[Federal Register Volume 63, Number 225 (Monday, November 23, 1998)]
[Notices]
[Pages 64743-64744]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-31228]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 23537; 812-11320]
Kemper Global/International Series, Inc., et al.; Notice of
Application
November 17, 1998.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application under sections 6(c) and 17(b) of the
Investment Company Act of 1940 (the ``Act'') for an exemption from
section 17(a) of the Act.
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SUMMARY OF APPLICATION: Kemper Global/International Series, Inc. (the
``Company'') and Scudder Kemper Investments, Inc. (the ``Adviser'')
seek an order to permit in-kind redemptions of shares of The Growth
Fund of Spain (the ``Fund''), a portfolio of the Company, by certain
affiliated shareholders of the Fund.
applicants: Company and Adviser.
FILING DATES: The application was filed on September 23, 1998 and
amended on November 12, 1998.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
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 December 10, 1998, and should be accompanied by proof of
service on the applicants, in the form of an affidavit or, for lawyers,
a certificate of service. Hearing requests should state the nature of
the writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, Securities and Exchange Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549. Applicants, c/o William J.
Kotapish, Esq., Dechert Price & Rhoads, 1775 Eye Street, N.W.,
Washington, D.C. 20006-2401.
FOR FURTHER INFORMATION CONTACT:
Emerson S. Davis, Sr., Senior Counsel, at (202) 942-0714, or George J.
Zornada, Branch Chief, at (202) 942-0564 (Division of Investment
Management, Office of Investment Company Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee from
the Commission's Public Reference Branch, 450 Fifth Street, N.W.,
Washington, D.C. 20549 (telephone (202) 942-8090).
Applicants' Representations
1. The Company, a Maryland corporation, is registered under the Act
as an open-end management investment company and operates as a series
company. The Fund will be established as a new series of the Company
and will be a successor to The Growth Fund of Spain, Inc., a closed-end
management investment company that will convert to an open-end
management investment company and reorganize as the Fund. The
reorganization is expected to occur on December 11, 1998. The Fund will
invest primarily in equity securities of Spanish issuers. The Adviser
is registered under the Investment Advisers Act of 1940 and serves as
investment adviser to the Fund.
2. Applicants state that four shareholders are expected to own 5%
or more of the outstanding shares of the Fund.\1\ Applicants request
relief to permit the Fund to satisfy redemption requests made by any
shareholders of the Fund who, at the time of such redemption requests,
are ``affiliated persons'' of the Fund solely by reason of owning,
controlling, or holding with the power to vote, five percent or more of
the Fund's shares (``Affiliated Shareholders'') by distributing
portfolio securities in-kind. The relief sought would not extend to
shareholders who are ``affiliated persons'' of the Fund within the
meaning of sections 2(a)(3)(B) through (F) of the Act.
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\1\ These shareholders are: Bankgesellshaft Berlin AG (11.30%),
Cargill Financial Markets PLC (9.34%), FMR Corporation (5.31%), and
Stichting Azko Pensioenfonds (5.5%).
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3. The Fund's prospectus and statement of additional information
provide that, in limited circumstances, the Fund may satisfy all or
part of a redemption request by distribution in-
[[Page 64744]]
kind of portfolio securities. The board of directors of the Fund
(``Board''), including all of the directors who are not ``interested
persons'' as defined in section 2(a)(19) of the Act, has determined
that it would be in the best interests of the Fund and its shareholders
to pay to an Affiliated Shareholder the redemption price for its shares
in-kind.\2\
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\2\ The Fund has elected to be governed by the provisions of
rule 18f-1 under the Act.
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Applicants' Legal Analysis
1. Section 17(a)(2) of the Act prohibits an affiliated person of a
registered investment company, or an affiliated person of such person,
acting as principal, from knowingly purchasing any security or other
property (except securities of which the seller is the issuer) from the
registered investment company. Section 2(a)(3)(A) of the Act defines an
``affiliated person'' to include any person owning 5% or more of the
outstanding voting securities of the other person. Applicants state
that to the extent that an in-kind redemption could be deemed to
involve the purchase of portfolios securities (of which the Fund is not
the issuer) by an Affiliated Shareholder, the proposed redemption in-
kind would be prohibited by section 17(a)(2).
2. Section 17(b) of the Act provides that, notwithstanding section
17(a) of the Act, the Commission shall exempt a proposed transaction
from section 17(a) if evidence establishes that: (a) the terms of the
proposed transaction are reasonable and fair and do not involve
overreaching; (b) the proposed transaction is consistent with the
policy of each registered investment company involved; and (c) the
proposed transaction is consistent with the general purpose of the Act.
3. Section 6(c) of the Act provides that the Commission may exempt
any person, security or transaction, or any class or classes of
persons, securities or transactions, from the provisions of the Act, to
the extent that such exemption is necessary or appropriate in the
public interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act.
4. Applicants request an order under sections 6(c) and 17(b) of the
Act exempting applicants from section 17(a) of the Act to permit
Affiliated Shareholders to redeem their shares in-kind. The requested
order would not apply to redemptions by shareholders who are affiliated
persons of the Fund within the meaning of sections 2(a)(3)(B) through
(F) of the Act.
5. Applicants submit that the terms of the proposed in-kind
redemptions by Affiliated Shareholders meet the standards set forth in
sections 6(c) and 17(b) of the Act. Applicants assert that neither the
Fund nor the Affiliated Shareholders will have any choice as to the
type of consideration to be received in connection with a redemption
request, and neither the Adviser nor the Affiliated Shareholder will
have any opportunity to select the specific portfolio securities to be
distributed. Applicants further state that the portfolio securities to
be distributed in the proposed in-kind redemptions will be valued
according to an objective, verifiable standard and the in-kind
redemptions are consistent with the investment policies of the Fund.
Applicants also state that the proposed in-kind redemptions are
consistent with the general purposes of the Act because the Affiliated
Shareholders would not receive any advantage not available to other
redeeming shareholders.
Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. The securities distributed pursuant to a redemption in-kind (the
``In-Kind Securities'') will be limited to securities that are traded
on a public securities market or for which quoted bid and asked prices
are available.
2. The In-Kind Securities will be distributed to Affiliated
Shareholders on a pro rata basis after excluding: (a) Securities which,
if distributed, would be required to be registered under the Securities
Act of 1933; (b) securities issued by entities in countries which
restrict or prohibit the holding of securities by non-nationals other
than through qualified investment vehicles, such as the Fund; and (c)
certain portfolio assets (such as forward foreign currency exchange
contracts, futures and options contracts, and repurchase agreements)
that, although they may be liquid and marketable, involve the
assumption of contractual obligations, require special trading
facilities or can only be traded with the counterparty to the
transaction in order to effect a change in beneficial ownership. Cash
will be paid for that portion of the Fund's assets represented by cash
equivalents (such as certificates of deposits, commercial paper and
repurchase agreements) and other assets which are not readily
distributable (including receivables and prepaid expenses), net of all
liabilities (including accounts payable). In addition, the Fund will
distribute cash in lieu of securities held in its portfolio not
amounting to round lots (or which would not amount to round lots if
included in the in-kind distribution), fractional shares, and accruals
on such securities.
3. The In-Kind Securities will be valued in the same manner as they
would be valued for the purposes of computing the Fund's net asset
value, which, in the case of securities traded on a public securities
market for which quotations are available, is their last reported sales
price on the exchange on which the securities are primarily traded or
at the last sales price on the national securities market, or, if the
securities are not listed on an exchange or the national securities
market, or, if there is no such reported price, the average of the most
recent bid and asked price (or, if no such price is available, the last
quoted bid price).
4. The Board, including a majority of the directors who are not
``interested persons'' (as defined in section 2(a)(19) of the Act) of
the Fund, will determine no less frequently than annually: (a) Whether
the In-Kind Securities, if any, have been distributed in accordance
with conditions 1 and 2; (b) whether the In-Kind Securities, if any,
have been valued in accordance with condition 3; and (c) whether the
distribution of any such In-Kind Securities is consistent with the
policies of the Fund as reflected in the prospectus. In addition, the
Board shall make and approve such changes as the Board deems necessary
in its procedures for monitoring applicants' compliance with the terms
and conditions of this application.
5. The Fund will maintain and preserve for a period of not less
than six years from the end of the fiscal year in which the proposed
in-kind redemption occurs, the first two years in an easily accessible
place, a written record of each redemption that includes the identity
of the Affiliated Shareholder, a description of each security
distributed, the terms of the distribution, and the information or
materials upon which the valuation was made.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-31228 Filed 11-20-98; 8:45 am]
BILLING CODE 8010-01-M
