[Federal Register Volume 78, Number 104 (Thursday, May 30, 2013)]
[Notices]
[Pages 32477-32483]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-12797]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 30539; 812-13877]
ASA Gold and Precious Metals Limited; Notice of Application
May 22, 2013.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of application under section 7(d) of the Investment
Company Act of 1940 (the ``Act'').
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[[Page 32478]]
SUMMARY: Summary of Application: Applicant, ASA Gold and Precious
Metals Limited (``ASA''), a Bermuda closed-end management investment
company registered under section 7(d) of the Act, requests an order
that would permit ASA to make changes to its custodial arrangements
without prior Commission approval, hold assets and conduct certain
securities transactions in specified foreign countries, as well as
permit ASA and certain other persons to designate CT Corporation System
(``CT Corp'') in the U.S. to accept service of process.
DATES: Filing Dates: The application was filed on March 9, 2011, and
amended on March 21, 2012, and February 6, 2013.
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 June 17, 2013 and should be accompanied by proof of
service on 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: Elizabeth M. Murphy, Secretary, Securities and Exchange
Commission, 100 F Street NE., Washington, DC 20549-1090. Applicant, c/o
Deborah Djeu, 400 S. El Camino Real, Suite 710, San Mateo, CA 94402.
FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, at
(202) 551-6876, or Daniele Marchesani, Branch Chief, at (202) 551-6747
(Division of Investment Management, Exemptive Applications Office).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at http://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicants' Representations
1. ASA is an internally-managed closed-end management investment
company organized in 1958 in South Africa and currently organized in
Bermuda. ASA is registered under the Act.\1\ ASA had $591 million in
net assets as of February 29, 2012. Shares of ASA trade on the New York
Stock Exchange (``NYSE''). ASA's main focus is to invest in securities
of companies involved in the exploration and mining of gold and other
precious minerals. To this end, ASA's management is seeking to take
advantage of investment opportunities in non-South African companies
that are, or in the future may be, listed on the Stock Exchange of Hong
Kong Limited (the ``HKSE''), the London Stock Exchange (``LSE''), the
Toronto Stock Exchange (``TSX''), or the Australian Securities Exchange
(``ASX'').\2\ ASA states that certain conditions of the Existing Order
have made it difficult for ASA to implement fully a flexible investment
strategy consistent with its current fundamental investment policy and
to achieve its desired portfolio diversification outside of South
Africa. Applicant asserts that with the requested relief ASA will be
able to better adapt to changes in the gold and other precious minerals
industry and to pursue the best investment prospects on a global scale,
for the benefit of its shareholders.
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\1\ Investment Company Act Release Nos. 2739 (July 3, 1958)
(notice) and 2756 (Aug. 13, 1958 (order) (the ``Original Order'').
Since 1958, the Original Order has been amended on a number of
occasions. See Investment Company Act Release Nos. 26582 (Aug. 27,
2004) (notice) and 26602 (Sep. 20, 2004) (order) (``Existing
Order''); Investment Company Act Release Nos. 24321 (Feb. 29, 2000)
(notice) and 24367 (Mar. 27, 2000) (order) (the ``CSD Order'');
Investment Company Act Release Nos. 21161 (June 23, 1995) (notice)
and 21220 (July 20, 1995) (order); Investment Company Act Release
Nos. 17904 (Dec. 17, 1990) (notice) and 17945 (Jan. 15, 1991)
(order); Investment Company Act Release Nos. 14826 (Dec. 4, 1985)
(notice) and 14878 (Dec. 31, 1985) (order); Investment Company Act
Release Nos. 11669 (Mar. 6, 1981) (notice) and 11722 (Apr. 7, 1981)
(order) (collectively with the CSD Order, the ``Custody Orders'');
Investment Company Act Release Nos. 8278 (Mar. 20, 1974) (notice)
and 8312 (Apr. 17, 1974) (order); Investment Company Act Release
Nos. 7860 (June 12, 1973) (notice) and 7894 (July 10, 1973) (order);
Investment Company Act Release Nos. 2944 (Dec. 14, 1959) (notice)
and 2957 (Dec. 29, 1959) (order); Investment Company Act Release
Nos. 2883 (May 22, 1959) (notice) and 2886 (June 9, 1959) (order)
(``1959 Order''); and Investment Company Act Release Nos. 2817 (Jan.
5, 1959) (notice) and 2821 (Jan 20, 1959) (order) (collectively with
the Custody Orders, the ``Subsequent Orders'' and together with the
Original Order, the ``Prior Orders'').
\2\ In 2005, with the approval of its shareholders, ASA replaced
its fundamental investment policies that, among other things,
required ASA to invest more than 50% of its assets in equity
securities of gold mining companies in South Africa and no more than
20% of its assets in equity securities of companies outside of South
Africa with a new investment policy that no longer contains any
geographical limitations as to ASA's investments.
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2. Applicant requests an order that would: (a) permit ASA to
appoint a primary custodian (``Primary Custodian'') or otherwise amend
its agreement with the Primary Custodian without prior Commission
approval; (b) permit ASA to settle purchases and sales of portfolio
securities outside of the U.S. on an additional ``established
securities exchange,'' the HKSE; \3\ (c) permit ASA, subject to the
existing condition that ASA keep at least 20% of its assets in the
United States in the custody of a U.S. bank (``20% Requirement''), to
maintain its remaining assets in the custody of an eligible foreign
custodian or an eligible securities depository in South Africa, Hong
Kong, the United Kingdom, Canada, or Australia; \4\ (d) permit ASA's
Primary Custodian to change the eligible foreign custodian or eligible
securities depository in whose custody it maintains ASA's assets in
those five countries, and to amend the custodian agreement with ASA to
reflect the change, without prior Commission approval; (e) permit ASA,
through its Primary Custodian or its Primary Custodian's agent, to
exercise in South Africa, Hong Kong, the United Kingdom, Canada, or
Australia the rights issued to it as a shareholder in other companies
for the purchase of securities; and (f) require ASA and each of its
present or future directors, officers or investment advisers who is not
a resident of the United States (``Non-Resident Persons'') to
irrevocably designate CT Corp, instead of ASA's Primary Custodian, as
an agent in the U.S. to accept service of process (``U.S. Service
Agent'') in any suit, action, or proceeding (collectively,
``Proceeding'') before the Commission or any appropriate court relating
to, respectively, the Non-Resident Persons' activities as directors,
officers or investment advisers of ASA.\5\ As described more fully in
the application, ASA's foreign subcustodians generally would also
designate CT Corp as U.S. Service Agent.
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\3\ The Existing Order defines the term ``established securities
exchange'' as a national securities exchange as defined in Section
2(a)(26) of the Act, the JSE Limited South Africa (``JSE''), the
LSE, the Tokyo Stock Exchange, the TSX, the ASX and the SWX Swiss
Exchange.
\4\ If the Commission grants the requested relief, ASA will
comply with the requirements of Rule 17f-5 and Rule 17f-7 under the
Act as if ASA were a registered management investment company
organized or incorporated in the United States (``U.S. Fund''). The
terms ``eligible foreign custodian'' and ``eligible securities
depository'' have the same meaning as defined in Rule 17f-5 and Rule
17f-7.
\5\ ASA would designate CT Corp as U.S. Service Agent in the
same city in which ASA's Primary Custodian is located.
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Applicants' Legal Analysis
1. Section 7(d) of the Act prohibits an investment company
organized outside the U.S. (``foreign fund'') from making a
[[Page 32479]]
public offering of its securities in the U.S., but authorizes the
Commission by order to permit a foreign fund to register under the Act
and make a public offering of its securities in the U.S. if the
Commission finds that ``by reason of special circumstances or
arrangements, it is both legally and practically feasible effectively
to enforce the provisions of [the Act] against such company and that
the issuance of such order is otherwise consistent with the public
interest and protection of investors.'' Rule 7d-1 under the Act sets
forth the conditions that an investment company organized in Canada
must satisfy in order to receive an order under section 7(d) of the
Act.\6\ Applicant seeks an order under section 7(d) as discussed above,
subject to conditions that, among other things, would require ASA to
comply with many of the requirements of rule 7d-1 under the Act,
including the requirement that its charter and bylaws contain the Act's
substantive provisions.
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\6\ Although rule 7d-1 by its terms applies only to Canadian
funds, the Commission generally has required other foreign funds
seeking section 7(d) orders to comply with the rule's conditions.
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2. ASA believes that it would be legally and practically feasible
effectively to enforce the provisions of the Act against it and that
the issuance of the requested order would be consistent with the public
interest and the protection of investors. In particular, Applicant
states that (i) applicable law provides substantial certainty that
appropriate U.S. courts would exercise personal jurisdiction over ASA;
(ii) a U.S. Federal court would possess subject matter jurisdiction in
a case brought by the Commission because such a case would be based
upon alleged violations of the federal securities laws; and (iii) the
doctrine of forum non conveniens would not present an impediment to the
Commission's or another party's ability to bring appropriate claims
against ASA.\7\ Applicant also asserts that the analysis of whether a
plaintiff would be able to enforce in Hong Kong, the United Kingdom,
Canada, or Australia a judgment obtained in the United States or
Bermuda would be the same with respect to ASA as with a U.S. Fund.
Thus, Applicant claims that placing assets in those countries does not
involve any greater jurisdictional concerns in the case of ASA than it
does in the case of U.S. funds, which, in addition, are not subject to
the 20% Requirement. In addition, ASA has agreed to perform every
action and thing necessary to cause and assist its shareholders or the
Commission to collect (i) any monetary amount specified in a Commission
order or (i) a final judgment entered by a court of competent
jurisdiction.
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\7\ Applicant notes that (i) unlike a U.S. Fund, ASA must
maintain at least 20% of its assets in the U.S.; (ii) ASA will
appoint a U.S. bank as its Primary Custodian; (iii) ASA's principal
offices are located in the U.S. and a majority of its directors,
executive officers, and employees would be both citizens and
residents of the U.S.; and (iv) ASA would stipulate that personal
jurisdiction exists in any Commission action brought against ASA in
the U.S. and waive any defense of forum non conveniens in any such
action. ASA also represents that its agreement with its Primary
Custodian would contain provisions stipulating that the United
States is the proper venue for disputes arising under the agreement.
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3. Under the terms and conditions of the Existing Order, ASA agreed
that JPMorgan Chase Bank, N.A. (``Chase'') will serve as ASA's Primary
Custodian and will continue to meet the qualifications of a custodian
under Section 17(f) of the Act.\8\ Furthermore, one of the conditions
of the Existing Order requires ASA to seek an order of the Commission
prior to any amendment of its custodian agreement with its Primary
Custodian. ASA seeks an order to permit it to appoint a Primary
Custodian or otherwise amend its custodian agreement without prior
Commission approval. ASA states that requiring Commission approval
imposes on ASA an unfair and unnecessary burden not imposed on U.S.
Funds, as well as diminishes ASA's ability effectively and efficiently
to deal with business issues regarding its custody arrangements. ASA
represents that (i) a U.S. bank eligible to serve as custodian under
section 17(f) would serve as ASA's Primary Custodian, and (ii) ASA
would request an order of the Commission prior to any amendment of its
agreement with its Primary Custodian if the amendment conflicts with
any of the representations or conditions of the requested order.
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\8\ Section 17(f) of the Act provides that ``every registered
management investment company shall place and maintain its
securities and similar investments in the custody of: (A) a bank or
banks having the qualifications prescribed in paragraph (1) of
Section 26(a) of [the Act]. . . .''
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4. Under the terms and conditions of the Existing Order, ASA is
required to settle its purchases and sales of portfolio securities,
other than purchases and sales on an ``established securities
exchange,'' in the U.S.\9\ ASA requests an order expanding the
definition of ``established securities exchange'' to permit it to
settle purchases and sales of portfolio securities on the HKSE.
Applicant states that the Act does not limit the securities exchanges
on which U.S. Funds may settle securities transactions. Applicant
asserts that the requirement that ASA's purchases and sales of
portfolio securities, other than purchases and sales on an
``established securities exchange'' as currently defined, be settled in
the U.S. renders it impracticable for ASA to purchase portfolio
securities on the HKSE, and prevents ASA from taking advantage of
certain investment opportunities to the detriment of its shareholders.
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\9\ See supra note 3.
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5. Under the terms and conditions of the Existing Order, ASA is
required to keep at least 20% of its assets in the U.S. in the custody
of a U.S. bank. ASA's remaining assets are also required to be kept in
the custody of such U.S. custodian, except that, subject to the 20%
Requirement, ASA may keep, through its custodian or South African
subcustodian, in the central securities depository for equity
securities in South Africa (``CSD'') up to 100% of its securities
eligible for deposit at the CSD.\10\ In addition, ASA is permitted to
keep up to 33% of its assets in countries other than South Africa
outside of the U.S. in the custody of an eligible foreign custodian or
overseas branch of a U.S. bank under certain circumstances.\11\ ASA
seeks an order to permit it, subject to the 20% Requirement, to
maintain up to 80% of its assets in the custody of an eligible foreign
custodian, as defined in Rule 17f-5 under the Act, or an eligible
securities depository, as defined in Rule 17f-7 under the Act, in South
Africa, Hong Kong, the United Kingdom, Canada or Australia. ASA's
management is seeking to take advantage of investment opportunities in
non-South African companies that are, or in the future may be, listed
on the HKSE, the LSE, the TSX, or the ASX.\12\ ASA states
[[Page 32480]]
that the requested relief would not change the total percentage of
assets that ASA is currently permitted to maintain outside of the U.S.
Rather, it would permit ASA to allocate that total percentage among,
and maintain that total percentage in five countries, rather than
maintain that total percentage all in one country. Moreover, as
discussed more fully in the application, Applicant represents that the
difficulty in enforcing a judgment obtained in the United States or
Bermuda against ASA in South Africa does not exist in Hong Kong, the
United Kingdom, Canada or Australia. Applicant represents that if the
Commission grants the requested relief, ASA will comply with Rule 17f-5
\13\ and Rule 17f-7 \14\ under the Act as if ASA were a U.S. Fund.
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\10\ Under the Existing Order, ASA agreed that Standard Bank
would serve as Chase's subcustodian in South Africa. Subsequent
staff no-action relief permitted ASA's Primary Custodian to change
the subcustodian to First National Bank. See ASA (Bermuda) Limited,
SEC No-Action Letter (December 13, 2006) (``2006 Letter'').
\11\ ASA may keep: (i) up to 3% of its assets in South Africa in
short-term rand-denominated investments issued or guaranteed by the
Republic of South Africa; (ii) up to 5% of its assets in rand-
denominated interest bearing bank accounts with eligible foreign
custodians or overseas branches of U.S. banks; and (iii) up to 5% of
its assets with an eligible foreign custodian or overseas branch of
ASA's Primary Custodian in each of London, Japan, Australia,
Switzerland, and Canada, if removal of securities purchased on the
established exchanges becomes either prohibited by law or regulation
or financially impracticable.
\12\ Under the terms and conditions of the Existing Order, ASA
is permitted to settle securities transactions on the LSE, the TSX,
and the ASX (and ASA is seeking an order to permit it to settle
securities transactions on the HKSE as well), but if ASA does so it
must then satisfy the requirement that such securities be maintained
in the U.S. with ASA's Primary Custodian. Applicant asserts that the
only way it may meet this requirement is by moving physical
securities away from their primary trading markets or purchasing
American Depositary Receipts for those foreign securities in the
U.S. market, neither of which is an effective and efficient means
for ASA to achieve its desired international portfolio
diversification.
\13\ Rule 17f-5 permits a U.S. Fund to maintain foreign assets
with an ``eligible foreign custodian.'' The fund's board of
directors, its investment adviser, or custodian bank (``foreign
custody manager'') must determine that the fund's assets in custody
will be subject to reasonable care, based upon the standards
applicable to custodians in the relevant market after considering
certain factors. Rule 17f-5 also requires that the custody
arrangement be governed by a written contract, including certain
specified (or equivalent) provisions, that the foreign custody
manager determines will provide reasonable care for fund assets. The
foreign custody manager must establish a system to monitor the
appropriateness of maintaining the fund's assets with the eligible
foreign custodian and the performance of the contract. ASA's board
of directors (the ``Board'') will serve as foreign custody manager
and will not delegate such function.
\14\ Rule 17f-7 permits a fund, including a registered Canadian
fund, to maintain foreign assets with a foreign ``eligible
securities depository'' that acts as or operates a system for the
central handling of securities that is regulated by a foreign
financial regulatory authority. Rule 17f-7 also requires a fund's
primary custodian, or its agent, to furnish the fund or its
investment adviser with an analysis of the custody risks of using an
eligible securities depository before the fund places its assets
with the depository. In addition, the fund's contract with its
primary custodian must require the custodian, or its agent, to
monitor these risks on a continuing basis and promptly notify the
fund of any material change in these risks. Prior to use of an
``eligible securities depository'' for ASA's overseas assets, the
Board will review the proposed arrangements to ensure they meet the
requirements of Rule 17f-7.
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6. ASA requests an order to permit its Primary Custodian to change
the eligible foreign custodian or eligible securities depository in
whose custody it maintains ASA's assets, and to amend the custodian
agreement with ASA to reflect the change, without prior Commission
approval. Applicant contends that requiring it to seek Commission
approval before its Primary Custodian changes the eligible foreign
custodian or eligible securities depository in whose custody it
maintains ASA's assets imposes on ASA and its Primary Custodian an
unfair burden that is not imposed upon U.S. Funds. ASA also asserts
that changing the eligible foreign custodian or eligible securities
depository in whose custody ASA's Primary Custodian maintains ASA's
assets does not raise any jurisdictional concerns different from than
those discussed above. Finally, ASA asserts that requiring it to seek
Commission approval diminishes ASA's (and its Primary Custodian's)
ability to deal effectively and efficiently with business issues
regarding ASA's custody arrangements.
7. ASA also seeks relief to exercise in South Africa, Hong Kong,
the United Kingdom, Canada, or Australia the rights issued to it as a
shareholder in other companies for the purchase of securities. Under
the terms and conditions of the Existing Order, ASA is required to
settle its purchases and sales of portfolio securities, other than
purchases on established exchanges, in the U.S.\15\ Applicant contends
that exercise in South Africa, Hong Kong, the United Kingdom, Canada or
Australia of the rights issued to ASA as a shareholder in other
companies for the purchase of securities would not constitute purchases
and sales ``on'' the established exchanges. ASA asserts that without
this relief, there could be significant opportunity costs and financial
harms to ASA and its shareholders because, among other things, ASA
could be precluded from participating in rights offerings that present
attractive investment opportunities in companies with which ASA already
is familiar. As stated in condition 23, applicant states that this
relief would be limited so that: (a) the rights so exercised are
offered to ASA as a shareholder in another company on the same basis as
all other holders of the class or classes of shares of such other
company to whom such rights are offered, (b) the rights so exercised do
not exceed 10% of the total amount of such rights so offered, and (c)
the securities purchased pursuant to such exercise, or securities of
the same class, are listed on the JSE, the HKSE, the LSE, the TSX, or
the ASX, or application has been made to such exchange for the listing
thereon of such securities, or it has been publicly announced that
application will be made to such exchange for the listing thereon of
such securities.
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\15\ See supra note 3.
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8. Under the terms and conditions of the Existing Order, ASA and
each of its Non-Resident Persons must designate Chase, ASA's Primary
Custodian, as U.S. Service Agent in any Proceeding before the
Commission or any appropriate court relating to their activities as
directors, officers or investment advisers of ASA. ASA requests that
ASA and its Non-Resident Persons be required to designate CT Corp,
instead of ASA's Primary Custodian, as U.S. Service Agent.\16\ ASA's
foreign custodians generally also would designate CT Corp as U.S.
Service Agent. Applicant states that CT Corp is a leading registered
agent in the U.S. and has been in the business of providing registered
agent services for over 100 years. Applicant states that permitting ASA
and each of its Non-Resident Persons to designate CT Corp, instead of
ASA's Primary Custodian, as U.S. Service Agent would eliminate the
inconvenience and unnecessary expense associated with having to change
the designated U.S. Service Agent in the event of changes to ASA's
custodial arrangements. ASA, furthermore, is seeking more flexibility
with respect to foreign custodians, which are not in privity of
contract with ASA. ASA asserts that while Chase's current foreign
subcustodians have agreed to designate CT Corp, future foreign
subcustodians may not be able or willing to do so. If ASA's foreign
subcustodians change, ASA will use its best efforts to ensure that the
new foreign subcustodians will also designate CT Corp as U.S. Service
Agent.\17\ ASA does not believe that this relief would have an impact
on the jurisdictional issues discussed above.
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\16\ ASA notes that the 2006 Letter granted staff no-action
relief to (i) permit, among other things, ASA to continue relying on
the Existing Order after Chase's subcustodian changed from Standard
Bank to First National Bank, and (ii) permit ASA to continue to rely
on the Existing Order while CT Corp, instead of ASA's custodian,
served as FirstRand Bank Limited's U.S. Service Agent in any
Proceeding before the Commission or any appropriate court relating
to the activities of its subsidiary, First National Bank, as ASA's
South African subcustodian.
\17\ If, however, a foreign subcustodian cannot, or remains
unwilling to, designate CT Corp as U.S. Service Agent, then ASA's
Board will consider, as part of its decision whether to engage a
Primary Custodian or use a particular foreign subcustodian, the fact
that the foreign subcustodian would not designate CT Corp as U.S.
Service Agent.
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ASA's Conditions
ASA agrees that any order granting the requested relief will be
subject to the following conditions: \18\
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\18\ The terms ``eligible foreign custodian,'' ``U.S. bank'' and
``foreign custody manager'' used in the conditions have the same
meaning as defined in rule 17f-5 under the Act.
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1. A U.S. bank, as defined in section 2(a)(5) of the Act and having
the qualification described in section 26(a)(1) of the Act, will serve
as ASA's Primary Custodian. In addition, ASA's
[[Page 32481]]
agreement with its Primary Custodian will contain provisions
stipulating that the United States is the proper venue for disputes
arising under the agreement.
2. ASA will seek an order of the Commission prior to any amendment
of its agreement with its Primary Custodian if the amendment conflicts
with any of the representations or conditions applicable to the
Existing Order, as amended by the requested order.
3. The Board will serve as foreign custody manager and will not
delegate such functions to ASA's Primary Custodian or any other person.
4. ASA will comply with Rule 17f-5 and Rule 17f-7 under the Act as
if ASA were a registered management investment company organized or
incorporated in the United States. Each eligible foreign custodian that
ASA uses will be contractually obligated to follow the Primary
Custodian's instructions with respect to assets the eligible foreign
custodian holds on behalf of ASA. In each applicable jurisdiction, the
Board will consider the relationship between an eligible foreign
custodian and an eligible securities depository (including whether the
eligible foreign custodian is liable for the eligible securities
depository's misdeeds to the same extent as if such securities were
maintained by the eligible foreign custodian) and will determine that
maintaining assets in the eligible securities depository through the
eligible foreign custodian is in the best interest of ASA and its
shareholders.
5. ASA will cause each present and future officer, director,
investment adviser, and principal underwriter of ASA to enter into an
agreement (``Agreement'') (to be filed by ASA with the Commission when
that person assumes office), which will provide that each person
agrees: (a) to comply with ASA's charter and bylaws, the Act and the
rules of the Commission under the Act, and the undertakings and
agreements contained in the application as applicable to each person
and as each may be amended from time to time, as applicable to each
person; (b) to do nothing inconsistent with the undertakings and
agreements contained in the application, the provisions of the Act, or
the rules under the Act; (c) that the undertakings described in (a) and
(b) above constitute representations and inducements to the Commission
to issue the requested order; and (d) each Agreement constitutes a
contract between the person and ASA and the shareholders of ASA with
the intent that ASA's shareholders will be beneficiaries of and will
have the status of parties to the Agreement so as to enable them to
maintain actions at law or in equity within the United States or
Bermuda. In addition, each Agreement of each officer and director of
ASA will contain provisions similar to those contained in condition 21
below.\19\
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\19\ ASA acknowledges that: (a) every agreement and undertaking
of ASA, its officers, directors, investment adviser, and principal
underwriters contained in the application constitutes (i)
inducements to the Commission for the issuance and continuance in
effect of the requested order, and (ii) a contract among ASA, the
Commission, and ASA's shareholders with the same intent as set forth
in condition 5 above; and (b) the failure by ASA or any of the
persons listed above to comply with any of the agreements or
undertakings, unless permitted by the Commission, will constitute a
violation of the requested order.
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6. So long as ASA is registered under the Act, ASA's charter and
bylaws, together, will contain in substance the provisions required by
Rule 7d-1(b)(8) under the Act, and neither the charter nor the bylaws
will be changed or amended in any manner inconsistent with Rule 7d-
1(b)(8) under the Act and the rules and regulations under the Act,
unless authorized by the Commission.
7. ASA's Primary Custodian will not transfer any assets of ASA
unless the instructions it receives from ASA include the written
approval of ASA's Chief Compliance Officer. ASA will submit
instructions relating to any transfer of assets to its Chief Compliance
Officer, who will review them prior to the submission of any approved
instructions to ASA's Primary Custodian. ASA's Chief Compliance Officer
will not approve a transfer of assets if an agent, broker-dealer, or
counterparty is an affiliated person of ASA or an affiliated person of
any director, officer, or investment adviser of ASA, unless the
transaction is of a type permitted by the Act or any regulation under
the Act or specifically permitted by order of exemption issued under
the Act. In addition to providing any other information relevant to the
Chief Compliance Officer's review, ASA will require each of its
officers, directors, and investment advisers to transmit quarterly a
list of affiliated persons or a statement that there has been no change
since the last list so transmitted to ASA's Chief Compliance Officer.
No person will qualify to serve as a director or officer of ASA until
he or she has transmitted to ASA a list of his or her affiliated
persons, as that term is defined in Section 2(a)(3) of the Act.
8. ASA will furnish to the Commission revisions, if any, to the
list of persons affiliated with ASA that previously was furnished to
the Commission concurrently with the filing of periodic reports
required to be filed under the Act. Such revised lists will include
persons affiliated with any future investment adviser or principal
underwriter of ASA.
9. The Chief Executive Officer of ASA, a majority of the directors
of ASA, a majority of the officers, and the Chief Compliance Officer of
ASA will be both citizens and residents of the United States. ASA will
maintain its principal executive office in the United States.
10. ASA will hold all of its shareholder meetings in the United
States.
11. ASA will maintain in the United States a transfer agent for
transfer of its shares, and a registrar for the registration of its
shares.
12. ASA will file, and will cause each of its present or future
directors, officers, or investment advisers who is not a resident of
the United States to file with the Commission irrevocable designation
of CT Corp as an agent in the United States to accept service of
process in any suit, action, or proceeding before the Commission or any
appropriate court to enforce the provisions of the laws administered by
the Commission, or to enforce any right or liability based upon ASA's
charter or bylaws, contracts, or the respective undertakings and
agreements of any of these persons required by the terms and conditions
of the requested order, or which alleges a liability on the part of any
of these persons arising out of their services, acts, or transactions
relating to ASA. Further, ASA will designate CT Corp as U.S. Service
Agent in the same city in which ASA's Primary Custodian is located.
13. After receipt of the requested order, ASA will file with the
Commission (a) a copy of each subcustodian agreement, if that
subcustodian agreement irrevocably designates CT Corp as an agent in
the United States to accept service of process in any Proceeding before
the Commission or any appropriate court to enforce the provisions of
the laws administered by the Commission in connection with the
subcustodian agreement, or to enforce any right or liability
(``Liability'') based on the subcustodian agreement or which alleges a
liability on the part of the subcustodian arising out of its services,
acts, or transactions under the subcustodian agreement relating to
ASA's assets; and (b) a copy of each subcustodian agreement that does
not contain one or more provisions described in clause (a), along with
a written explanation as to why ASA determined that it was nonetheless
appropriate to use that subcustodian notwithstanding the lack of that
provision or those provisions. This
[[Page 32482]]
filing requirement will automatically terminate upon a subcustodian
ceasing to hold ASA's assets, except as to a Proceeding or a Liability
based on an action or inaction of the subcustodian prior to the
subcustodian having ceased holding ASA's assets.
14. ASA will perform every action and thing necessary to cause and
assist the custodian of its assets to distribute the same, or the
proceeds, if the Commission or a court of competent jurisdiction will
have so directed by final order.\20\ ASA also will perform every action
and thing necessary to cause and assist its shareholders or the
Commission to collect (a) any monetary amount specified in a Commission
order or (b) a final judgment entered by a court of competent
jurisdiction. ASA will assist the Commission in enforcing temporary and
preliminary injunctions and other orders entered by a court of
competent jurisdiction, including ``freeze'' orders that would direct
the company to retain specified funds pending a final disposition of a
Commission case. To this end, ASA will agree, and will have the right
under its agreement with the Primary Custodian, to instruct the Primary
Custodian to freeze specified assets of ASA for a short period of time
at the request of the Commission, pending the Commission's application
for a formal court order freezing those assets. During this period, ASA
will repatriate any cash or cash equivalents from frozen accounts,
pending final disposition of the case. Further, ASA's agreement with
its Primary Custodian will include a provision that disputes concerning
the implementation of any asset freeze are under the jurisdiction of
the U.S. courts. As soon as practicable, ASA and its Primary Custodian
will notify an eligible foreign custodian or eligible securities
depository of any court-ordered asset freeze.
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\20\ A court of competent jurisdiction means any U.S. federal
court that has jurisdiction to issue such an order.
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15. ASA stipulates that personal jurisdiction exists in any
Commission action brought against ASA in the United States and agrees
to waive any defense of forum non conveniens to any Commission action.
16. ASA will take all steps necessary to ensure that it will be
listed on the NYSE, including the publishing of financial statements
and other information required by the NYSE for the benefit of holders
of the shares listed on the NYSE and the performance of all the
covenants contained in its listing agreement.
17. The Commission, in its discretion, may revoke its order
permitting registration of ASA and the public offering of its
securities if the Commission finds, after notice and opportunity for
hearing, that there has been a violation of the requested order or the
Act and may determine whether distribution of ASA's assets is necessary
or appropriate in the interests of investors and may so direct.
18. ASA waives any counsel fees to which it may be entitled and
waives security for costs in any action brought against it in Bermuda
by any shareholder based on its charter or bylaws or any of the
undertakings and agreements contained in the application. ASA will
cause each of its present or future directors who is a non-resident of
the United States to make similar waivers.
19. ASA will promptly notify the Commission in the event that there
is any change in Bermudian law that will be contrary to any provision
of the Act or detrimental to or inconsistent with the protection
afforded by the undertakings and agreements contained in the
application.
20. Any shareholder of ASA or the Commission, on its own motion or
on request of any of ASA's shareholders, will have the right to
initiate a proceeding: (a) before the Commission for the revocation of
the order permitting registration of ASA; or (b) before a court of
competent jurisdiction for the liquidation of ASA and a distribution of
its assets to its shareholders and creditors. The court may enter the
order in the event that it finds, after notice and opportunity for
hearing, that ASA, its officers, directors, investment adviser, or
principal underwriter has violated any provision of the Act or the
requested order.
21. Any shareholder of ASA will have the right to bring suit at law
or equity, in any court of the United States or Bermuda having
jurisdiction over ASA, its assets, or any of its officers or directors
to enforce compliance by ASA, its officers and directors with any
provision of ASA's charter or bylaws, the Act, the rules under the Act,
or the undertakings and agreements required by the conditions of the
requested order, insofar as applicable to these persons. The court may
appoint a trustee or receiver of ASA with all powers necessary to
implement the purposes of the suit, including the administration of the
estate, the collection of corporate property including choses-in-
action, and distribution of ASA's assets to its creditors and
shareholders. ASA and its officers and directors waive any objection
they may be entitled to raise and any right they may have to object to
the power and right of any shareholder of ASA to bring such suit,
reserving, however, their right to maintain that they have complied
with these provisions, undertakings and agreements, and otherwise to
dispute the suit on its merits. ASA and its officers and directors also
agree that any final judgment or decree of any U.S. court may be
granted full faith and credit by a court of competent jurisdiction of
Bermuda and consent that the Bermudian court may enter judgment or
decree on ASA at the request of any shareholder, receiver, or trustee
of ASA.
22. ASA will settle its purchases and sales of portfolio securities
in the United States by use of the mails or means of interstate
commerce, except for: (a) purchases and sales on an ``established
securities exchange'' (defined as a national securities exchange as
defined in Section 2(a)(26) of the Act, the JSE, the HKSE, the LSE, the
Tokyo Stock Exchange, the TSE, the ASX, and the SIX Swiss Exchange
(collectively the ``Established Exchanges'')) and (b) purchases and
sales, through its custodian or its custodian's agent, in South Africa
of South African Treasury Bills from or to the South African Treasury
or South African Reserve Bank securities, or CSD-eligible securities.
Assets purchased on the JSE, the HKSE, the LSE, the TSE, and the ASX
will be maintained as provided for in condition 25 below. Assets
purchased on the Tokyo Stock Exchange and the SIX Swiss Exchange will
be maintained in the United States with ASA's custodian, unless
prohibited by law or regulation or financially impracticable as
provided in condition 26 below.
23. Notwithstanding condition 22, ASA may, through its custodian or
its custodian's agent, exercise in South Africa, Hong Kong, the United
Kingdom, Canada, or Australia the rights issued to it as a shareholder
of other companies for the purchase of securities, provided that, in
the case of each such exercise, (i) the rights so exercised are offered
to ASA as a shareholder in another company on the same basis as all
other holders of the class or classes of shares of such other company
to whom such rights are offered, (ii) the rights so exercised do not
exceed 10% of the total amount of such rights so offered, and (iii) the
securities purchased pursuant to such exercise, or securities of the
same class, are listed on the JSE, the HKSE, the LSE, the TSE, or the
ASX, or application has been made to such exchange for the listing
thereon of such securities, or it
[[Page 32483]]
has been publicly announced that application will be made to such
exchange for the listing thereon of such securities.
24. Contracts of ASA, other than those executed on an Established
Exchange which do not involve affiliated persons, will provide that:
(a) the contracts, irrespective of the place of their execution or
performance, will be performed in accordance with the requirements of
the Act, the Securities Act of 1933, and the Securities Exchange Act of
1934, each as amended, if the subject matter of the contracts is within
the purview of these Acts; and (b) in effecting the purchase or sale of
assets, the parties to the contracts will utilize the U.S. mails or
means of interstate commerce.
25. ASA will keep at least 20% of its assets in the United States
in the custody of a U.S. bank. ASA's remaining assets will be kept in
the custody of (a) an eligible foreign custodian, as defined in rule
17f-5 under the Act, in South Africa, Hong Kong, the United Kingdom,
Canada, or Australia; or (b) an eligible securities depository, as
defined in rule 17f-7 under the Act, in South Africa, Hong Kong, the
United Kingdom, Canada, or Australia.
26. If removal of securities purchased on the Tokyo Stock Exchange
and the SIX Swiss Exchange becomes either prohibited by law or
regulation or financially impracticable, up to 5% of ASA's assets may
be held by an eligible foreign custodian or overseas branch of ASA's
custodian in each of Japan and Switzerland.
27. ASA will withdraw its assets from the care of a subcustodian as
soon as practicable, and in any event within 180 days of the date when
a majority of the Board makes the determination that a particular
subcustodian may no longer be considered eligible under rule 17f-5
under the Act or that continuance of the subcustodian arrangement would
not be consistent with the best interests of ASA and its shareholders.
28. ASA will cause its custodian to enter into an agreement (to be
filed by ASA with the Commission when the custodian commences service
to ASA), which will provide that the custodian agrees: (a) To comply
with the Act and the rules of the Commission under the Act and the
undertakings and agreements contained in the application as applicable
to the custodian and as each may be amended from time to time, as
applicable to the custodian; (b) to do nothing inconsistent with the
undertakings and agreements contained in the application, the
provisions of the Act, or the rules under the Act; and (c) that the
undertakings described in (a) and (b) above constitute representations
and inducements to the Commission to issue the requested order.\21\
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\21\ ASA acknowledges that: (a) Every agreement and undertaking
of ASA and its custodian contained in the application constitutes
(i) inducements to the Commission for the issuance and continuance
in effect of the requested order, and (ii) a contract among ASA, the
Commission and ASA's shareholders; and (b) the failure by ASA or the
custodian to comply with any of the agreements or undertakings,
unless permitted by the Commission, will constitute a violation of
the requested order.
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29. So long as ASA is registered under the Act, ASA's custody
contract with its custodian will provide that the custodian will: (a)
Consummate all purchases and sales of securities by ASA through the
delivery of securities and receipt of cash, or vice versa as the case
may be, within the United States, except for (i) purchases and sales on
the Established Exchanges, and (ii) purchases and sales, through ASA's
custodian or custodian's agent, in South Africa of South African
Treasury Bills from or to the South African Treasury, South African
Reserve Bank securities, or CSD-eligible securities; and (b) distribute
ASA's assets, or the proceeds thereof, to ASA's creditors and
shareholders, upon service upon the custodian of an order of the
Commission or court directing such distribution as provided in
conditions 17, 20, and 30.
30. With respect to an alleged violation of the Act or the
requested order by ASA's custodian, eligible foreign custodian, or
eligible securities depository, the Commission, on its own motion, will
have the right to initiate a proceeding: (a) Before the Commission for
the revocation of the order permitting registration of ASA; or (b)
before a court of competent jurisdiction for the liquidation of ASA and
a distribution of its assets to its shareholders and creditors. The
court may enter the order in the event that it finds, after notice and
opportunity for hearing, that ASA's custodian has violated any
provision of the Act or the requested order.
31. The Chief Compliance Officer, as defined in Rule 38a-l(a)(4)
under the Act, shall prepare a report, as part of the annual report to
the Board, that evaluates ASA's compliance with the terms and
conditions of the Application and the procedures established to achieve
such compliance. The Chief Compliance Officer will also annually file a
certification pursuant to item 77Q3 of Form N-SAR as such Form may be
revised, amended or superseded from time to time, that certifies that
ASA and the Board have established procedures reasonably designed to
achieve compliance with Conditions 22, 25 and 26 regarding location of
ASA's assets. Additionally, ASA's independent public accountants, in
connection with their audit examination of ASA, will review the
operations and procedures pertaining to the location of ASA's assets
and custody arrangements for compliance with the conditions of the
Application, and their review will form the basis, in part, of the
auditor's report on internal accounting controls in Form N-SAR.
By the Commission.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-12797 Filed 5-29-13; 8:45 am]
BILLING CODE 8011-01-P