SEC Division of Investment Management staff letter: Opportunity Partners L.P. Shareholder Proposal (Clough Global Equity Fund)

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FILED VIA E-MAIL (IMshareholderproposals@sec.gov) U.S. Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Re.: Clough Global Equity Fund - Omission of Shareholder Proposal Submitted by Opportunity Partners L.P. Ladies and Gentlemen:
Pursuant to Rule 14a-8 promulgated under the Securities and Exchange Act of 1934, as amended, (the “Exchange Act”), and as counsel to Clough Global Equity Fund, a Delaware statutory trust registered under the Investment Company Act of , as amended (the “ Act”), as a closed-end management investment company (the “Fund”), we request confirmation that the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) will not recommend enforcement action if the Fund omits from its proxy materials (the “Proxy Materials”) for its Annual Meeting of Shareholders (the “ Annual Meeting”) the proposal (the “Proposal”) and supporting statement described herein. Background On January 29, 2015, the Fund received a proposal and supporting statement from Opportunity Partners L.P. (the “Proponent”) for inclusion in the Proxy Materials for the Annual Meeting. Pursuant to Rule 14a-8(j), this letter is being filed with the Commission not less than 80 days before the Fund plans to file its definitive proxy statement. Also pursuant to Rule 14a-8(j), the Fund, by e-mail, is contemporaneously advising the Proponent of the Fund’s intention to omit the Proposal from the Proxy Materials. The Proposal and supporting statement are attached hereto as Exhibit A. The Proposal requests, in relevant part, that the Board of Trustees of the Fund (the “Board” or the “Trustees”) authorize a self-tender for all of the Fund’s outstanding common shares of beneficial interest (“Common Shares”) at or close to net asset value (“NAV”) and that, if more than % of the Fund’s outstanding Common Shares are tendered, the tender offer should be cancelled and the Fund should be liquidated or converted into an exchange-traded fund

U.S. Securities and Exchange Commission
(“ETF”) or an open-end mutual fund.
The Proposal
RESOLVED: The shareholders of Clough Global Equity Fund (the Fund) request that the Board of Trustees authorize a self-tender offer for all outstanding common shares of the Fund at or close to net asset value (NAV). If more than % of the Fund’s outstanding common shares are submitted for tender, the tender offer should be cancelled and the Fund should be liquidated or converted into an exchange-traded fund (ETF) or an open-end mutual fund. There are two potential interpretations of the request made by the Proposal should more than % of the Fund’s Common Shares be submitted for tender. Under one construction, the Proponent requests the Board unilaterally liquidate or convert the Fund. Under the other construction, shareholder approval of the Proposal is to represent shareholder approval of the liquidation or conversion without first having obtained Board approval as required by the Fund’s governing instrument. As explained below, neither interpretation enables the Fund to implement the Proposal. Reasons for Exclusion of the Proposal The Fund believes that it may properly omit the Proposal from the Proxy Materials for the 2015 Annual Meeting for the following reasons:
 In the event more than % of the Fund’s Common Shares are Submitted for Tender, Implementation of the Proposal would Result in an Action in Contravention of the Fund’s Governing Instrument. The Fund may exclude the Proposal under Rule 14a-8(i)(6) because in the event more than % of the Fund’s Common Shares are submitted for tender, there is no authority under the Fund’s governing instrument (the “Charter”) to implement the Proposal, and implementation of the Proposal in such event would require an act in contravention of the Fund’s Charter.  The Implementation of the Proposal would Violate the 1940 Act. The Fund may exclude the Proposal pursuant to Rule 14a-8(i)(2), because it would, if implemented, require the Fund to violate the 1940 Act.  The Proposal is Inherently Vague or Indefinite. The Fund may exclude the Proposal pursuant to Rule 14a-8(i)(3) because it is vague and indefinite, such that the shareholders and the Fund could not determine what actions the Proposal requires.

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I. The Proposal May Be Excluded Pursuant to Rule 14a-8(i)(6) Because There is No
Authority to Implement the Proposal in the Event More Than 50% of the Fund’s Common Shares Are Submitted for Tender, and Implementing the Proposal in Such Event Would Result in an Action in Contravention of the Fund’s Governing Instrument In the event more than % of the Fund’s Common Shares were submitted for tender, there would be no authority to implement the Proposal without obtaining authorization in accordance with the terms of, and using the interpretive requirements set forth in, the Charter (attached hereto as Exhibit B). Under Delaware law, a statutory trust operates under the terms of its governing instrument.1 In the event more than % of the Fund’s Common Shares were submitted for tender, implementation of the Proposal would cause the Fund to liquidate or convert to an ETF or an open-end mutual fund (i.e., an “open-end investment company”) either by Board action without shareholder approval or by shareholder vote without being preceded by related Board action, in contravention of the Fund’s Charter. Rule 14a-8(i)(6) permits a company to exclude a stockholder proposal if the company “lacks the power or authority to implement” such proposal. In Staff Legal Bulletin No. 14D (CF) (Nov. 7, 2008), the Staff recognized that when a proposal recommends, requests, or requires corporate action that state law mandates “be initiated by the board and then approved by stockholders,” that proposal may be excluded under Rule 14a-8(i)(6). The Fund believes that in the event more than % of the Fund’s Common Shares were submitted for tender, there would be no authority to implement the Proposal because the Charter does not vest in either the Board or the shareholders the power to unilaterally implement the Proposal, and implementation of the Proposal in such event would result in an act in contravention of the Fund’s Charter. The Staff has acknowledged that proposals may be excluded where the company lacks authority to implement them. In Northrop Grumman Corporation (Feb. 29, 2008) and Xerox Under the Delaware Statutory Trust Act (“DSTA”), a statutory trust is governed by the terms of its governing instrument. Section 3801 of the DSTA defines a statutory trust as an unincorporated association which is “created by a governing instrument under which property is or will be held, managed . . . invested . . . and/or operated or business . . . activities for profit . . . will be carried on, by a trustee or trustees or as otherwise provided in the governing instrument for the benefit of such person or persons as are or may become beneficial holders or as otherwise provided in the governing instrument.” Section (c) further defines the term “governing instrument” as “any written instrument (whether referred to as a trust agreement, declaration of trust or otherwise) which creates a statutory trust or provides for the governance of the affairs of the statutory trust and the conduct of its business.” In addition, Section 3801(c) provides that “[A] statutory trust is
bound by its governing instrument whether or not the statutory trust executes the governing instrument.” Section of the DSTA explains that the policy underlying the creation of statutory trusts and the use of a governing instrument is to “give maximum effect to the principle of freedom of contract and to the enforceability of governing instruments.”

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Corporation (Feb. 23, 2004), the omitted proposals at issue requested that the board take unilateral action where they were required to seek stockholder approval. The same principal applied recently in AllianceBernstein Income Fund, Inc. (Feb. 18, 2015), in which a proposal to liquidate, merge, or convert upon a 50% tender of outstanding shares was excluded in part because the board lacked authority under the terms of its charter to implement the proposal. See also The Goldman Sachs Group, Inc. (Jan. 28, 2015) (concurring with exclusion pursuant to Rule 14a-(i)() where the “proposal is beyond the power of the board to implement”); AT&T, Inc. (Feb. 19, 2008) (concurring with exclusion of a proposal that requested the board “unilaterally amend” the company’s charter, because amendment required action by both the board and the shareholders); and Burlington Resources Inc. (Feb. 7, 2003) (concurring with exclusion because the proposal requested action not authorized by the company’s certificate of incorporation). The Fund believes that its position is consistent with the Staff’s decisions in similar situations. The Proposal requests, in the event more than % of the Fund’s Common Shares were submitted for tender, either that the Board unilaterally liquidate or convert the Fund or that the shareholders affect a liquidation or conversion without preceding action by the Board, neither of which can be accomplished under the terms of the Charter. The Proposal in such event cannot be implemented without an act being taken in contravention of the Fund’s Charter. Under the first interpretation, the Proposal requests that should more than 50% of the Fund’s Common Shares be tendered, the Board unilaterally liquidate or convert the Fund into an ETF or an open-end mutual fund. Under the second interpretation, the Proposal requests that a greater than 50% tender of Common Shares result in liquidation or conversion based solely upon prior shareholder approval without preceding action by the Board. Liquidation of the Fund would involve either (i) the dissolution of the Fund, or (ii) a sale of all or substantially all of the assets of the Fund. Dissolution of the Fund is governed by Article VII, Section 7.2 of the Charter, which states, in relevant part, that the Fund “may be dissolved, after two thirds of the Trustees have approved a resolution therefor, upon approval by Shares having at least 75% of the votes of all the Shares outstanding on the record date for such meeting….”2 Similarly, the sale of all or substantially all of the assets of the Fund is governed by Article VII, Section 7.4 of the Charter, which states, in relevant part, that the Fund may sell all or substantially all of the Fund’s assets “when and as authorized by two-thirds of the Trustees and approved by the affirmative vote of
Section 3806(b) of the DSTA provides that a statutory trust’s governing instrument may grant or deny
beneficial owners the right to vote on any matter, including the sale of the statutory trust’s assets, dissolution, or conversion. Section (a) of the DSTA provides that unless otherwise provided in the statutory trust’s governing instrument, a statutory trust shall have perpetual existence, and “a statutory trust may not be terminated or revoked by a beneficial owner or other person except in accordance with the terms of its governing instrument.” In addition, Section (c) of the DSTA provides in relevant part that “… a statutory trust is dissolved and its affairs wound up at the time and upon the happening of the events specified in the governing instrument.” 2

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U.S. Securities and Exchange Commission the holders of not less 75% of the affected Shares outstanding on the record date for such meeting .…” The Fund may therefore be liquidated only upon Board approval and subsequent shareholder approval. The Charter does not provide for liquidation through unilateral action by the Board or by shareholder vote without preceding Board approval.3 The conversion of the Fund into an “open-end investment company” is governed by
Article VII, Section 7.5 of the Charter, which provides that that Fund may be converted upon
approval of a proposal “by a majority of the Trustees then in office, by the holders of not less than % of the Trust’s outstanding Shares,” and by any other votes required under the 1940 Act. The Charter further provides that “[f]rom time to time, the Trustees may consider recommending to the Shareholders a proposal” to convert the Fund. Upon shareholder adoption of the proposal and the adoption of necessary Charter amendments, the conversion may take place. The Charter therefore contemplates more than one method to initiate a conversion, none of which may be realized without participation by both the Board and the shareholders. In addition, Section 7.5 of the Charter is ambiguous as to whether Trustee action must precede shareholder action. As discussed in footnote 3, as a result of such ambiguity, the governing law clause in Section 8.4 of the Charter requires reference to Delaware corporate principles. While Delaware corporate law does not specifically address conversions of corporations from a closedend fund to an open-end fund or an ETF, the manner in which such a conversion could be accomplished under Delaware corporate law would be through a charter amendment, merger, consolidation, transfer or sale of all of the assets, or conversion into another entity. Applying Delaware corporate law principles to each of those instances, the Trustees, as the managers of the Fund, must first approve the conversion and then, and only then, would the proposed conversion be submitted to the shareholders for approval. See AGR Halifax Fund, Inc. v. Fiscina, 743 A.2d 1188 (Del. Ch. 1999), and Tansey, 2001 WL 1526306, at *4. Therefore, approval by the shareholders of a conversion would need to be preceded by Board action. The governing law clause of the Fund’s Charter found in Article VIII, Section ., provides that “… reference be specifically made to the business corporation law of the State of Delaware as to the construction of matters not specifically covered [in the governing instrument] or as to which ambiguity exists .…” Ordinarily, with a statutory trust, as a creature of contract, it is possible to take actions that deviate from the terms of a governing instrument provided that the actions are taken with the authority of the parties whose consent would be necessary to amend the governing instrument. Because this general principle is not specifically covered in the Fund’s Charter, the reference in the governing law clause to Delaware corporate principles is triggered. The Proposal would require deviating from the express provisions of Section . and Section . of the Fund’s Charter, which require the Trustees first to approve a resolution to liquidate, which would involve the sale of all or substantially all of the assets of the Fund under Section 7.4, or dissolve (a prerequisite to liquidating) under Section 7.2, followed by a shareholder vote. While it might have been possible to deviate from the ordering provisions of Section 7.2 and
Section 7.4 of the Charter in the absence of a reference to Delaware corporate law, applying Delaware corporate law
would require that the Trustees, as the managers of the Fund, first approve the liquidation and then, and only then, would the proposed liquidation be submitted to the shareholders for approval. See Tansey v. Trade Show News Networks, Inc., 2001 WL 1526306, at *4 (Del. Ch. Nov. 27, 2001).

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Based upon the foregoing, in the event more than % of the Fund’s Common Shares were submitted for tender, there is no authority to implement either interpretation of the Proposal, and implementation of either such interpretation of the Proposal in such event would cause an act to be taken in contravention of the Fund’s Charter. Therefore, the Fund believes it may exclude the Proposal under Rule 14a-8(i)(6). To the extent required by Rule 14a-8(j)(2)(iii), this letter shall serve as an opinion of counsel. I, Nicholas I. Froio, am licensed to practice law in the State of Delaware. It is my opinion that, based on the interpretation that in the event more than % of the Fund’s Common Shares were submitted for tender, the Proposal would require that the Fund (i) sell all or substantially all of its assets, (ii) dissolve or (iii) convert, in each case without obtaining the necessary Board and shareholder approvals as required under the Fund’s governing instrument, the implementation of the Proposal in such event would result in an act being taken in contravention of the Fund’s governing instrument.
II. The Proposal Would, If Implemented, Violate the 1940 Act
Implementation of the Proposal would also violate the Federal law. Section 5(a) of the 1940 Act divides management companies into closed-end funds and open-end funds. Section 5(a)(l) defines an open-end fund is as a “management company which is offering for sale or has outstanding any redeemable security of which it is the issuer.” Section (a)() defines a closedend fund is “any management company other than an open-end company.” Under Section (a) of the 1940 Act, a registered investment company may not change its subclassification under
Section (a)(l) or () of the Act, “unless authorized by a majority of its outstanding voting
securities.” To convert the Fund into an ETF or open-end fund would change its subclassification. As discussed above, under the first interpretation the Proposal requests that the Board affect such change unilaterally upon the tender of 50% of the outstanding Common Shares. The Board cannot do so without violating the 1940 Act requirement of a shareholder vote. Therefore, the Fund believes it may exclude the Proposal under Rule 14a-8(i)(2) because it would, if implemented, violate Federal law.
III. The Proposal May Be Excluded Pursuant to Rule 14a-8(i)(3) Because the Proposal is
Vague and Indefinite
The Proposal is not sufficiently clear for the Board and the shareholders to determine what actions are required upon implementation. The Proposal clearly sets forth the first step of its request, that the Board authorize a self-tender for all outstanding Common Shares, but the Proposal is indefinite as to the result should more than 50% of the Common Shares be tendered. Rule 14a-8(i)(3) permits the exclusion of a stockholder proposal if the proposal or

U.S. Securities and Exchange Commission supporting statement is contrary to any of the Commission’s proxy rules, including Rule a-9, which prohibits materially false or misleading statements in proxy soliciting materials. In Staff Legal Bulletin No. B (CF) (Sept. , ), the Staff recognized that exclusion “may be appropriate” where the proposal is “so inherently vague and indefinite that neither the stockholders voting on the proposal, nor the company in implementing the proposal (if adopted), would be able to determine with any reasonable certainty exactly what actions or measures the proposal requires.” The Staff stated such a proposal may be excluded under Rule a-8(i)(3) as materially misleading pursuant to Rule 14a-9. Applying the “inherently vague and indefinite” standard, the Staff has held that a proposal need not specify the exact manner of implementation, and that the discretion may be left to the board. However, the Staff has recognized that a proposal may be materially misleading as vague and indefinite where “any action ultimately taken by the Company upon implementation could be significantly different from the actions envisioned by the shareholders voting on the proposal.” Fuqua Industries, Inc. (Mar. 12, 1991). See also Capital One Financial Corp. (Feb. 7, 2003) (concurring with exclusion of a shareholder proposal where its terms left the final outcome of implementation open to speculation); and Occidental Petroleum Corporation (Feb. 11, 1991) (concurring with exclusion of a proposal because it was “unclear what action the Company would be required to take if the proposal were adopted”). The Proposal under consideration may be distinguished from that considered in The Adams Express Company (Jan. 11, 2011), in which the Staff denied no-action relief under Rule 14a-8(i)(3). In Adams, as here, the proposal requested that the board authorize a self-tender, to be cancelled upon the tender of more than 50% of outstanding shares. The Adams proposal then specifies that upon cancellation the fund should be liquidated. The proposal goes on to say that merger or conversion from a closed-end fund into an open-end fund may be permitted, at the discretion of the board, instead of liquidation. The Adams proposal therefore presents shareholders with three concrete potential outcomes: 1) less than 50% of the shares are tendered;
2) the fund is liquidated; and 3) the board, exercising the discretion authorized by shareholders in
approving the proposal, determines that merger or conversion is preferable to liquidation. The Proposal at issue here does not present shareholders with concrete choices. Instead, the Proposal offers that if more than % of Common Shares are tendered, the fund “should be liquidated or converted.” Shareholders have no way to determine what option is likely to occur (and, if conversion occurs, whether it would be conversion to an ETF or an open-end mutual fund) or upon whose authority the choice is made. Some shareholders may expect the Proposal to lead to liquidation, others may expect conversion to an ETF and still others may expect conversion to an open-end mutual fund. The Proposal does not set forth a specified outcome or provide that the exact manner of implementation is left to the Board. Rather, the Proposal sets forth disparate outcomes without explaining what the shareholders and the Fund should expect upon implementation. Accordingly, the Proposal is vague and indefinite because “implementation

U.S. Securities and Exchange Commission could be significantly different from the actions envisioned by the shareholders voting on the proposal” and so the Fund believes it may exclude the Proposal under Rule 14a-8(i)(3). Conclusion We recognize that the Staff, on occasion, will permit proponents to revise their proposals to correct errors that are “minor in nature and do not alter the substance of the proposal.”4 The Fund, however, believes that in this case if the Proposal is revised to address the deficiencies discussed herein, the revision would constitute a substantive alteration of the Proposal, inconsistent with the Staff’s long-standing practice. On the basis of the foregoing and on behalf of the Fund, we respectfully request the concurrence of the Staff that the Proposal may be excluded from the Fund’s Proxy Materials for the 2015 Annual Meeting.

Staff Legal Bulletin No. 14B (CF) (September 15, 2004). 4

Exhibit A

Shareholder Proposal

Exhibit B

Clough Global Equity Fund Charter

Clough Global Equity Fund Letter

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