SEC Division of Investment Management staff letter: France Growth Fund, Inc

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The France Growth Fund, Inc. - Calapasas Investment Partnership

April 6, 2001 Charles F. McCain II Hale & Dorr LLP 60 State Street Boston, MA 02109 Re: France Growth Fund Inc. ("Fund") File No. 811-5994 Shareholder Proposal of Calapasas Investment Partnership Dear Mr. McCain: In a letter dated March 7, 2001, you notified the staff of the Securities and Exchange Commission that the Fund proposes to omit from its proxy materials for its 2001 annual meeting a shareholder proposal (the "Proposal") submitted by Calapasas Investment Partnership ("Proponent"). The Proposal provides: RESOLVED: That the shareholders of The France Growth Fund (the "Fund") recommend that the Board of Directors expedite the process to ensure that the Fund's shares can trade at net asset value (NAV) daily. Suggested alternatives include (1) conversion to an open-end investment company; or (2) a merger with another open-end fund.

You request our assurances that we would not recommend enforcement action if the Fund omits the Proposal based on either a failure to satisfy the deadline requirements of Rule 14a-8(e) under the Securities Exchange Act of 1934, or based on Rule 14a-8(i)(1). Additionally, you request that the staff permit the Fund to make this submission less than 80 days prior to filing its definitive proxy statement and form of proxy pursuant to Rule 14a-8(j)(1). Discussion The Fund intends to exclude the Proposal based on the Proponent's failure to comply with the Fund's deadline for submission of shareholder proposals. The deadline for submitting a shareholder proposal to the Fund under Rule 14a-8 was November 17, 2000. You state that this deadline was calculated according to Rule 14a-8(e)(2), and was clearly noted in the Fund's proxy materials filed with the Commission on March 17, 2000. In addition, these proxy materials provided the address of the Fund's principal executive offices. You state that the Fund received the Proposal, which was incorrectly addressed, on January 16, 2001. You also allege that the Proponent was unable to provide the Fund with any proof of the Proposal's date of delivery. In order for a shareholder proposal to be considered timely, it must be received at the Fund's principal executive offices not less than 120 days before the anniversary of the date the previous year's proxy materials were sent to shareholders in connection with that year's annual meeting. The Fund appears to have received the Proposal after its 14a-8(e)(2) deadline. Finally, despite the exhortation in Rule 14a-8(e)(1) to obtain proof of delivery, you state that the Proponent was unable to provide the Fund with any evidence proving a date of delivery on or before the deadline set out in the Fund's March 17, 2000 proxy materials. Based upon the foregoing, and without necessarily agreeing with your analysis, the staff would not recommend enforcement action to the Commission if the Fund omits the Proposal based upon the Proponent's failure to submit the proposal by the deadline calculated pursuant to Rule 14a-8(e)(2). In reaching this opinion it was not necessary to address your alternate basis for omission, and consequently we do not express an opinion on it. We note that the Fund intends to file its definitive proxy materials less than 80 calendar days from the date it filed its statement objecting to the inclusion of the Proposal in its definitive proxy materials. Given the circumstances of the delay, we grant the Fund's request that the 80-day requirement be waived. Attached is a description of the informal procedures the Division follows in responding to shareholder proposals. If you have any questions or comments regarding this matter, please contact the undersigned at (202) 942-0573. Sincerely, Eric S. Purple Senior Counsel ATTACHMENT

cc: Calapasas Investment Partnership c/o Jeff Robertson, General Partner 2800 28 th Street, #160 Santa Monica, CA 90405

Incoming Letter

Charles F. McCain, II 617-526-6276 charles.mccain@haledorr.com March 7, 2001 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549

Attention: Mr. Richard Pfordte, Branch Chief Mr. Eric Purple, Staff Attorney Division of Investment Management

Re: Shareholder Proposal Submitted to The France Growth Fund, Inc. by Calapasas Investment Partnership Dear Messrs. Pfordte and Purple: This letter is submitted on behalf of our client, The France Growth Fund, Inc., a Maryland corporation (the "Company"), pursuant to Rule 14a-8(j) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company hereby gives notice of its intention to omit from its proxy statement and form of proxy (the "Proxy Materials") the proposal and statement of support (the "Proposal") submitted by Calapasas Investment Partnership (the "Proponent") by facsimile to the Company on January 16, 2000. Pursuant to the provisions of Rule 14a-8(j) under the Exchange Act, enclosed for filing are six copies of each of this letter and the Proposal. For a copy of the Proposal, please see Exhibit A . Also, pursuant to the provisions of Rule 14a-8(j), we are sending a copy of this letter and Exhibits to the Proponent. For the reasons set forth under Section III below and as permitted by Rule 14a-8(j), we respectfully request the staff of the Securities and Exchange Commission (the "Commission") to permit the Company to file its definitive Proxy Materials with the Commissions less than 80 days from the date that the Commission receives this letter. For ease of reference, the text of the Proposal, exactly as received, is set forth below. Stockholder Proposal

RESOLVED: That shareholders of The France Growth Fund (the "Fund") recommend the Board of Directors expedite the process to ensure that the Fund's shares can trade at net asset value (NAV) daily. Suggested alternatives include (1) conversion to an open-end investment company; or (2) a merger with another open-end fund."

It is our opinion that this Proposal may be omitted from the Proxy Materials based upon Rule 14a-8(i)(3) and Rule 14a-8(e)(i)(1). I. Rule 14a-8(i)(3) (Violation of the Proxy Rules)

A. The Proposal was submitted well after the deadline set forth in Rule 14a-8(e).

Rule 14a-8(e) under the Exchange Act requires stockholders to submit their proposals for inclusion in a company's proxy statement prior to a deadline which is specified by the Rule. If the proposal is being submitted for a regularly scheduled annual meeting, Rule 14a-8(e)(2) provides that the proposal must be received at the company's principal executive offices not less than 120 calendar days before the first anniversary of the date that the company's proxy statement in connection with the previous year's annual meeting was released to stockholders. Rule 14a-8(e)(1) notes that the deadline for submission of stockholder proposals to the company can normally be found in the company's proxy statement. According to Rule 14a-8(e)(2), the deadline by which a stockholder proposal intended to be presented at the regularly scheduled 2001 annual meeting of stockholders (the "2001 Annual Meeting") had to be received by the Company in order for such proposal to be included in the Company's proxy statement was November 17, 2000 (the "November Deadline"). The November Deadline was determined in the manner required by Rule 14a-8(e)(2). The mailing date of the proxy statement relating to the 2000 annual meeting of stockholders (the "2000 Proxy Statement") was March 17, 2000. November 17, 2000 is 120 calendar days prior to the first anniversary of that March 17, 2000 mailing date. The November Deadline was clearly set forth under the heading "Stockholder Proposals" on page 18 of the Company's proxy statement of March 17, 2000 relating to the 2000 annual meeting of stockholders (the "2000 Annual Meeting"). The Company did not receive the Proposal from the Proponent until it received the Proposal by facsimile on January 16, 2001, which was approximately two months after the November Deadline. Prior to January 16, 2001, the Company had never had any contact with the Proponent and did not have any indication that it would receive a proposal from the Proponent. The Company believes that the Proponent had ample notice and opportunity to comply with the procedural requirements of Rule 14a-8. The Company believes that the deadline set forth in Rule 14a-8(e)(2) was intended to provide companies and their boards of directors with sufficient time to carefully evaluate a stockholder's proposal. The Company believes that it and its stockholders would be adversely effected if the Company were required to include the Proposal even though it was received by the Company well after the November Deadline. The Board of Directors of the Company (the "Board") met in December 2000 to evaluate all of the proposals which were received by the Fund prior to the November Deadline. The Board is not scheduled to meet again until following the 2000 Annual Meeting. If the Company were not permitted to omit the Proposal from its Proxy Materials, the Board would be required to hold a special meeting for the sole purpose of evaluating the merits of the Proposal. The Company's stockholders would
ultimately bear the costs associated with such a special meeting. For the reasons set forth above, the Company intends to exclude the Proposal from the Proxy Materials pursuant to Rule 14a-8(i)(3) because the Proposal has violated the Commission's proxy rules. B. Additional Procedural Deficiencies.

The Proposal which the Company received on January 16, 2001 purports to be dated November 13, 2000. Because we believe that the Proponent may respond to this letter by arguing that the Proposal was sent to the Company prior to the November Deadline, we believe that it is important to provide the following additional information concerning the Proposal. First, Rule 14a-8(e) provides that a stockholder proposal must be received at the company's principal executive offices prior to the deadline specified by the Rule. The Proposal, on its face, purports to be addressed to: Steven M. Cancro Secretary The France Growth Fund, Inc. c/o Mitchell Hutchins Asset Management 1285 Avenue of the Americas, 37 th Floor New York, NY 10019 That address has never been the principal executive offices of the Company. In fact, the Company does not maintain any offices at that address. The Company's principal executive offices at the time the Proponent was required to submit its Proposal to the Company for inclusion in the Company's proxy materials ( i.e. prior to the November deadline) was 1211 Avenue of the Americas, New York, New York 10036. That address was set forth prominently in the 2000 Proxy Statement. A copy of the relevant pages from the 2000 Proxy Statement are attached as Exhibit B . The Company has since moved to new offices at 666 Third Avenue, New York, New York, on April 24, 2000. Therefore, even if the Proponent argues that it did send the Proposal to the Company prior to the November Deadline, the Proponent did not submit the Proposal to the Company's principal executive offices. Second, the Proposal was never received at the address listed on the Proposal. The 1285 Avenue of the Americas address listed on the Proposal is the former address of the Company's administrator, Mitchell Hutchins Asset Management ("Mitchell Hutchins"). Mitchell Hutchins moved to new offices at 51 West 52 nd Street, New York, NY 10019 on June 19, 2000. Mitchell Hutchins new address is set forth in the Company's Semi-Annual Report dated June 30, 2000 which was sent to all shareholders on August 29, 2000. The Proponent, which represents that it has beneficially owned shares of the Company for over one year prior to the purported date of the Proposal, would have received the Company's Semi-Annual Report dated June 30, 2000 with the correct address for Mitchell Hutchins prior to the purported date of the Proposal. The Company has investigated whether Mitchell Hutchins had received the Proposal either at its old address or at its new address. Mitchell Hutchins reported to the Company that it has never received any proposal from the Proponent at either its old or new address. Third, Rule 14a-8(e)(1) under the Exchange Act provides that the stockholder should submit its proposal to the Company in a manner which would allow the stockholder to prove the date of delivery. From discussions between the Company and the Proponent following the Company's receipt of the Proposal on January
16, 2001, the Proponent stated that it could not provide any proof that the Proposal was, in fact, sent on or about November 13, 2000, or that it was received prior to the November deadline by either the Company or Mitchell Hutchins at the address listed on the Proposal. The Proponent stated that it also sent the Proposal to the Company by facsimile on or about November 13, 2000. The Company did not receive the Proposal by facsimile prior to January 16, 2001. The Company was not familiar with the fax number which the Proponent stated it had used and tested the number and found that it was not in service. II. Rule 14a-8(i)(1) (The Stockholder's Notice to the Company of the Proposal Fails to Comply with the Company's Advance Notice Bylaws).

Section 2-504(e) of the Maryland General Corporations Law ("MGCL") expressly authorizes a Maryland corporation to adopt bylaws that require any stockholder proposing a matter for consideration at a meeting of the stockholders to provide minimum advance notice of the proposal to the corporation of not more than 90 days before the first anniversary of the mailing date of the notice of the preceding year's annual meeting. Pursuant to Section 2-504, the Company adopted Article III, Section 13 of the Bylaws, which requires, in the case of an annual meeting, a stockholder to give notice of a proposal to the Company not later than the 90th day nor earlier than the 120th day prior to the first anniversary of the date of mailing of the notice of the preceding year's annual meeting. The Proponent has failed to comply with Article III, Section 13 of the Bylaws. The deadline for submitting a proposal for consideration at the 2001 Annual Meeting under Article III Section 13 of the Bylaws was December 17, 2000. As explained above under Section I, the Company did not receive the Proposal until January 16, 2001. The Company is thus not permitted pursuant to Article III, Section 13 of the Bylaws to present this Proposal for action at the 2001 Annual Meeting. Accordingly, the Company also intends to exclude the Proposal under Rule 14a-8(i)(1) because the Proposal is not a proper matter for action at the 2001 Annual Meeting. III. The Company requests accelerated review of this letter.

Rule 14a-8(j) provides that the Commission staff may permit the Company to make its submission less than 80 days before the Company files its definitive Proxy Materials with the Commission. The Company believes that it would be appropriate for the staff to consider accelerating its review in situations such as this where the Company has received a stockholder proposal almost two months after the deadline specified in Rule 14a-8(e). Prior to the receipt of this Proposal, the Company intended to file definitive Proxy Materials with the Commission on or about April 6, 2001. The 2001 Annual Meeting is scheduled to be held on April 30, 2001. If the Staff were not able to accelerate its review of this matter, the Company would be forced to postpone its 2001 Annual Meeting until June as the Company would not be able to file definitive Proxy Materials until mid May. The Company's Bylaws currently require the Fund to hold its annual meeting during the month of April, so an amendment to the Bylaws would be required in order to hold the 2001 Annual Meeting later than April 30, 2001. * * * * For all of the foregoing reasons, the Company intends to omit the Proposal from its Proxy Materials. If you have any questions or need any additional information regarding the above, please do not hesitate to call me (collect) at the number listed above. Very truly yours, Charles F. McCain II

http://www.sec.gov/divisions/investment/noaction/france040601.htm

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Modified: 10/30/2001