 |
Home | Previous Page | |
|
||
 |
|
|
|
||
 |
|
|
|
|
|||||||||||||||
|
|
|||||||||||||||
|
|
No-Action Letter under:
|
| 1 | In connection with this request, we also considered a letter we received from the Proponent on August 24, 2001. |
| 2 | We note, for example, that the price of the Fund's shares on June 8, 2001 (a date within the 60-day period prior to June 18, 2001), was more than the price on August 6, 2001. |
| 3 | We note that the proxy rules do not specifically address a situation where an issuer requests information a second time from a shareholder. Furthermore, we note that the Fund's July 24th letter told Mr. Baer that he must obtain verification that he owned Fund shares that were worth at least $2,000 continuously over the relevant period. As noted above, in our view the notification misrepresented the requirements of rule 14a-8(b). Therefore, the notification was deficient. |
Stradley Ronon Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Telephone (215) 564-8000
Fax (215) 564-8120
August 13, 2001
VIA HAND DELIVERY
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, DC 20549
Attention: Division of Investment Management
RE: Templeton Vietnam and Southeast Asia Fund, Inc.:
Shareholder Proposal of Walter S. Baer
Dear Sir or Madam:
I am a partner with Stradley, Ronon, Stevens & Young, LLP, which serves as outside counsel to the Templeton Vietnam and Southeast Asia Fund, Inc. (the "Fund"). I am writing on behalf of the Fund to request the Securities and Exchange Commission (the "Commission") staff's confirmation that it will take no action if the Fund, pursuant to Rule 14a-8(f) under the Securities Exchange Act of 1934, as amended, (the "Securities Act") omits a shareholder proposal and supporting statement submitted to the Fund by Mr. Walter S. Baer (the "Proposal") from its proxy statement and form of proxy ("Proxy Materials"). Mr. Baer's letter setting forth the Proposal is attached hereto as Exhibit A. The specific reasons for the Fund's position are set forth below. The annual meeting of shareholders (the "Meeting") is scheduled for November 30, 2001 and the Fund plans to mail definitive Proxy Materials in October, 2001. The Fund respectfully requests that the Commission staff respond to this letter prior to September 15, 2001, to enable the Fund sufficient time to provide Mr. Baer with a copy of the Fund's opposition statement pursuant to Rule 14a-8(m)(3) in the event that the Fund is required to include the Proposal in the Proxy Materials.
RULES 14a-8(b) and 14a-8(f)-MR. BAER FAILED TO DEMONSTRATE CONTINUOUS OWNERSHIP OF $2,000 IN MARKET VALUE OF THE FUND'S SECURITIES FOR A YEAR PRIOR TO SUBMISSION OF THE PROPOSAL.
The Proposal may be properly excluded pursuant to Rules 14a-8(b) and 14a-8(f) because Mr. Baer failed to demonstrate that he is eligible to submit a proposal. Under Rules 14a-8(b) and 14a-8(f), Mr. Baer has the burden of establishing proof that he meets certain eligibility requirements. Rule 14a-8(b)(1) requires that Mr. Baer, at the time he submitted the Proposal, "have continuously held at least $2,000 in market value, or 1%, of the company's securities entitled to be voted on the proposal at the meeting for at least one year" by the date he submitted the Proposal. Rule 14a-8(b)(2) further requires that, unless Mr. Baer is the registered holder of the Fund's securities, he must prove his eligibility to submit the Proposal by submitting to the Fund a written statement from the "record" holder of his securities (usually a broker or bank) verifying that, at the time the Proposal was submitted, Mr. Baer continuously held the securities for at least one year.
If Mr. Baer fails to comply with Rule 14a-8(b), the Fund, pursuant to Rule 14a-8(f), may exclude the Proposal, but only after the Fund has notified Mr. Baer of the deficiency and Mr. Baer fails to correct such deficiency. Under Rule 14a-8(f)(1), within 14 days of receiving the Proposal, the Fund was required to notify Mr. Baer in writing of any procedural or eligibility deficiencies, as well as provide Mr. Baer with the proper time frame for his response. In addition, Mr. Baer was required to respond to the Fund and correct any deficiency within 14 days from the date Mr. Baer received the Fund's notification. Since Mr. Baer failed to adequately correct the procedural deficiency identified by the Fund over the course of not one, but two 14 day periods, the Fund seeks to exclude the Proposal from its Proxy Materials.
BACKGROUND
Mr. Baer, in the Proposal, dated June 11, 2001 and received by the Fund on June 18, 2001, stated that he held for at least one year shares of the Fund with a market value of $2,000, and that he intended to hold those shares continuously through the date of the Meeting. The Fund's shareholder records did not reflect that Mr. Baer was a record holder of the Fund's shares. Accordingly, on behalf of the Fund, on June 27, 2001, I wrote to Mr. Baer (the "First Fund Letter") and requested that he verify his eligibility to submit the Proposal by providing the Fund with evidence of his share ownership in accordance with Rule 14a-8. In the First Fund Letter (a copy of which is attached hereto as Exhibit B), which was received by Mr. Baer no later than July 9, 2001, I informed Mr. Baer that he had 14 days to respond to my request. On July 16, 2001, I received a fax from Mr. Baer which included a letter from Brown & Company (the "First Brown Letter") which stated that Mr. Baer was the beneficial owner of shares of the Fund with a market value of over $2,000 as of the closing price on July 12, 2001. The First Brown Letter also stated that the shares had been held for at least one year. A copy of the fax and the First Brown Letter are attached hereto as Exhibit C. The Fund was unable to determine from the First Brown Letter that Mr. Baer had continuously held $2,000 worth of shares for the entire year. The fact that Mr. Baer's shares were worth $2,000 on July 12, 2001 does not indicate that at all times from June 18, 2000 through June 18, 2001 these shares were both continuously held, and were worth at least $2,000.
As a result of the deficiency of the First Brown Letter, Mr. Baer failed to adequately prove to the Fund his share ownership within 14 days of the First Fund Letter. Although the Fund was not required to do so under the Securities Act, the Fund made a good faith attempt to permit Mr. Baer to correct this error. By letter dated July 24, 2001, a copy of which is attached hereto as Exhibit D (the "Second Fund Letter"), in accordance with Rule 14a-8(f)(1), I notified Mr. Baer that the First Brown Letter failed to prove his eligibility as required by Rule 14a-8(b). I requested that Mr. Baer provide a written statement from Brown & Company verifying that he continuously owned shares worth at least $2,000 from June 18, 2000 through June 18, 2001. Moreover, I notified Mr. Baer that he had an additional 14 days to respond to this second request. Mr. Baer received this letter via facsimile on July 24, 2001. Once again, Mr. Baer failed to provide within 14 days of receipt of the Second Fund letter, a written statement verifying that, at the time the Proposal was submitted, he had continuously held shares of at least $2,000 in market value for at least one year from the date he submitted the Proposal.
On August 8, 2001, 15 days after receiving the Second Fund Letter via facsimile, Mr. Baer faxed to me a letter from Brown & Company, (the "Second Brown Letter"). A copy of that facsimile and the Second Brown Letter are attached hereto as Exhibit E. The Second Brown Letter stated that Mr. Baer was the beneficial owner of Fund shares with a market value of over $2,000 as of August 6, 2001 and that these shares had been held continuously since June 18, 2000. Once again, the Second Brown Letter clearly failed to verify, as required by Rule 14a-8(b)(2), that, at the time he submitted the Proposal, Mr. Baer continuously held shares worth $2,000 for at least one year. At most, the Second Brown Letter demonstrates that Mr. Baer held shares worth $2,000 on August 6, 2001 and that he held them for one year. However, depending upon prevailing market prices, the shares worth $2,000 on August 6, 2001 may not have been worth $2,000 at all times from June 18, 2000 through June 18, 2001. Without a statement to this effect from Brown & Company, and without written proof as to the exact number of shares held by Mr. Baer, the Fund was unable to determine that Mr. Baer met the requirements of Rule 14a-8(b). In any event, the Second Brown Letter was not received within the required 14 day time period. Thus, Mr. Baer has clearly failed to establish that he is eligible to submit the Proposal.
Again, although not required to do so under the Securities Act, on August 9, 2001 I once more contacted Mr. Baer in an attempt to help Mr. Baer prove proper ownership. In a telephone call with Mr. Baer, I suggested that he and I talk to Brown & Company together, so that the broker could understand what information we were seeking. Mr. Baer found my request to be "extremely technical," and refused to contact Brown & Company again so as to request that they send the proper proof of ownership.
The Fund notes that this is not a situation where a proponent is unfamiliar with the rules governing submissions of shareholder proposals and has failed to satisfy a technical requirement out of ignorance. On the contrary, Mr. Baer is an experienced shareholder who previously has submitted proposals to various registrants.1 During our August 9th telephone conversation, Mr. Baer insisted that he was a knowledgeable and experienced advocate for shareholder's rights. The Fund went above and beyond the requirements of the Securities Act in a good faith attempt to help Mr. Baer establish proof of his eligibility to submit a proposal as specifically required by the proxy rules. The Fund offered Mr. Baer two 14 day periods in which to establish his eligibility and, in both instances, Mr. Baer failed to provide the required information.
DISCUSSION
The Staff has consistently taken the position that a proposal may be excluded under Rule 14a-8(f) if a proponent fails to provide sufficient evidence that it satisfies the eligibility requirements under Rule 14a-8(b). Among the recent Commission no-action letters to this effect are: Oracle Corp. (pub. avail. June 22, 2001), General Motors Corporation (pub. avail. Apr. 3, 2001), Bank of America Corporation (pub. avail. Feb. 12, 2001), Eastman Kodak Company (pub. avail. Feb. 7, 2001), Eastman Kodak Company (Service Employees Int'l.) (pub. avail. Feb. 5, 2001), and The Coca-Cola Company (pub. avail. Jan. 19, 2001).
Mr. Baer is responsible for ensuring that adequate evidence of eligibility has been furnished. Where the failure to provide the required evidence is attributable to the actions of the broker rather than a proponent, the Staff recognizes that the requirements of Rule 14a-8(b) are not satisfied and permits exclusion of the proposal. See, e.g., Oracle Corp. (pub. avail. June 22, 2001), General Motors Corporation (pub. avail. Apr. 3, 2001), Bank of America Corporation (pub. avail. Feb. 12, 2001), Eastman Kodak Company (pub. avail. Feb. 7, 2001), and Eastman Kodak Company (Service Employees Int'l.) (pub. avail. Feb. 5, 2001). Since it is Mr. Baer's responsibility to ensure that adequate evidence of eligibility is provided, and because Mr. Baer failed to provide such evidence, we believe that we may properly exclude the Proposal from the 2001 Proxy Materials.
Finally, the Fund relies on the eligibility requirements to identify who is eligible to submit a proposal under Rule 14a-8. Determining eligibility is an important part of the Fund's corporate governance process and allows the Fund to allocate its resources appropriately and efficiently. It is important for the Fund to know whether a proponent is eligible to submit a proposal before the Fund devotes time and attention to the proposal. The additional expense of including a shareholder proposal and, if appropriate, an opposition statement of the Directors is significant, and the Fund cannot responsibly incur such expense without adequate assurance that Mr. Baer is indeed a shareholder who meets the eligibility requirements of Rule 14a-8(b).
CONCLUSION
For the foregoing reasons, we respectfully request that the staff concur in our opinion that the Proposal may be properly excluded from the Fund's 2001 Proxy Materials. We would be happy to provide you with any additional information and answer any questions that you may have regarding this subject. Should you disagree with the conclusions set forth herein, we respectfully request the opportunity to confer with you prior to the determination of the staff's final position.
In accordance with Rule 14a-8(j)(1), the Fund is contemporaneously notifying Mr. Baer, by copy of this letter including the enclosures, of its intention to omit the Proposal from its Proxy Materials. Pursuant to Rule 14a-8(j)(2), I have enclosed six (6) copies of this letter (and the Exhibits), which states the reasons to exclude the Proposal from the Fund's Proxy Materials. Please acknowledge receipt of this letter and the enclosures by stamping the enclosed copy of this letter and returning it in the enclosed self-addressed stamped envelope. If the Commission's staff has any questions, or would like to discuss this matter further, please contact the undersigned at 215-564-8115, or in my absence, Lisa Matson, Esq. at 215-564-8003.
Very truly yours,
_____________________________
Bruce G. Leto
| Enclosures: | Exhibit A: | Proposal of Walter S. Baer |
| Exhibit B: | First Fund Letter | |
| Exhibit C: | First Brown Letter | |
| Exhibit D: | Second Fund Letter | |
| Exhibit E: | Second Brown Letter |
| cc (w/encls.): | via federal express:
Walter S. Baer
via federal express: ATTN: Secretary
|
| 1 | The Fund notes that two recent Commission no-action letters have addressed proposals submitted by Mr. Baer to The Foreign & Colonial Emerging Middle East Fund, Inc. (pub. avail. Dec. 17, 1999) and Current Income Shares, Inc. (pub. avail. July 10, 2001). |
http://www.sec.gov/divisions/investment/noaction/templeton092801.htm
| Home | Previous Page | Modified: 01/03/2002 |