[Federal Register Volume 63, Number 236 (Wednesday, December 9, 1998)]
[Notices]
[Pages 67947-67948]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-32600]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 23581; 812-11408]
CCB Funds; Notice of Application
December 1, 1998.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of application under section 17(b) of the Investment
Company Act of 1940 (``Act'') for an exemption from section 17(a) of
the Act.
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SUMMARY OF APPLICATION: Applicant, CCB Funds (formerly, 111 Corcoran
Funds) (``Trust''), on behalf of its portfolio CCB Equity Fund
(``Fund''), seeks an order to permit an in-kind redemption of shares of
the Fund by an affiliated person of the Fund.
FILING DATE: The application was filed on November 18, 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 applicant with a copy of the request, personally or by
mail. Hearing requests should be received by the Commission by 5:30
p.m. on December 24, 1998, and should be accompanied by proof of
service on applicant, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons may request notification of a hearing by writing to
the Commission's Secretary.
ADDRESSES: Secretary, Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549. Applicant, Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779.
FOR FURTHER INFORMATION CONTACT:
Edward P. Macdonald, 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 at the
Commission's Public Reference Branch, 450 5th Street, N.W., Washington,
D.C. 20549 (tel. no. 202-942-8090).
Applicant's Representations
1. The Trust, organized as a Massachusetts business trust, is
registered under the Act as an open-end management investment company.
The Fund is a series of the Trust. Central Carolina Bank and Trust
Company (``Adviser'') serves as the Fund's investment adviser. The
Adviser is exempt from registration under the Investment Advisers Act
of 1940 (``Advisers Act''). Franklin Street Advisors, Inc., registered
under the Advisers Act, serves as the Fund's subadviser (``Sub-
Adviser''). The Adviser and the Sub-Adviser are not affiliated.
2. North Carolina Employees State Retirement System (``Affiliated
Shareholder'') is a retirement trust for employees of the state of
North Carolina. The Affiliated Shareholder owns approximately 83.7% of
the outstanding shares of the Fund.
3. The Affiliated Shareholder has concluded that the assets
invested in the Fund should be managed directly by the Sub-Adviser. The
Affiliated Shareholder has notified the Fund that it intends to redeem
all of its shares of the Fund. On November 17, 1998, the Fund's board
of trustees, including all of the independent trustees, determined that
it would be in the best interests of the Fund and its shareholders to
redeem the shares of the Affiliated Shareholder in-kind.
Applicant's Legal Analysis
1. Section 17(a)(2) of the Act generally prohibits an affiliated
person of a registered investment company, acting as principal, from
knowingly purchasing any security from the company. Section 2(a)(3)(A)
of the Act defines ``affiliated person'' of another person to include,
among others, any person owning 5% or more of the outstanding voting
securities of the other person and any person controlling, controlled
by or under common control with the other person. Under section 2(a)(9)
of the Act, a person that owns beneficially more than 25% of the voting
securities of a
[[Page 67948]]
company is presumed to control the company.
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) of the Act 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 purposes of the
Act.
3. Applicant states that the Affiliated Shareholder is an
affiliated person of the Fund because it owns beneficially in excess of
25% of the Fund's shares. To the extent that the proposed in-kind
redemption would be considered to involve the ``purchase'' of the
Fund's portfolio securities by the Affiliated Shareholder, applicant
states that the proposed in-kind redemption would be prohibited by
section 17(a)(2) of the Act.
4. Applicant submits that the terms of the proposed in-kind
redemption meet the standards set forth in section 17(b) of the Act.
Applicant asserts that neither the Adviser nor the Affiliated
Shareholder will have any opportunity to select the specific portfolio
securities to be distributed. Rather, the Affiliated Shareholder will
receive a pro rata share of each portfolio security held by the Fund,
except for odd lot securities, fractional shares and accrual on such
securities. Applicant further states that the portfolio securities to
be distributed to the Affiliated Shareholder will be valued according
to an objective, verifiable standard and that the in-kind redemption is
consistent with the investment policies of the Fund. Applicant also
states that the proposed in-kind redemption is consistent with the
general purposes of the Act.
Applicant's Conditions
Applicant agrees that any order granting the requested relief will
be subject to the following conditions:
1. The Fund will distribute to the Affiliated Shareholder pursuant
to the in-kind redemption of pro rata share of each portfolio security
held by the Fund (``In-Kind Securities''), provided that the Fund may
distribute cash in lieu of odd lot securities, fractional shares and
accruals on such securities.
2. The In-Kind Securities distributed to the Affiliated Shareholder
will be valued in the same manner as they would be valued for purposes
of computing the Fund's net asset value.
3. 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 the rdemption setting forth a description of
each security distributed in-kind, the terms of the in-kind
distribution and the information or materials upon which the valuation
was made.
For the SEC, by the Division of Investment Management, under
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-32600 Filed 12-8-98; 8:45 am]
BILLING CODE 8010-01-M
