
under the RQFII open ended fund
model, it is possible that proceeds from
sales of portfolio investments in liquid
or illiquid Chinese Securities may not
be able to immediately be repatriated to
8 Expenses of the Aberdeen China A Fund Series
will include basic fees and expenses of service
providers, such as the administrator, transfer agent,
accountant, local custodian and legal counsel. No
fees will be paid by an Aberdeen China A Fund
Series to an administrator or transfer agent that is
an Aberdeen Affiliate or Unaffiliated Manager
(defined below) except in accordance with
condition 3.
9 Applicants state that the GAAS standards
applicable to the audit of an Aberdeen China A
Fund Series would be the same standards as those
applicable to a registered investment company.
Further, applicants state that GAAP would apply to
both the Aberdeen China A Fund Series audit and
a registered investment company audit. Thus,
applicants assert that critical accounting policies
governing security valuation, accounting for
investment transactions, recognition of investment
income and of expenses, and accrual of expenses,
which are often the critical policies applicable to
investment companies, would apply in
substantially the same manner for the audit of the
Aberdeen China A Fund Series.
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a foreign investor such as an Aberdeen
China A Fund Series at the approximate
value at which the Aberdeen China A
Fund Series has valued the investment.
Accordingly, each Fund will treat its
entire investment in an Aberdeen China
A Fund Series as an investment that is
not liquid for purposes of any
applicable rules or guidance of the
Commission or its staff regarding the
management of liquidity with respect to
open-end and/or closed-end funds, as
applicable, and will otherwise be
subject to the limits described in
condition 4.
11. Applicants state that access by the
Funds and Other Accounts to the quota
(i.e., to Chinese Securities) through the
Aberdeen China A Fund Series is not
expected to be limited. On a day to day
basis, each Aberdeen China A Fund
Series will utilize the quota that has
been allocated by the respective Adviser
or Aberdeen Affiliate. When an
Aberdeen China A Fund Series has used
up approximately 70% of the quota
allocated to it, the respective Adviser or
Aberdeen Affiliate will apply for
additional quota. Before any additional
quota is approved, in the event that
there is a shortfall or an anticipated
shortfall in available quota, the Adviser
or Aberdeen Affiliate will review
whether there is any surplus quota
allocated to a Fund, Other Account or
Aberdeen China A Fund Series that
could be reallocated to the Aberdeen
China A Fund Series. In the unlikely
circumstances that there are times when
an Aberdeen China A Fund Series’
investments will be limited by quota
limitations, access by the Funds and
Other Accounts to Aberdeen China A
Fund Series Interests will be allocated
in accordance with the Advisers’ trade
order aggregation and trade allocation
policies and procedures (the ‘‘Advisers’
Trade Allocation Policy’’). Under the
Advisers’ Trade Allocation Policy, if
fewer Interests are available than are
requested by the portfolio managers of
the Funds and Other Accounts, Interests
will generally be allocated across
participating accounts on a pro rata
basis according to requested order
size.10 However, there may be certain
10 Currently, AAMAL manages one other client to
which it has granted quota under its RQFII license,
which is the Aberdeen Global—China A Share
Equity Fund, a collective investment vehicle
incorporated in Luxembourg (the ‘‘Luxembourg
China A Fund’’) that is not available for sale to U.S.
investors. The Luxembourg China A Fund investors
are generally not permitted to invest in the
Aberdeen China A Fund Series due to their
residency outside of the U.S. AAMAL expects that
both funds will continue to be offered despite their
duplication in strategy, in order to make the
strategy available in multiple jurisdictions.
Additionally, AAMAL could, but is currently not
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circumstances where the Advisers,
consistent with the Trade Allocation
Policy as it will be amended, may take
into account other factors such that
there is a deviation from an exact pro
rata allocation in an effort to allocate
Interests fairly across accounts. For
example, given that it can take several
months to receive additional quota
under the RQFII structure, there may be
an instance where one Fund requests
additional Interests months before they
are available, while another Fund
requests additional Interests a day
before they are available. In that case,
the Advisers may take the timing of the
request into account and fulfill the first
Fund’s entire request for additional
Interests and offer the second Fund the
remainder, if any, while the Advisers
put in an additional request for quota so
that it can satisfy the second Fund’s
request. Similarly, if more than one
Fund or Other Account seeks to
repatriate proceeds at or about the same
time, and Chinese regulations limit the
aggregate amount of proceeds that may
be repatriated at any given time to a
level below the aggregate amount sought
to be repatriated, the requests by the
applicable portfolio manager(s) will be
aggregated, if received at or about the
same time, and proceeds available for
repatriation will be allocated pro rata
among requesting Funds and Other
Accounts.11 The Advisers will not
consider the potential impact on the
quota when making investment
decisions for the Funds or Other
Accounts.12
expected to, grant RQFII quota to similar collective
investment vehicles or other clients in the future
(together with the Luxembourg China A Fund and
the Aberdeen China A Fund Series, ‘‘Aberdeen
China Accounts’’). In the event that quota is
exhausted by the Luxembourg China A Fund or
other client(s) prior to the launch of the Initial
China A Fund Series, AAMAL intends to apply for
additional quota. To the extent there is demand for
additional Chinese Securities through the RQFII
license from multiple Aberdeen China Accounts or
from other clients of the Advisers who are allocated
quota through a QFII license, allocations of Chinese
Securities, like allocations of other investment
opportunities among Funds and Other Accounts,
will be subject to the Advisers’ Trade Allocation
Policy. Similarly, consistent with the Advisers’
Trade Allocation Policy, in the event that AAMAL
receives additional RQFII quota, such additional
RQFII quota will be allocated amongst Aberdeen
China Accounts pro rata based on amounts
requested by such Aberdeen China Accounts.
11 Applicants are not seeking comfort nor is the
Commission providing any opinion on whether the
Advisers’ Trade Allocation Policy meets the
standards applicable under the Act or the Advisers
Act.
12 Applicants state that the quota may be reduced
or revoked if AAMAL (or if other Advisers in the
future receive a license, by the relevant Adviser)
does not invest the full amount of its quota over a
phase-in period, or if it repatriates its investments
below the quota amount.
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12. Applicants state that AAMI
contemplates making a nominal
investment (i.e. expected to be $1,000
and in no case more than $10,000) in
the Initial Aberdeen China A Fund.
AAMI will acquire Interests in the
Initial Aberdeen China A Fund having
rights, duties and obligations that are
identical in all respects to Interests
purchased by other investors in the
Initial Aberdeen China A Fund. The
sole purpose of the proposed investment
is to permit AAMI to serve as the tax
matters partner of the Initial Aberdeen
China A Fund, which intends to be
treated as a partnership for U.S. federal
tax purposes. Applicants state that in
the absence of AAMI’s investment, it is
likely that the U.S. Internal Revenue
Service would appoint a non-managing
member partner of the Commingled LLC
to serve as tax matters partner of the
Initial Aberdeen China A Fund in an
audit proceeding. In addition, absent
AAMI’s investment, the tax matters
partner could change from year-to-year,
which may disrupt preparation of the
Initial Aberdeen China A Fund’s annual
tax return.
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Applicants’ Legal Analysis
Section 17(a)—Purchase and Sale of
Interests
1. Section 17(a) generally provides, in
part, that it is unlawful for any affiliated
person of a registered investment
company (‘‘first-tier affiliate’’), or any
affiliated person of such person
(‘‘second tier affiliate’’), acting as
principal, to sell or purchase any
security or other property to or from
such investment company. Section
2(a)(3) of the Act defines an ‘‘affiliated
person’’ of another person to include (a)
any person directly or indirectly
owning, controlling, or holding with
power to vote, 5% or more of the
outstanding voting securities of the
other person; (b) any person 5% or more
of whose outstanding voting securities
are directly or indirectly owned,
controlled, or held with the power to
vote by the other person; and (c) any
person directly or indirectly controlling,
controlled by, or under common control
with the other person. Section 2(a)(9)
defines ‘‘control’’ to mean ‘‘the power to
exercise a controlling influence over the
management or policies of a company,
unless such power is solely the result of
an official position with such
company.’’
2. Applicants state that the Funds and
the Aberdeen China A Fund Series are
expected to be affiliated persons under
section 2(a)(3) of the Act, because it is
expected that one or more Funds and
Other Vehicles will own at least 5%,
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and potentially, more than 25% of the
Interests of an Aberdeen China A Fund
Series. While Interests of an Aberdeen
China A Fund Series will be non-voting
interests, a Fund or Other Vehicle could
have power to exercise a controlling
influence over the management or
policies of an Aberdeen China A Fund
Series and be deemed an affiliated
person of the Aberdeen China A Fund
Series under section 2(a)(3)(C).
Furthermore, as the investment advisers
to the Funds, the Advisers are affiliated
persons of the Funds that they advise
under section 2(a)(3)(E) and, because
AAMI is the managing member of the
Commingled LLC, an Aberdeen China A
Fund Series may be deemed to be under
AAMI’s control under section 2(a)(3)(C),
resulting in each Aberdeen China A
Fund Series being deemed an affiliated
person of an affiliated person of certain,
if not all, of the Funds. Since the Funds
and the Aberdeen China A Fund Series
may share a common investment
adviser or investment advisers that are
wholly-owned by the same parent
company, they may be deemed to be
first-tier affiliates by virtue of arguably
being under common control for
purposes of section 2(a)(3)(C).
3. If a Fund and an Aberdeen China
A Fund Series are deemed affiliates of
each other, or even second-tier affiliates,
the sale of Interests of the Aberdeen
China A Fund Series to the Fund, and
the redemption of such Interests by the
Fund, would be prohibited under
section 17(a) of the Act.
4. Section 17(b) of the Act authorizes
the Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if the terms
of the proposed transaction, including
the consideration to be paid or received,
are fair and reasonable and do not
involve overreaching on the part of any
person concerned, and the proposed
transaction is consistent with the
policies of each registered investment
company involved and with the general
purposes of the Act. Section 6(c) of the
Act permits the Commission to exempt
any person or transactions from any
provisions of the Act if 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.
5. Applicants submit that the
proposed arrangement satisfies the
standards for relief under sections 17(b)
and 6(c) of the Act. For the reasons
discussed below, Applicants submit that
the terms of the arrangement, including
the consideration to be paid, are fair and
reasonable and do not involve
overreaching on the part of any person
PO 00000
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Fmt 4703
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14071
concerned, and that the proposed
transactions are consistent with the
policy of each registered investment
company concerned and with the
general purposes of the Act. Applicants
further submit that the Funds’
participation in the Aberdeen China A
Fund Series will be necessary or
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policies and provisions
of the Act.
6. Applicants state that each Fund
and Other Account will be treated
identically as a holder of Interest in the
Aberdeen China A Fund Series, and
each Fund and Other Account will
purchase and sell Interests of an
Aberdeen China A Fund Series on the
same terms and on the same basis as
each other Fund and Other Account that
invests in that Aberdeen China A Fund
Series. Applicants note that no Adviser,
Aberdeen Affiliate, or investment
manager to a Sub-Advised Fund that is
not an Initial Adviser or Aberdeen
Affiliate or any person controlling,
controlled by or under common control
with such investment manager (any
such investment manager to a SubAdvised Fund or control affiliate of
such investment manager, an
‘‘Unaffiliated Manager’’) will receive an
advisory fee from an Aberdeen China A
Fund Series used by the Funds. The
Funds, as holders of Interests of the
Aberdeen China A Fund Series, will not
be subject to any sales load, redemption
fee, distribution fee or service fee,
except that the Aberdeen China A Fund
Series will have the discretion to
impose a redemption fee in accordance
with applicable law or regulation for the
purpose of offsetting brokerage, tax or
other costs. If a redemption fee is
charged by an Aberdeen China A Fund
Series, such fee will be limited in
accordance with the then-current
requirements of the Commission
applicable to management investment
companies offering redeemable
securities as if the Aberdeen China A
Fund Series were an open-end
investment company. The financial
statements of the Aberdeen China A
Fund Series will be audited. Moreover,
administrative fees and transfer agent
fees will be paid by an Aberdeen China
A Fund Series used by the Funds to an
Adviser, Aberdeen Affiliate, or
Unaffiliated Manager only upon the
determination by each Fund’s Board,
including a majority of Independent
Board Members, that the fees are (i) for
services in addition to, rather than
duplicative of, services rendered to the
Funds directly and (ii) fair and
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reasonable in light of the usual and
customary charges imposed by others
for services of the same nature and
quality. Applicants argue that the fees
payable to the Aberdeen China A Fund
Series’ service providers will be for
distinct services, and the costs of such
fees will be outweighed by opportunity
to invest in Chinese Securities.
Section 17(d)
7. Section 17(d) of the Act and rule
17d–1 under the Act generally prohibit
joint transactions involving registered
investment companies and their
affiliates unless the Commission has
approved the transaction. In considering
whether to approve a joint transaction
under rule 17d–1, the Commission
considers whether the proposed
transaction is consistent with the
provisions, policies, and purposes of the
Act, and the extent to which the
participation of the investment
companies is on a basis different from
or less advantageous than that of the
other participants.
8. Applicants state that the Funds (by
purchasing Interests of the Aberdeen
China A Fund Series), the Advisers (by
managing the portfolio securities of the
Aberdeen China A Fund Series and the
Funds at the same time that the Funds
are invested in Interests of the Aberdeen
China A Fund Series and/or by
providing a nominal tax matters partner
investment in the Aberdeen China A
Fund Series), and the Aberdeen China A
Fund Series (by selling its Interests to,
and redeeming its Interests from, the
Funds), could be deemed to be
participants in a joint enterprise or
arrangement within the meaning of
section 17(d) and rule 17d–1.
9. Applicants request an order
pursuant to section 17(d) and rule 17d–
1 to permit the proposed transactions
with the Aberdeen China A Fund Series.
Applicants submit that the investment
by the Funds in the Aberdeen China A
Fund Series on the basis proposed is
consistent with the provisions, policies
and purposes of the Act, and that each
Fund will invest in Interests of the
Aberdeen China A Fund Series on the
same basis as any other shareholder (i.e.,
the other Funds and Other Accounts).
Applicants further state that the
Advisers will take reasonable steps to
make sure that allocations among the
Funds and Other Accounts are fair and
equitable. Allocations of Chinese
Securities to different Aberdeen China
A Fund Series, and allocations of
opportunities to invest in the Aberdeen
China A Fund Series, by Funds and
Other Accounts, will be subject to the
Advisers’ Trade Allocation Policy,
under the supervision of the Advisers’
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19:06 Mar 30, 2018
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and the Funds’ Chief Compliance
Officer, and compliance with the
Advisers’ Trade Allocation Policy will
be overseen by each Fund’s Board.
10. Applicants do not believe that
AAMI’s nominal investment as tax
matters partner in the Initial Aberdeen
China A Fund poses any potential
conflict of interest not addressed by the
conditions contained in the application.
AAMI will acquire Interests having
rights, duties and obligations that are
identical in all respects to Interests
purchased by other investors in the
Initial Aberdeen China A Fund.
Section 17(a)—Cross Transactions
11. Applicants propose that the Funds
be permitted to continue to engage in
certain purchase and sale cross
transactions in securities (‘‘Cross
Transactions’’) between a Fund seeking
to implement a portfolio strategy and an
Other Vehicle seeking to raise or invest
cash. The Funds currently rely on rule
17a–7 to engage in such Cross
Transactions; however, if a Fund and an
Other Vehicle were deemed to be
second-tier affiliates of each other by
virtue of their ownership or control
affiliations with an Aberdeen China A
Fund Series, the Funds may not be
entitled to rely on rule 17a–7 because
they would no longer be affiliated solely
for the reasons permitted by the rule.
12. Applicants assert that the
potential affiliations created by the
Aberdeen China A Fund Series structure
do not affect the other protections
provided by the rule, including the
integrity of the pricing mechanism
employed, and oversight by each Fund’s
Board. Applicants represent that the
Funds and Other Vehicles will comply
with the requirements set forth in rule
17d–(7)(a) through (g). Applicants thus
believe that Cross Transactions will be
reasonable and fair, and will not involve
overreaching, and will be consistent
with the purposes of the Act and the
investment policy of each Fund.
Applicants’ Conditions
Applicants agree that any order
granting the requested relief shall be
subject to the following conditions:
1. The Funds’ investments in Interests
of an Aberdeen China A Fund Series
will be undertaken only in accordance
with the Funds’ stated investment
restrictions and will be consistent with
their stated investment policies.
2. The Advisers, their affiliated
persons and Unaffiliated Managers will
receive no advisory fee from an
Aberdeen China A Fund Series in
connection with the Funds’ investment
in the Aberdeen China A Fund Series.
The Advisers, their affiliated persons
PO 00000
Frm 00130
Fmt 4703
Sfmt 4703
and Unaffiliated Managers will receive
no commissions, fees, or other
compensation (except for administrative
and/or transfer agent fees that are paid
in accordance with condition 3 as
described in the application) from a
Fund or an Aberdeen China A Fund
Series in connection with the purchase
or redemption by the Funds of Interests
in the Aberdeen China A Fund Series.
Interests of an Aberdeen China A Fund
Series will not be subject to a sales load,
redemption fee, distribution fee or
service fee, except that the Aberdeen
China A Fund Series will have the
discretion to impose a redemption fee in
accordance with applicable law or
regulation for the purpose of offsetting
brokerage, tax or other costs. If a
redemption fee is charged by an
Aberdeen China A Fund Series, such fee
will be limited in accordance with the
then-current requirements of the
Commission applicable to management
investment companies offering
redeemable securities as if the Aberdeen
China A Fund Series were an open-end
investment company registered under
the Act.
3. Administrative fees and transfer
agent fees will be paid by an Aberdeen
China A Fund Series used by the Funds
to an Adviser, Aberdeen Affiliate or
Unaffiliated Manager only upon a
determination by each Fund’s Board,
including a majority of its Independent
Board Members, that the fees are (i) for
services in addition to, rather than
duplicative of, services rendered to the
Funds directly and (ii) fair and
reasonable in light of the usual and
customary charges imposed by others
for services of the same nature and
quality. If such determination is not
made by a Fund’s Board, the Fund’s
Adviser will reimburse to that Fund the
amount of any administrative fee and
transfer agent fee borne by that Fund as
an investor in the Aberdeen China A
Fund Series.
4. Each Fund will treat its entire
investment in an Aberdeen China A
Fund Series as an investment that is not
liquid for purposes of any applicable
rules or guidance of the Commission or
its staff regarding the management of
liquidity. For example, under current
guidelines, each Fund that is an openend fund must not purchase an illiquid
security if, as a result, more than 15%
of its net assets would be invested in
illiquid assets, which for purposes of
the requested relief include any
investments in an Aberdeen China A
Fund Series. In addition, each Fund
will, at all times, limit its holdings in
the Aberdeen China A Fund Series to no
more than 15% of its net assets.
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5. Each Fund’s Board, including a
majority of the Independent Board
Members, will determine initially and
no less frequently than annually that the
Fund’s investment in the Aberdeen
China A Fund Series is, and continues
to be, in the best interests of the Fund
and the Fund’s shareholders. As part of
this determination, each Fund’s Board
will consider the custody arrangements
for the Aberdeen China A Fund Series’
foreign securities (under rule 17f–5) and
the bonding arrangements in place for
certain of the Aberdeen China A Fund
Series’ officers and employees (under
rule 17g–1).
6. The Advisers will make the
accounts, books and other records of
each Aberdeen China A Fund Series
available for inspection by the
Commission staff and, if requested, will
furnish copies of those records to the
Commission staff.
7. Each Aberdeen China A Fund
Series will comply with the following
sections of the Act as if the Aberdeen
China A Fund Series were an open-end
management investment company
registered under the Act, except as
noted: Section 9; section 12 (except that
each Aberdeen China A Fund Series
shall be permitted to sell Interests to
Funds in excess of the limits set out in
section 12(d)(1)(B)); section 13 (the
Interests issued by the Aberdeen China
A Fund Series will be regarded as voting
securities under section 2(a) (42) of the
Act for purposes of applying this
condition and the offering
memorandum utilized by the Aberdeen
China A Fund Series to offer and sell
Interests will be regarded as a
registration statement for purposes of
applying this condition); section 17(a)
(except as described in the application);
section 17(d) (except as described in the
application); section 17(e); section 17(f);
section 17(h), section 18 (the Interests
issued by the Aberdeen China A Fund
Series will be regarded as voting
securities under section 2(a)(42) of the
Act for purposes of applying this
condition); section 21; section 36; and
sections 37–53. In addition, the
Aberdeen China A Fund Series will
comply with the rules under section
17(f) 13 and section 17(g) of the Act, and
rule 22c–1 under the Act as if the
Aberdeen China A Fund Series were an
open-end management investment
company registered under the Act. This
condition 7 will apply only to Aberdeen
China A Fund Series in which a Fund
has invested; this condition 7 will not
13 The Applicants note that they will operate each
Aberdeen China A Fund Series such that rule 17f–
1, rule 17f–2, and rule 17f–3 will not be applicable
to it.
VerDate Sep<11>2014
19:06 Mar 30, 2018
Jkt 244001
apply to Aberdeen China A Fund Series
invested in exclusively by Other
Accounts except insofar as necessary for
the Aberdeen China A Fund Series
invested in by a Fund to comply with
this condition.
The Advisers will adopt procedures
designed to ensure that each Aberdeen
China A Fund Series complies with the
aforementioned sections of the Act and
rules under the Act. The Advisers will
periodically review and periodically
update as appropriate such procedures
and will maintain books and records
describing such procedures, and
maintain the records required by rules
31d–1(b)(1), 31d–1(b)(2)(ii) and 31d–
1(b)(9) under the Act. In addition, in
connection with the determination
required by condition 5 above, the
Advisers will provide annually to each
Fund’s Board a written report about the
Advisers’ and the Aberdeen China A
Fund Series’ compliance with this
condition.
All books and records required to be
made pursuant to this condition will be
maintained and preserved for a period
of not less than six years from the end
of the fiscal year in which any
transaction occurred, the first two years
in an easily accessible place, and will be
subject to examination by the
Commission and its staff.
For purpose of implementing
condition 7, any action that the abovereferenced statutory and regulatory
provisions require to be taken by the
directors, officers and/or employees of a
registered investment company will be
performed by AAMI (or its successor) 14
as the managing member of the
Commingled LLC, except to the extent
that the order requires the Funds’
Boards to exercise oversight or take
action with respect to the Aberdeen
China A Fund Series as an extension of
such Boards’ duties to the Funds.
8. To engage in Cross Transactions,
the Funds will comply with rule 17a–
7 under the Act in all respects other
than the requirement that the parties to
the transaction be affiliated persons (or
affiliated persons of affiliated persons)
of each other solely by reason of having
a common investment adviser or
investment advisers which are affiliated
persons of each other, common officers,
and/or common directors, solely
because a Fund and Other Vehicle
might become affiliated persons within
the meaning of section 2(a)(3)(A), (B) or
(C) of the Act because of their
investments in an Aberdeen China A
Fund Series.
9. An Aberdeen China A Fund Series
in which a Fund invests will not engage
14 See
PO 00000
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Frm 00131
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Sfmt 4703
14073
in leverage or borrow except that an
Aberdeen China A Fund Series may
borrow in amounts not exceeding 5% of
its total assets for temporary or
emergency purposes or for the clearance
of transactions, but not for speculative
investment purposes, and may pledge
its assets to secure such borrowings.
10. A Sub-Advised Fund may not
invest in an Aberdeen China A Fund
Series in reliance on the order unless
the Sub-Advised Fund’s Unaffiliated
Manager has executed an agreement
with the Aberdeen China A Fund Series
stating that the Unaffiliated Manager
understands the terms and conditions of
the order and agrees to comply with
conditions 1, 2, 3, 4, 5 and 8 of the
order.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Jill Peterson,
Assistant Secretary.
[FR Doc. 2018–06567 Filed 3–30–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–267, OMB Control No.
3235–0272]
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Extension:
Rule 11a–2
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission (the
‘‘Commission’’) has submitted to the
Office of Management and Budget a
request for extension of the previously
approved collection of information
discussed below.
Rule 11a–2 (17 CFR 270.11a–2) under
the Investment Company Act of 1940
(15 U.S.C. 80a–1 et seq.) permits certain
registered insurance company separate
accounts, subject to certain conditions,
to make exchange offers without prior
approval by the Commission of the
terms of those offers. Rule 11a–2
requires disclosure, in certain
registration statements filed pursuant to
the Securities Act of 1933 (15 U.S.C. 77a
et seq.) of any administrative fee or sales
load imposed in connection with an
exchange offer.
There are currently 673 registrants
governed by Rule 11a–2. The
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]]>Agencies
[Federal Register Volume 83, Number 63 (Monday, April 2, 2018)]
[Notices]
[Pages 14068-14073]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-06567]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33058; 812-14670]
Aberdeen Asset Management Inc., et al.
March 27, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
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Notice of application for an order under sections 6(c) and 17(b) of
the Investment Company Act of 1940 (``Act'') for exemptions from
section 17(a) of the Act, and under section 17(d) of the Act and rule
17d-1 thereunder to permit certain joint transactions.
Summary of Application: Applicants requests an order to permit certain
registered open-end and closed-end management investment companies or
series thereof to invest in a private investment vehicle established by
their investment advisers for the purpose of investing in China A
Shares and certain other Chinese securities.
Applicants: Aberdeen Asset Management Inc. (``AAMI''), Aberdeen Asset
Managers Limited, (``AAML''), Aberdeen Asset Management Asia Limited
(``AAMAL,'' and together with AAMI and AAML, the ``Initial Advisers''),
Aberdeen Funds (the ``Trust''), Aberdeen Greater China Fund, Inc.
(``GCH''), and Aberdeen Institutional Commingled Funds, LLC (the
``Commingled LLC'').
Filing Dates: The application was filed on July 20, 2016, and amended
on February 10, 2017, September 22, 2017, January 18, 2018, and March
19, 2018.
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 applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on April 23, 2018, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Pursuant to rule 0-5 under the Act, hearing
requests should state the nature of the writer's interest, any facts
bearing upon the desirability of a hearing on the matter, 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, U.S. Securities and Exchange Commission, 100 F
Street NE, Washington, DC 20549-1090. Applicants: 225 Liberty Street,
New York, NY 10281.
FOR FURTHER INFORMATION CONTACT: Kieran G. Brown, Senior Counsel, at
(202) 551-6773, or Robert H. Shapiro, Branch Chief, at (202) 551-6821
(Division of Investment Management, Chief Counsel's Office).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's website by searching for the file number, or an applicant
using the Company name box, at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicants' Representations:
1. The Trust is a Delaware statutory trust and is registered under
Act as an open-end management investment company. GCH is a Maryland
corporation and is registered under the Act as a closed-end management
investment company. Each of Aberdeen Asia-Pacific (ex-Japan) Equity
Fund, Aberdeen Emerging Markets Fund and Aberdeen China Opportunities
Fund (together with GCH, collectively, the ``Initial Funds'') is a
series of the Trust.
2. The Commingled LLC is a limited liability company under the
Delaware Limited Liability Company Act, which relies on the exemption
from registration under the Act provided by section 3(c)(7) of the
Act.\1\
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\1\ Each entity that currently intends to rely on the requested
relief, other than the Initial Sub-Advised Funds (defined below),
has been named as an applicant. Any existing or future registered
open-end or closed-end management investment companies or series
thereof for which an Initial Adviser, or an Initial Adviser's
successor, or any person controlling, controlled by, or under common
control with an Initial Adviser (an ``Aberdeen Affiliate'') acts as
investment adviser or sub-adviser (each such Initial Adviser or
Aberdeen Affiliate acting as investment adviser or sub-adviser, an
``Adviser'') that may rely on the requested relief in the future is
a ``Future Fund''. For purposes of the requested order, the term
``successor'' is limited to an entity that results from a
reorganization into another jurisdiction or a change in the type of
business organization. The Initial Funds, Sub-Advised Funds (as
defined below) and Future Funds are referred to collectively as the
``Funds'' or individually as a ``Fund''. Each Fund or other entity
that may rely on the requested relief in the future will do so only
in accordance with the terms and conditions of the requested order.
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3. Each Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 (``Advisers Act''), and AAMI, AAML and
AAMAL are wholly-owned subsidiaries of Aberdeen Asset Management PLC.
AAMI serves as the investment adviser to the series of the Trust
pursuant to an investment advisory agreement between AAMI and the
Trust, on behalf of its series (the ``AAMI Agreement''). AAMAL and AAML
both serve as sub-advisers (collectively, and in this capacity, the
``Sub-Advisers'') to certain series of the Trust, including Aberdeen
Asia-Pacific (ex-Japan) Equity Fund, Aberdeen Emerging Markets Fund and
Aberdeen China Opportunities Fund, pursuant to sub-advisory agreements
by and among the Trust, AAMI and the respective Sub-Adviser (the ``Sub-
Advisory Agreements''). The Initial Advisers also serve as sub-adviser
to a number of other registered management investment companies or
series thereof.\2\ AAMAL
[[Page 14069]]
serves as the investment manager to GCH pursuant to an investment
management agreement (together with the AAMI Agreement and Sub-Advisory
Agreements, the ``Advisory Agreements''). The Initial Advisers are
responsible for making investment decisions for the Initial Funds and
Initial Sub-Advised Funds that they advise or sub-advise, as
applicable, and for administering the business and affairs of such
Initial Funds. The Initial Advisers are entitled, under the terms of
the Advisory Agreements, to receive management fees directly from the
Initial Funds, or in the case of the Sub-Advisers, from AAMI, in each
case at specified rates. In the case of the Initial Sub-Advised Funds,
the Initial Advisers receive a sub-advisory fee from the applicable
Unaffiliated Manager (defined below) at specified rates.\3\ As
investment adviser, investment manager and/or sub-adviser, AAMI's,
AAML's and AAMAL's activities are subject to the oversight of the Board
of Trustees of the Trust and the Board of Directors of GCH, as
applicable (each Fund's Board of trustees/directors, a ``Board''), at
least a majority of whose members are not ``interested persons'' of the
Trust or GCH, as defined in section 2(a)(19) of the Act (the members of
a Fund's Board who are not ``interested persons'' of the relevant Fund,
as defined in Section 2(a)(19) of the Act, the ``Independent Board
Members'').
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\2\ The following registered management investment companies or
series of registered management investment companies are sub-advised
by an Adviser and, to the Adviser's knowledge, currently intend to
rely on the requested relief, subject to approval by their
respective primary investment advisers and boards of directors or
trustees: First Trust/Aberdeen Emerging Opportunity Fund,
Brighthouse/Aberdeen Emerging Markets Equity Portfolio, Emerging
Markets Equity Portfolio, Thrivent Partner Emerging Markets Equity
Fund, Thrivent Partner Worldwide Allocation Fund, Thrivent Partner
Emerging Markets Equity Portfolio and Thrivent Partner Worldwide
Allocation Portfolio (collectively, the ``Initial Sub-Advised
Funds,'' and together with any other existing or future registered
open-end or closed-end management investment company or series
thereof that is sub-advised by an Adviser that may rely on the
requested relief in the future, the ``Sub-Advised Funds''). Only the
portion of a Sub-Advised Fund managed by an Adviser would be
permitted to make investments into an Aberdeen China A Fund Series
(defined below) in reliance on the requested order.
\3\ Pursuant to condition 10, an Unaffiliated Manager (defined
below) would be required to contractually agree to comply with the
applicable conditions of the requested order as a prerequisite to a
Sub-Advised Fund's reliance on the requested order.
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4. The Advisers also advise or may advise collective investment
trusts, private pooled investment vehicles and investment companies
registered in other jurisdictions (together, the ``Other Vehicles''),
as well as separately managed accounts (together with the Other
Vehicles, ``Other Accounts'').\4\ Applicants state that these Other
Accounts may have similar investment objectives and strategies as the
Funds and will invest in an Aberdeen China A Fund Series (defined
below) along with one or more Funds.
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\4\ The Applicants acknowledge that they are neither seeking nor
receiving relief with respect to the separately managed accounts.
---------------------------------------------------------------------------
5. The Funds desire to purchase and redeem limited liability
company interests (``Interests'') of separately identified series of
the Commingled LLC (each separate series of the Commingled LLC, an
``Aberdeen China A Fund Series''). Each Aberdeen China A Fund Series
invests in securities of Chinese companies, including without
limitation, class A Shares listed on People's Republic of China
(``PRC'') stock exchanges, rights to invest in such class A Shares or
other equivalent securities authorized by the China Securities
Regulatory Commission for purchase by non-Chinese investors or
``qualified foreign institutional investors'' (``QFII''), corporate or
government bonds listed on PRC stock exchanges or traded in the over-
the-counter markets of the PRC and warrants listed on PRC stock
exchanges (together, ``Chinese Securities'').\5\ Notwithstanding the
foregoing, a security will only be a ``Chinese Security'' if it is
subject to the quota systems described in the application (as such
quota systems may be amended or altered from time to time). Interests
in the Aberdeen China A Fund Series will be sold only to the Funds and
the Other Accounts. The initial Aberdeen China A Fund Series will be
the China A Share Equity Fund (the ``Initial Aberdeen China A Fund'').
---------------------------------------------------------------------------
\5\ Applicants represent that the Aberdeen China A Fund Series
will not invest in derivatives or in other pooled investment
vehicles.
---------------------------------------------------------------------------
6. Applicants assert that, for a variety of reasons, it is not
practical or economical for the Funds to invest a significant amount of
assets directly in Chinese Securities. Applicants state that, until
2002, the Chinese government restricted investment in China A Shares
and other Chinese Securities to domestic (i.e., Chinese) investors.\6\
According to Applicants, since 2002, the Chinese Government has
permitted certain non-Chinese investors to invest in China A Shares and
gradually has liberalized applicable rules to permit non-Chinese
investors to invest in other types of Chinese Securities. However,
subject to limited exceptions described in the application, to do so, a
foreign investor must receive a license as a QFII or Renminbi Qualified
Foreign Institutional Investor (``RQFII'') and be allotted a quota,
representing the amount in renminbi of Chinese Securities that the
investor may purchase. As described more fully in the application,
individual applications on behalf of each Fund or Other Account would
generally not be practical or feasible. Accordingly, AAMAL has obtained
QFII and RQFII licenses and quota so that it can invest in Chinese
Securities on behalf of the Funds and Other Accounts and the Advisers
are applying for additional quota under the RQFII to be made available
to the Initial Aberdeen China A Fund and the Other Accounts.
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\6\ Applicants assert that, for a variety of reasons, China A
Shares are a more attractive means to invest in Chinese companies
than are other categories of stock that are available on the
Shanghai, Shenzhen and Hong Kong Stock Exchanges (which is where a
significant majority of publicly traded Chinese companies list their
shares).
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7. Applicants state that while some of the Initial Funds currently
invest in China A Shares (pursuant to quota allocated by AAMAL) and
other Chinese Securities, the use of the Aberdeen China A Fund Series
would allow the Funds, and Other Accounts, to gain dedicated exposure
to Chinese Securities and provide numerous additional investment
opportunities for the Funds that are consistent with their investment
objectives and policies. Additionally, being able to pool investments
into China A Shares with Future Funds and Other Accounts will provide
more diversification with respect to China A Share investments. Future
Funds would obtain access to China A Shares without having to obtain
individual licenses as QFIIs or RQFIIs, and without having to comply
with the reporting required for each fund or account that is allocated
quota from an Adviser with an existing QFII or RQFII license.
Applicants state that each Aberdeen China A Fund Series will invest
only in Chinese securities and cash and cash equivalents.
8. The Commingled LLC is organized as a Delaware limited liability
company. AAMI serves as the managing member of the Commingled LLC. The
Commingled LLC does not have a board of directors or trustees. Each
Fund or Other Account may purchase interests of an Aberdeen China A
Fund Series; if there is more than one Aberdeen China A Fund Series, a
Fund or Other Account may invest in some or all of the different
Aberdeen China A Fund Series.\7\ Each Aberdeen China A Fund Series will
have its own portfolio manager or portfolio management team at AAMI
and/or AAMAL who will be responsible for selecting particular Chinese
Securities for investment by that Aberdeen China A Fund Series. Each
Fund or Other Account investing in an Aberdeen China A Fund Series will
hold Interests which will represent a proportionate share of the
Aberdeen China A Fund Series' net assets and a proportionate claim on
the Aberdeen China A Fund Series' net income. Interests in an Aberdeen
China A Fund
[[Page 14070]]
Series used by the Funds will be valued daily in accordance with the
Funds' valuation procedures as approved by each Fund's Board and in
accordance with section 2(a)(41) of the Act. Each Interest would have
the same rights as any other Interest, and the Aberdeen China A Fund
Series would not issue preferred interests.
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\7\ Applicants state that one Aberdeen China A Fund Series is
contemplated, but in the future additional Aberdeen China A Fund
Series may be established to invest in different issuers, or types,
of Chinese Securities based generally on the particular
characteristics of those issuers, or types, of Chinese Securities.
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9. The Advisers will not charge advisory fees to an Aberdeen China
A Fund Series used by the Funds. The Advisers will, however, be
entitled to receive applicable advisory fees from the Funds or Other
Accounts. Expenses of the Aberdeen China A Fund Series will be charged
to the Aberdeen China A Fund Series as a whole and accrue on a daily
basis.\8\ The books of each Aberdeen China A Fund Series will be
accounted for under standard accounting principles and in accordance
with U.S. Generally Accepted Accounting Principles (``GAAP''), and they
will be audited annually by a nationally recognized and PCAOB-
registered audit firm in accordance with U.S. Generally Accepted
Auditing Standards (``GAAS'').\9\ An Aberdeen China A Fund Series in
which a Fund invests will not engage in leverage or borrow except that
an Aberdeen China A Fund Series may borrow in amounts not exceeding 5%
of its total assets for temporary or emergency purposes or for the
clearance of transactions, but not for speculative investment purposes,
and may pledge its assets to secure such borrowings.
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\8\ Expenses of the Aberdeen China A Fund Series will include
basic fees and expenses of service providers, such as the
administrator, transfer agent, accountant, local custodian and legal
counsel. No fees will be paid by an Aberdeen China A Fund Series to
an administrator or transfer agent that is an Aberdeen Affiliate or
Unaffiliated Manager (defined below) except in accordance with
condition 3.
\9\ Applicants state that the GAAS standards applicable to the
audit of an Aberdeen China A Fund Series would be the same standards
as those applicable to a registered investment company. Further,
applicants state that GAAP would apply to both the Aberdeen China A
Fund Series audit and a registered investment company audit. Thus,
applicants assert that critical accounting policies governing
security valuation, accounting for investment transactions,
recognition of investment income and of expenses, and accrual of
expenses, which are often the critical policies applicable to
investment companies, would apply in substantially the same manner
for the audit of the Aberdeen China A Fund Series.
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10. A Fund's decision to invest in an Aberdeen China A Fund Series
will be made by a Fund's portfolio manager(s). Although daily
repatriation is permitted under the RQFII open ended fund model, it is
possible that proceeds from sales of portfolio investments in liquid or
illiquid Chinese Securities may not be able to immediately be
repatriated to a foreign investor such as an Aberdeen China A Fund
Series at the approximate value at which the Aberdeen China A Fund
Series has valued the investment. Accordingly, each Fund will treat its
entire investment in an Aberdeen China A Fund Series as an investment
that is not liquid for purposes of any applicable rules or guidance of
the Commission or its staff regarding the management of liquidity with
respect to open-end and/or closed-end funds, as applicable, and will
otherwise be subject to the limits described in condition 4.
11. Applicants state that access by the Funds and Other Accounts to
the quota (i.e., to Chinese Securities) through the Aberdeen China A
Fund Series is not expected to be limited. On a day to day basis, each
Aberdeen China A Fund Series will utilize the quota that has been
allocated by the respective Adviser or Aberdeen Affiliate. When an
Aberdeen China A Fund Series has used up approximately 70% of the quota
allocated to it, the respective Adviser or Aberdeen Affiliate will
apply for additional quota. Before any additional quota is approved, in
the event that there is a shortfall or an anticipated shortfall in
available quota, the Adviser or Aberdeen Affiliate will review whether
there is any surplus quota allocated to a Fund, Other Account or
Aberdeen China A Fund Series that could be reallocated to the Aberdeen
China A Fund Series. In the unlikely circumstances that there are times
when an Aberdeen China A Fund Series' investments will be limited by
quota limitations, access by the Funds and Other Accounts to Aberdeen
China A Fund Series Interests will be allocated in accordance with the
Advisers' trade order aggregation and trade allocation policies and
procedures (the ``Advisers' Trade Allocation Policy''). Under the
Advisers' Trade Allocation Policy, if fewer Interests are available
than are requested by the portfolio managers of the Funds and Other
Accounts, Interests will generally be allocated across participating
accounts on a pro rata basis according to requested order size.\10\
However, there may be certain circumstances where the Advisers,
consistent with the Trade Allocation Policy as it will be amended, may
take into account other factors such that there is a deviation from an
exact pro rata allocation in an effort to allocate Interests fairly
across accounts. For example, given that it can take several months to
receive additional quota under the RQFII structure, there may be an
instance where one Fund requests additional Interests months before
they are available, while another Fund requests additional Interests a
day before they are available. In that case, the Advisers may take the
timing of the request into account and fulfill the first Fund's entire
request for additional Interests and offer the second Fund the
remainder, if any, while the Advisers put in an additional request for
quota so that it can satisfy the second Fund's request. Similarly, if
more than one Fund or Other Account seeks to repatriate proceeds at or
about the same time, and Chinese regulations limit the aggregate amount
of proceeds that may be repatriated at any given time to a level below
the aggregate amount sought to be repatriated, the requests by the
applicable portfolio manager(s) will be aggregated, if received at or
about the same time, and proceeds available for repatriation will be
allocated pro rata among requesting Funds and Other Accounts.\11\ The
Advisers will not consider the potential impact on the quota when
making investment decisions for the Funds or Other Accounts.\12\
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\10\ Currently, AAMAL manages one other client to which it has
granted quota under its RQFII license, which is the Aberdeen
Global--China A Share Equity Fund, a collective investment vehicle
incorporated in Luxembourg (the ``Luxembourg China A Fund'') that is
not available for sale to U.S. investors. The Luxembourg China A
Fund investors are generally not permitted to invest in the Aberdeen
China A Fund Series due to their residency outside of the U.S. AAMAL
expects that both funds will continue to be offered despite their
duplication in strategy, in order to make the strategy available in
multiple jurisdictions. Additionally, AAMAL could, but is currently
not expected to, grant RQFII quota to similar collective investment
vehicles or other clients in the future (together with the
Luxembourg China A Fund and the Aberdeen China A Fund Series,
``Aberdeen China Accounts''). In the event that quota is exhausted
by the Luxembourg China A Fund or other client(s) prior to the
launch of the Initial China A Fund Series, AAMAL intends to apply
for additional quota. To the extent there is demand for additional
Chinese Securities through the RQFII license from multiple Aberdeen
China Accounts or from other clients of the Advisers who are
allocated quota through a QFII license, allocations of Chinese
Securities, like allocations of other investment opportunities among
Funds and Other Accounts, will be subject to the Advisers' Trade
Allocation Policy. Similarly, consistent with the Advisers' Trade
Allocation Policy, in the event that AAMAL receives additional RQFII
quota, such additional RQFII quota will be allocated amongst
Aberdeen China Accounts pro rata based on amounts requested by such
Aberdeen China Accounts.
\11\ Applicants are not seeking comfort nor is the Commission
providing any opinion on whether the Advisers' Trade Allocation
Policy meets the standards applicable under the Act or the Advisers
Act.
\12\ Applicants state that the quota may be reduced or revoked
if AAMAL (or if other Advisers in the future receive a license, by
the relevant Adviser) does not invest the full amount of its quota
over a phase-in period, or if it repatriates its investments below
the quota amount.
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[[Page 14071]]
12. Applicants state that AAMI contemplates making a nominal
investment (i.e. expected to be $1,000 and in no case more than
$10,000) in the Initial Aberdeen China A Fund. AAMI will acquire
Interests in the Initial Aberdeen China A Fund having rights, duties
and obligations that are identical in all respects to Interests
purchased by other investors in the Initial Aberdeen China A Fund. The
sole purpose of the proposed investment is to permit AAMI to serve as
the tax matters partner of the Initial Aberdeen China A Fund, which
intends to be treated as a partnership for U.S. federal tax purposes.
Applicants state that in the absence of AAMI's investment, it is likely
that the U.S. Internal Revenue Service would appoint a non-managing
member partner of the Commingled LLC to serve as tax matters partner of
the Initial Aberdeen China A Fund in an audit proceeding. In addition,
absent AAMI's investment, the tax matters partner could change from
year-to-year, which may disrupt preparation of the Initial Aberdeen
China A Fund's annual tax return.
Applicants' Legal Analysis
Section 17(a)--Purchase and Sale of Interests
1. Section 17(a) generally provides, in part, that it is unlawful
for any affiliated person of a registered investment company (``first-
tier affiliate''), or any affiliated person of such person (``second
tier affiliate''), acting as principal, to sell or purchase any
security or other property to or from such investment company. Section
2(a)(3) of the Act defines an ``affiliated person'' of another person
to include (a) any person directly or indirectly owning, controlling,
or holding with power to vote, 5% or more of the outstanding voting
securities of the other person; (b) any person 5% or more of whose
outstanding voting securities are directly or indirectly owned,
controlled, or held with the power to vote by the other person; and (c)
any person directly or indirectly controlling, controlled by, or under
common control with the other person. Section 2(a)(9) defines
``control'' to mean ``the power to exercise a controlling influence
over the management or policies of a company, unless such power is
solely the result of an official position with such company.''
2. Applicants state that the Funds and the Aberdeen China A Fund
Series are expected to be affiliated persons under section 2(a)(3) of
the Act, because it is expected that one or more Funds and Other
Vehicles will own at least 5%, and potentially, more than 25% of the
Interests of an Aberdeen China A Fund Series. While Interests of an
Aberdeen China A Fund Series will be non-voting interests, a Fund or
Other Vehicle could have power to exercise a controlling influence over
the management or policies of an Aberdeen China A Fund Series and be
deemed an affiliated person of the Aberdeen China A Fund Series under
section 2(a)(3)(C). Furthermore, as the investment advisers to the
Funds, the Advisers are affiliated persons of the Funds that they
advise under section 2(a)(3)(E) and, because AAMI is the managing
member of the Commingled LLC, an Aberdeen China A Fund Series may be
deemed to be under AAMI's control under section 2(a)(3)(C), resulting
in each Aberdeen China A Fund Series being deemed an affiliated person
of an affiliated person of certain, if not all, of the Funds. Since the
Funds and the Aberdeen China A Fund Series may share a common
investment adviser or investment advisers that are wholly-owned by the
same parent company, they may be deemed to be first-tier affiliates by
virtue of arguably being under common control for purposes of section
2(a)(3)(C).
3. If a Fund and an Aberdeen China A Fund Series are deemed
affiliates of each other, or even second-tier affiliates, the sale of
Interests of the Aberdeen China A Fund Series to the Fund, and the
redemption of such Interests by the Fund, would be prohibited under
section 17(a) of the Act.
4. Section 17(b) of the Act authorizes the Commission to grant an
order permitting a transaction otherwise prohibited by section 17(a) if
the terms of the proposed transaction, including the consideration to
be paid or received, are fair and reasonable and do not involve
overreaching on the part of any person concerned, and the proposed
transaction is consistent with the policies of each registered
investment company involved and with the general purposes of the Act.
Section 6(c) of the Act permits the Commission to exempt any person or
transactions from any provisions of the Act if 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.
5. Applicants submit that the proposed arrangement satisfies the
standards for relief under sections 17(b) and 6(c) of the Act. For the
reasons discussed below, Applicants submit that the terms of the
arrangement, including the consideration to be paid, are fair and
reasonable and do not involve overreaching on the part of any person
concerned, and that the proposed transactions are consistent with the
policy of each registered investment company concerned and with the
general purposes of the Act. Applicants further submit that the Funds'
participation in the Aberdeen China A Fund Series will be necessary or
appropriate in the public interest and consistent with the protection
of investors and the purposes fairly intended by the policies and
provisions of the Act.
6. Applicants state that each Fund and Other Account will be
treated identically as a holder of Interest in the Aberdeen China A
Fund Series, and each Fund and Other Account will purchase and sell
Interests of an Aberdeen China A Fund Series on the same terms and on
the same basis as each other Fund and Other Account that invests in
that Aberdeen China A Fund Series. Applicants note that no Adviser,
Aberdeen Affiliate, or investment manager to a Sub-Advised Fund that is
not an Initial Adviser or Aberdeen Affiliate or any person controlling,
controlled by or under common control with such investment manager (any
such investment manager to a Sub-Advised Fund or control affiliate of
such investment manager, an ``Unaffiliated Manager'') will receive an
advisory fee from an Aberdeen China A Fund Series used by the Funds.
The Funds, as holders of Interests of the Aberdeen China A Fund Series,
will not be subject to any sales load, redemption fee, distribution fee
or service fee, except that the Aberdeen China A Fund Series will have
the discretion to impose a redemption fee in accordance with applicable
law or regulation for the purpose of offsetting brokerage, tax or other
costs. If a redemption fee is charged by an Aberdeen China A Fund
Series, such fee will be limited in accordance with the then-current
requirements of the Commission applicable to management investment
companies offering redeemable securities as if the Aberdeen China A
Fund Series were an open-end investment company. The financial
statements of the Aberdeen China A Fund Series will be audited.
Moreover, administrative fees and transfer agent fees will be paid by
an Aberdeen China A Fund Series used by the Funds to an Adviser,
Aberdeen Affiliate, or Unaffiliated Manager only upon the determination
by each Fund's Board, including a majority of Independent Board
Members, that the fees are (i) for services in addition to, rather than
duplicative of, services rendered to the Funds directly and (ii) fair
and
[[Page 14072]]
reasonable in light of the usual and customary charges imposed by
others for services of the same nature and quality. Applicants argue
that the fees payable to the Aberdeen China A Fund Series' service
providers will be for distinct services, and the costs of such fees
will be outweighed by opportunity to invest in Chinese Securities.
Section 17(d)
7. Section 17(d) of the Act and rule 17d-1 under the Act generally
prohibit joint transactions involving registered investment companies
and their affiliates unless the Commission has approved the
transaction. In considering whether to approve a joint transaction
under rule 17d-1, the Commission considers whether the proposed
transaction is consistent with the provisions, policies, and purposes
of the Act, and the extent to which the participation of the investment
companies is on a basis different from or less advantageous than that
of the other participants.
8. Applicants state that the Funds (by purchasing Interests of the
Aberdeen China A Fund Series), the Advisers (by managing the portfolio
securities of the Aberdeen China A Fund Series and the Funds at the
same time that the Funds are invested in Interests of the Aberdeen
China A Fund Series and/or by providing a nominal tax matters partner
investment in the Aberdeen China A Fund Series), and the Aberdeen China
A Fund Series (by selling its Interests to, and redeeming its Interests
from, the Funds), could be deemed to be participants in a joint
enterprise or arrangement within the meaning of section 17(d) and rule
17d-1.
9. Applicants request an order pursuant to section 17(d) and rule
17d-1 to permit the proposed transactions with the Aberdeen China A
Fund Series. Applicants submit that the investment by the Funds in the
Aberdeen China A Fund Series on the basis proposed is consistent with
the provisions, policies and purposes of the Act, and that each Fund
will invest in Interests of the Aberdeen China A Fund Series on the
same basis as any other shareholder (i.e., the other Funds and Other
Accounts). Applicants further state that the Advisers will take
reasonable steps to make sure that allocations among the Funds and
Other Accounts are fair and equitable. Allocations of Chinese
Securities to different Aberdeen China A Fund Series, and allocations
of opportunities to invest in the Aberdeen China A Fund Series, by
Funds and Other Accounts, will be subject to the Advisers' Trade
Allocation Policy, under the supervision of the Advisers' and the
Funds' Chief Compliance Officer, and compliance with the Advisers'
Trade Allocation Policy will be overseen by each Fund's Board.
10. Applicants do not believe that AAMI's nominal investment as tax
matters partner in the Initial Aberdeen China A Fund poses any
potential conflict of interest not addressed by the conditions
contained in the application. AAMI will acquire Interests having
rights, duties and obligations that are identical in all respects to
Interests purchased by other investors in the Initial Aberdeen China A
Fund.
Section 17(a)--Cross Transactions
11. Applicants propose that the Funds be permitted to continue to
engage in certain purchase and sale cross transactions in securities
(``Cross Transactions'') between a Fund seeking to implement a
portfolio strategy and an Other Vehicle seeking to raise or invest
cash. The Funds currently rely on rule 17a-7 to engage in such Cross
Transactions; however, if a Fund and an Other Vehicle were deemed to be
second-tier affiliates of each other by virtue of their ownership or
control affiliations with an Aberdeen China A Fund Series, the Funds
may not be entitled to rely on rule 17a-7 because they would no longer
be affiliated solely for the reasons permitted by the rule.
12. Applicants assert that the potential affiliations created by
the Aberdeen China A Fund Series structure do not affect the other
protections provided by the rule, including the integrity of the
pricing mechanism employed, and oversight by each Fund's Board.
Applicants represent that the Funds and Other Vehicles will comply with
the requirements set forth in rule 17d-(7)(a) through (g). Applicants
thus believe that Cross Transactions will be reasonable and fair, and
will not involve overreaching, and will be consistent with the purposes
of the Act and the investment policy of each Fund.
Applicants' Conditions
Applicants agree that any order granting the requested relief shall
be subject to the following conditions:
1. The Funds' investments in Interests of an Aberdeen China A Fund
Series will be undertaken only in accordance with the Funds' stated
investment restrictions and will be consistent with their stated
investment policies.
2. The Advisers, their affiliated persons and Unaffiliated Managers
will receive no advisory fee from an Aberdeen China A Fund Series in
connection with the Funds' investment in the Aberdeen China A Fund
Series. The Advisers, their affiliated persons and Unaffiliated
Managers will receive no commissions, fees, or other compensation
(except for administrative and/or transfer agent fees that are paid in
accordance with condition 3 as described in the application) from a
Fund or an Aberdeen China A Fund Series in connection with the purchase
or redemption by the Funds of Interests in the Aberdeen China A Fund
Series. Interests of an Aberdeen China A Fund Series will not be
subject to a sales load, redemption fee, distribution fee or service
fee, except that the Aberdeen China A Fund Series will have the
discretion to impose a redemption fee in accordance with applicable law
or regulation for the purpose of offsetting brokerage, tax or other
costs. If a redemption fee is charged by an Aberdeen China A Fund
Series, such fee will be limited in accordance with the then-current
requirements of the Commission applicable to management investment
companies offering redeemable securities as if the Aberdeen China A
Fund Series were an open-end investment company registered under the
Act.
3. Administrative fees and transfer agent fees will be paid by an
Aberdeen China A Fund Series used by the Funds to an Adviser, Aberdeen
Affiliate or Unaffiliated Manager only upon a determination by each
Fund's Board, including a majority of its Independent Board Members,
that the fees are (i) for services in addition to, rather than
duplicative of, services rendered to the Funds directly and (ii) fair
and reasonable in light of the usual and customary charges imposed by
others for services of the same nature and quality. If such
determination is not made by a Fund's Board, the Fund's Adviser will
reimburse to that Fund the amount of any administrative fee and
transfer agent fee borne by that Fund as an investor in the Aberdeen
China A Fund Series.
4. Each Fund will treat its entire investment in an Aberdeen China
A Fund Series as an investment that is not liquid for purposes of any
applicable rules or guidance of the Commission or its staff regarding
the management of liquidity. For example, under current guidelines,
each Fund that is an open-end fund must not purchase an illiquid
security if, as a result, more than 15% of its net assets would be
invested in illiquid assets, which for purposes of the requested relief
include any investments in an Aberdeen China A Fund Series. In
addition, each Fund will, at all times, limit its holdings in the
Aberdeen China A Fund Series to no more than 15% of its net assets.
[[Page 14073]]
5. Each Fund's Board, including a majority of the Independent Board
Members, will determine initially and no less frequently than annually
that the Fund's investment in the Aberdeen China A Fund Series is, and
continues to be, in the best interests of the Fund and the Fund's
shareholders. As part of this determination, each Fund's Board will
consider the custody arrangements for the Aberdeen China A Fund Series'
foreign securities (under rule 17f-5) and the bonding arrangements in
place for certain of the Aberdeen China A Fund Series' officers and
employees (under rule 17g-1).
6. The Advisers will make the accounts, books and other records of
each Aberdeen China A Fund Series available for inspection by the
Commission staff and, if requested, will furnish copies of those
records to the Commission staff.
7. Each Aberdeen China A Fund Series will comply with the following
sections of the Act as if the Aberdeen China A Fund Series were an
open-end management investment company registered under the Act, except
as noted: Section 9; section 12 (except that each Aberdeen China A Fund
Series shall be permitted to sell Interests to Funds in excess of the
limits set out in section 12(d)(1)(B)); section 13 (the Interests
issued by the Aberdeen China A Fund Series will be regarded as voting
securities under section 2(a) (42) of the Act for purposes of applying
this condition and the offering memorandum utilized by the Aberdeen
China A Fund Series to offer and sell Interests will be regarded as a
registration statement for purposes of applying this condition);
section 17(a) (except as described in the application); section 17(d)
(except as described in the application); section 17(e); section 17(f);
section 17(h), section 18 (the Interests issued by the Aberdeen China A
Fund Series will be regarded as voting securities under section
2(a)(42) of the Act for purposes of applying this condition); section
21; section 36; and sections 37-53. In addition, the Aberdeen China A
Fund Series will comply with the rules under section 17(f) \13\ and
section 17(g) of the Act, and rule 22c-1 under the Act as if the
Aberdeen China A Fund Series were an open-end management investment
company registered under the Act. This condition 7 will apply only to
Aberdeen China A Fund Series in which a Fund has invested; this
condition 7 will not apply to Aberdeen China A Fund Series invested in
exclusively by Other Accounts except insofar as necessary for the
Aberdeen China A Fund Series invested in by a Fund to comply with this
condition.
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\13\ The Applicants note that they will operate each Aberdeen
China A Fund Series such that rule 17f-1, rule 17f-2, and rule 17f-3
will not be applicable to it.
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The Advisers will adopt procedures designed to ensure that each
Aberdeen China A Fund Series complies with the aforementioned sections
of the Act and rules under the Act. The Advisers will periodically
review and periodically update as appropriate such procedures and will
maintain books and records describing such procedures, and maintain the
records required by rules 31d-1(b)(1), 31d-1(b)(2)(ii) and 31d-1(b)(9)
under the Act. In addition, in connection with the determination
required by condition 5 above, the Advisers will provide annually to
each Fund's Board a written report about the Advisers' and the Aberdeen
China A Fund Series' compliance with this condition.
All books and records required to be made pursuant to this
condition will be maintained and preserved for a period of not less
than six years from the end of the fiscal year in which any transaction
occurred, the first two years in an easily accessible place, and will
be subject to examination by the Commission and its staff.
For purpose of implementing condition 7, any action that the above-
referenced statutory and regulatory provisions require to be taken by
the directors, officers and/or employees of a registered investment
company will be performed by AAMI (or its successor) \14\ as the
managing member of the Commingled LLC, except to the extent that the
order requires the Funds' Boards to exercise oversight or take action
with respect to the Aberdeen China A Fund Series as an extension of
such Boards' duties to the Funds.
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\14\ See supra, footnote 1.
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8. To engage in Cross Transactions, the Funds will comply with rule
17a-7 under the Act in all respects other than the requirement that the
parties to the transaction be affiliated persons (or affiliated persons
of affiliated persons) of each other solely by reason of having a
common investment adviser or investment advisers which are affiliated
persons of each other, common officers, and/or common directors, solely
because a Fund and Other Vehicle might become affiliated persons within
the meaning of section 2(a)(3)(A), (B) or (C) of the Act because of
their investments in an Aberdeen China A Fund Series.
9. An Aberdeen China A Fund Series in which a Fund invests will not
engage in leverage or borrow except that an Aberdeen China A Fund
Series may borrow in amounts not exceeding 5% of its total assets for
temporary or emergency purposes or for the clearance of transactions,
but not for speculative investment purposes, and may pledge its assets
to secure such borrowings.
10. A Sub-Advised Fund may not invest in an Aberdeen China A Fund
Series in reliance on the order unless the Sub-Advised Fund's
Unaffiliated Manager has executed an agreement with the Aberdeen China
A Fund Series stating that the Unaffiliated Manager understands the
terms and conditions of the order and agrees to comply with conditions
1, 2, 3, 4, 5 and 8 of the order.
For the Commission, by the Division of Investment Management,
under delegated authority.
Jill Peterson,
Assistant Secretary.
[FR Doc. 2018-06567 Filed 3-30-18; 8:45 am]
BILLING CODE 8011-01-P
