Expansion of the Rule's Scope. Rule 17a-8 currently permits affiliated funds to merge only if they are affiliated by reason of having common advisers, officers, or directors. If adopted, the amendments would permit all affiliated funds to merge without first obtaining an exemptive order. This change would accommodate growing numbers of mergers that currently do not fit within Rule 17a-8, and that therefore need to proceed under what have become routine Commission orders.The Commission requests comments on the proposed amendments, including relevant data on costs and benefits of the amendments or any alternatives to the amendments. Comments on the proposed amendments to rule 17a-8 must be submitted to the Commission by January 18, 2002.Board Findings. Consistent with the current rule, the amended rule would, if adopted, rely heavily on the scrutiny of fund directors, including independent directors, to determine whether the merger is in the best interests of the fund and its shareholders. The proposed amendments would specify several factors that the directors must consider, if relevant, in approving the merger. The factors include consideration of fund expenses, allocation of merger costs, compatibility of assets, and effects on investors' taxes.
Mergers with Bank Trust Funds. If adopted, the rule amendments would, for the first time, permit funds to merge with affiliated bank common or collective trust funds without seeking an exemptive order.
Shareholder Voting. If adopted, the proposed amendments would, as a condition to the exemption, require: (1) shareholders of any fund that would not survive the merger to vote on the merger, and (2) subject to certain exceptions, large shareholders of a fund holding a vote on the merger who are advisers, underwriters, or large shareholders of other funds participating in the merger to vote their shares in proportion to the securities voted by other shareholders. This condition is designed to prevent affiliated persons from influencing the terms of the merger to the detriment of smaller shareholders.
FTSE Mondo Visione Exchanges Index:
SEC: Proposed Amendments To Rule 17a-8 On Mergers Of Affiliated Investment Companies
Date 08/11/2001
The Securities and
Exchange
Commission today issued proposed amendments to Rule 17a-8 under
the
Investment Company Act of 1940. Rule 17a-8 allows affiliated
investment companies (funds) to merge without obtaining a specific
exemptive order from the Commission. The proposed amendments are
designed to permit fund mergers that are consistent with the
protection of fund investors, but without the expense and delay of
obtaining individual exemptive orders.