SEC Division of Investment Management staff letter: Tekla Life Sciences Investors - Omission of Shareholder Proposal Submitted by Kenneth Steiner

March 1, 2019

February 27, 2019

Mr. Christopher P. Harvey, Esq.
Dechert LLP
One International Place, 40th Floor

100 Oliver Street
Boston, MA 02110-2605

Dear Mr. Harvey:

In a letter dated January 9, 2019, on behalf of Tekla Life Sciences Investors (the “Fund”), you requested confirmation from the staff of the Division of Investment Management that it would not recommend enforcement action to the Securities and Exchange Commission (the “Commission”) if a shareholder proposal and supporting statement (the “Proposal”) submitted by Kenneth Steiner (the “Proponent”) is excluded from the proxy materials for the Fund’s 2019 Annual Meeting (the “Proxy Materials”). The Proposal provides:

RESOLVED, shareholders ask that our Company take the steps necessary to reorganize the Board of Directors into one class with each director subject to election each year. The Board of Detectors [sic] has the means to adopt this proposal in one year.

The Fund maintains that the Proposal may be excluded from the Proxy Materials: (1)pursuant to Rule 14a-8(i)(8)(ii) because it would remove a director from office before his or her term expired; and (2) pursuant to Rule 14a-8(i)(3) because the Supporting Statement contains statements that are materially false or misleading.

There appears to be some basis for your view that the Fund may exclude the Proposal under Rule 14a-8(i)(8)(ii) to the extent it could, if implemented, disqualify directors previously elected from completing their terms on the board. It appears, however, that this defect could be cured if the Proposal were revised to provide that it will not affect the unexpired terms of directors elected prior to the Proposal’s implementation. Accordingly, unless the Proponent provides the Fund with a proposal revised in this manner, within seven calendar days after receiving this letter, we will not recommend enforcement action to the Commission if the Fund omits the Proposal from its proxy materials in reliance on Rule 14a-8(i)(8)(ii).

We are unable to concur in your view that the Fund may exclude the Proposal from the Proxy Materials under Rule 14a-8(i)(3). We are unable to conclude that you have demonstrated objectively that the proposal is materially false or misleading. Accordingly, we cannot assure the Fund that we would not recommend Enforcement action if the Fund excludes the Proposal from its Proxy Materials in reliance on Rule 14a-8(i)(3).

Attached is a description of the informal procedures the Division follows in responding to shareholder proposals. Please contact IMShareholderproposals@sec.gov if you have any questions.

Sincerely,

/s/ Raymond A. Be

Raymond A. Be
Attorney-Adviser

Attachment

Last Reviewed or Updated: March 1, 2019

Resources

• Incoming Letter
• Proponent Letter, Jan. 12, 2019
• Proponent Letter, Jan. 21, 2019
• Proponent's Submission, Jan. 31, 2019
• Informal Procedures Regarding Shareholder Proposals

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One International Place, 40th Floor
100 Oliver Street Dechert Boston, MA 02110-2605 +1 617 728 7100 Main LLP +1 617 426 6567 Fax www.dechert.com CHRISTOPHER P. HARVEY christopher.harvey@dechert.com +1 617 728 7167 Direct +1 617 275 8390 Fax VIAE-MAIL January 9, 2019 U.S. Securities and Exchange Commission Division of Investment Management Office of Chief Counsel 100 F Street N.E. Washington, D.C. 20549 IMshareholderproposals@sec.gov Re: Shareholder Proposal Submitted by Mr. Kenneth Steiner for Inclusion in the Tekla Life Sciences Investors' 2019 Proxy Statement Dear Sir or Madam:
We are counsel to Tekla Life Sciences Investors ("HQL"), a Massachusetts business trust. On December 9, 2018, HQL received a shareholder proposal and supporting statement (together, the "Proposal") from Mr. Kenneth Steiner (the "Proponent") for inclusion in HQL's proxy statement (the "2019 Proxy Statement") to be distributed to HQL's shareholders in connection with its 2019 Annual Meeting of Shareholders. The Proposal, which was amended and restated by the Proponent on December 20, 2018, is attached to this letter as Exhibit A. The purpose of this letter is to notify the U.S. Securities and Exchange Commission (the "Commission") of HQL's intent to exclude the Proposal from its 2019 Proxy Statement and form of proxy (the "2019 Proxy Materials"). On behalf of HQL, we respectfully request confirmation that the staff of the Division of Investment Management (the "Staff) will not recommend any enforcement action to the Commission if, in reliance on certain provisions of Rule 14a-8 under the Securities Exchange Act of 1934, as amended, HQL excludes the Proposal (in its entirety or a portion thereof) from its 2019 Proxy Materials. In accordance with Rule 14a-8U) and Staff Legal Bulletin No. 14D ("SLB 14D"), we are emailing this letter and its attachments to IMshareholderproposals@sec.gov. Additionally, in accordance with Rule 14a-8(j), we have copied the Proponent's agent on the email and are simultaneously forwarding a copy of this letter and its attachments via overnight mail to the Proponent and to his agent as notice of HQL's intention to exclude the Proposal from the 2019 Proxy Materials. HQL presently intends to file its definitive 2019 Proxy Materials with US Austin Boston Charlotte Hartford New York Orange County Philadelphia Princeton San Francisco Silicon Valley Washington DC EUROPE Brussels Dublin London Luxembourg Moscow Munich Paris ASIA Beijing Hong Kong

U.S. Securities and Exchange Commission Dechert January 9, 2019 LLP Page2 the Commission on or about April 18, 2019, or as soon as possible thereafter. Accordingly, pursuant to Rule 14a-8(j), this letter is being submitted not less than 80 calendar days before HQL will file its definitive 2019 Proxy Materials. Rule 14a-8(k) and SLB 14D provide that shareholder proponents are required to send issuers a copy of any correspondence that the proponents elect to submit to the Commission or the Staff. Accordingly, we are taking this opportunity to inform the Proponent and his agent that if the Proponent and/or the agent elect to submit additional correspondence to the Commission or the Staff with respect to this Proposal, a copy of that correspondence should be furnished concurrently to the undersigned on behalf ofHQL pursuant to Rule 14a-8(k) and SLB 14D. Please send any response by the Staff to this letter to my attention by email (christopher.harvey@dechert.com) or by fax ((617) 275-8390) and send a copy of the response to the attention of the Proponent's agent, John Chevedden, at the mailing address and/or email address set forth in the Proposal. Copies of other correspondence relating to the Proposal are attached to this letter as Exhibit B. The Proposal The Proposal relates to the declassification of HQL's Board of Trustees (the "Board") and states, in relevant part:
RESOLVED, shareholders ask that our Company take the steps necessary to reorganize the Board ofDirectors into one class with each director subject to election each year. The Board ofDetectors [sic} has the means to adopt this proposal in one year. Analysis of Bases for Exclusion The Proposal May Be Omitted Under Rule 14a-8(i)(8)(ii) Because It Would Improperly Remove Trustees From Office Before Their Terms Expire The Proposal may be omitted under Rule 14a-8(i)(8)(ii), which permits the exclusion of a shareholder proposal if it "would remove a director from office before his or her term expired." Pursuant to Section 2.2 of Article II of HQL's Declaration of Trust, the Board is divided into three classes, with approximately one-third of the Board being elected annually for three-year terms. Of HQL's seven continuing trusteeships, three trustees ("Trustees") will stand for election in 2019, another two in 2020 and the last two in 2021. The Proposal contemplates that the full Board should be elected at each annual meeting. As a result, if the

U.S. Securities and Exchange Commission Dechert January 9, 2019 LLP Page 3 Proposal were put into effect, some of the current Trustees would be disqualified from completing terms for which they have already been elected. In addition, passage of the Proposal would create uncertainty about the term of Trustees elected to the Board at the 2019 Annual Meeting and may similarly disqualify them from completing terms for which they would be elected. Accordingly, the Proposal is designed to have the intended effect of removing Trustees from office before his or her term expired. The staff of the Commission's Division of Corporation Finance has previously excluded similar declassification proposals proposed by the Proponent or his agent to other issuers. See, e.g., NeuStar, Inc. (Mar. 19, 2014); The Brinks Company , (Jan. 17, 2014); Kinetic Concepts, Inc. (Mar. 21, 2011); McDonald 's Corporation (Mar. 15, 2011); Western Union Co., (Feb. 25, 2011). Additionally, the Staff has previously found that there is basis to exclude a similar declassification proposal proposed by the Proponent to HQL in 2018 and the same result is warranted again in 2019. See Tekla Life Sciences Investors (Mar. 8, 2018). The Proponent has made no attempt to provide for the protection of the terms of Trustees already elected or to clarify that the election scheduled at the 2019 Annual Meeting would not be affected. Accordingly, the Proposal, if adopted, would disqualify certain current Trustees and all Trustee nominees elected at the 2019 Annual Meeting from completing their terms on the Board in contravention of Rule l4a-8(i)(8)(ii). Therefore, the Proposal is properly excludable from the 2019 Proxy Materials. The Proposal Or Portion Thereof May Be Omitted Under Rules 14a-8(i)(3) And 14a-9 Because It Contains A Statement That Is Materially Misleading A shareholder proposal or portion thereof may be properly omitted under Rule 14a-8(i)(3) when it is contrary to any of the Commission's proxy rules, including Rule 14a-9, which prohibits materially misleading statements in proxy soliciting materials. The Staff stated in Staff Legal Bulletin No. 14B that reliance on Rule 14a-8(i)(3) to exclude a proposal or portions of a supporting statement may be appropriate in only a few limited instances, one of which is when the issuer "demonstrates objectively that a factual statement is materially false or misleading." The Proposal states that "[t]his proposal topic previously won 44%-support at [HQL]" and that "[t]his 44%-vote would have been higher if all shareholders had access to independent proxy voting advice." These statements are misleading as they fail to clarify that the 44% support was for the Proponent's 2012 declassification proposal, and that the Proponent has submitted two more recent declassification proposals in 2017 and 2018, and those received only 37.5% and 36.78% support, respectively. In fact, of the Proponent's four prior failed

U.S. Securities and Exchange Commission Dechert January 9, 2019 LLP Page4 declassification proposals (another was submitted in 2011, receiving 39.92% support), the more recent declassification proposals in 20 I 7 and 2018 obtained lower percentage support than the 44% 2012 figure cited by the Proponent, and the most recent declassification proposal in 2018 obtained the lowest percentage support of all four prior failed declassification proposals. Without this additional context, these statements are misleading as they imply and suggest that the Proponent had submitted only one prior declassification proposal, which received 44% support from shareholders, or alternatively that the most recent proposal received this level of support, when in fact the Proponent has submitted multiple failed declassification proposals and support for such a proposal is trending downward. The statement by the Proponent that the "44%-vote would have been higher if all shareholders had access to independent proxy voting advice" is also misleading as it is drafted by the Proponent to read as a factual statement when in reality such statement is the Proponent's opinion, and should be qualified as such in the Proposal. Request for Confirmation For the foregoing reasons, HQL respectfully requests that the Staff confirm that it will not recommend any enforcement action to the Commission, if HQL excludes the Proposal from its 2019 Proxy Materials. If the Staff disagrees with our conclusion that the Proposal may be excluded from the 2019 Proxy Materials, HQL respectfully requests that the Staff confirm that it will not recommend any enforcement action to the Commission, ifHQL excludes from the 2019 Proxy Materials the statements identified above as materially misleading. Should you have any questions regarding any aspect of this letter or require any additional information, please contact the undersigned at ( 617) 728-7167 or christopher.harvey@dechert.com. If the Staff disagrees with our conclusion that the Proposal may be excluded from the 2019 Proxy Materials, we would appreciate an opportunity to discuss the matter with the Staff prior to issuance of its formal response. cc: Kenneth Steiner (via Fed Ex) John Chevedden (via email and Fed Ex) Daniel R. Omstead, Ph.D. (via email)

Dechert
LLP
Exhibit A
Proposal

U.S. Securities and Exchange Commission Dechert January 9, 2019 LLP Page 6 Kenneth Steiner Dr. Daniel Omstead President Tekla Life Sciences Investors (HQL) I 00 Federal Street, 19th Floor Boston, Massachusetts 02110 PH: 617-772-8500 Dear Dr. Omstead, I purchased stock in our company because I believed our company had potential for imporoved pcrfom1ance. My atLached Rule 14a-8 propo~al is submitted in supp<lrl of the long: term perfomlEI.nce of our company. ll1is Rule 1.4a-8 proposalls·submined ~a low-cost method to improve <;ompnay performance. My proposal is for the ne:~.1 annual harehold~r meeting. 1 w!U meet Rule l'la-8 requirements induding the conti.nuous ownership of the required stock value until after ihe date o Ihe respective shareholder meeting. My submitted forll)at, with th.e shareholder-supplied ~mpha~is , IS intended to be used for deli nitive proxy publication. This is my proxy for John Chevedden audlor his designee. to rorwnrd this Rult: 14a-8 proposal to me aompauy and to act on my behalf regarding this R(ole 14a-8 proposal and/or n1odilicution ofit, for the forthcoming shareholder meeting before. durirog and ufter the forthc<liTimg shareholder·mecting. Please direet atl Future communlcatjons reg~rding my rule 14a-8 proposal to John Chcveddeo (PH: 310-371-7872, 2215 Nelson Ave., No. 205, Redondo Beach, CA 90278) at:
olmsted7p (at) eartblink.net to facilitate prompt and verifiable communications. Please identifY this proposal as my proposal exclusively. This Idler does not cover proposals that are not rule l4a-M proposals. This Jetter do.,; not grant the pc>wer to vote. Your consideraticm and the considennion of rhc Board ofDirectors is appreciated in suppo1t of the long-term performance of our company. Please acknowledge receipt of my proposal promptly by email to olmsted7p (at) earthlink.net cc: Laura Woodward lwoodward@teklacap.com Dr. Daniel Omstead hql@destracapital.com

U.S. Securities and Exchange Commission Dechert January 9, 2019 LLP Page 7 [HQL: Rule l4a-8 Proposal, ,December 9, 2018 1 Revised Decernber20, 2018] [This line and any line above it-Not for publication.) .Proposal [41- Elect Each Director Annually RESOLVED, shareholders ask that our Company take the steps necessary to roorgani.ze the Board ofDir~ctQrs into un~ cla.s~ with ettch directot subj eot to election each year. The Board of Detectors has the mc!UlS to adopt this proposalin one yew:. Arthur Levitt, former Chairman of the Securities and. Exchange Commission said, "In my view it's best for the investor if the entiro board is elected once a year. Without annual election of each director shareholders have far less control over who represerus them." A total of 79 S&P 500 and Fortune 500 companies. worth more tban one trillion dollars, adopted this proposal topic since 2012. Annual elections arc widely viewed as a corpot;Jic governance best practice. Annual e.lect.ion ofeach director could make our directors more accountable, and thereby contribute to iq!proved performance and incre-ased company value. Jaroes McRitchie's proposal on this same topic won 84%-su[!porl at Tllumina Inc. in 2018. Joho Cbevedden' s proposal on this same topic won 88%-support at FleetCor Technologies in 2Ql8. This proposal topic previously won 44%-support at Tekla Life Sciences Investors. This 44% vote would have been higher if all shareholders had access to independent proxy voting advice. Shame on o_ur Boatd of Directors, wbo have a fiduciary duty to the shareholders ofTe-kla Life Sciences, for using sharcholdc:r money to target shareholders \Vith telephone calls telling them how to vote and thus making the shltrebolder vote not a level plllying !ield. Please vote yes:

Elect Each Director Annually- Proposal [4]

[The above line -Is for publication.]

U.S. Securities and Exchange Commission Dechert January 9, 2019 LLP Page 8 Kenneth Steiner, ponsors this proposal. Notes:

This proposal is believed to conform with Staff Legal Bulletin No. 14B (CF), September 15,

2004 including (emphasis added): ·

Accordingly, going forward, we believe that it would not be appropriate for companies to exclude supporting statement language and/or an entire proposal in reliance on rule 14a-8(1)(3) in the following circumstances:

• the company objects to factual assertions because they are not supported;
• the company objects to factual assertions that, while not materially false or misleading ,
  may be disputed or countered;
• the company objects to factual assertions because those assertions may be
  interpreted by shareholders in a manner that is unfavorable to the company, its directors, or its officers; and/or
• the company objects to statements because they represent the opinion of the
  shareholder proponent or a referenced source, but the statements are not identified specifically as such. We believe that It is appropriate under rule 14a-8 for companies to address these objections in their statements of opposition. See also: Sun Microsystems, Inc. (July 21, 2005). The stock supporting this proposal will be held until after the annual meeting and the proposal will be presented at the annual meeting. Please acknowledge this proposal promptly by email [olmsted7p (at) earthlink.nct].

Dechert
LLP
ExhibitB
Additional Correspondence

U.S. Securities and Exchange Commission
January 9, 2019
LLP Page 10
Dechert
From: olmsted [mal to:ol d7p®earthlink. et]

Sent: Monday, December 101 2018 2:4,7 PM

To: Lauro Woodward

Subject: Re: Rllle 14a-8 Proposal (HQL)

Thank y u.

U.S. Securities and Exchange Commission Dechert January 9, 2019 LLP Page 11 From: Laura Woodward

sent: Monday, December 10, 2018 2:08PM

To: olmsted (Q.[!J$~_7 @~rtnl!n~. t)
Subject: FW: Rule 14a-8 PropOsal (HQL)' '

w~ acknowledge the receipt of your proposal. liil/fa ~Woci\Yaro Chief Ccmp!I:.~JK;tJ 0/Hcsr ;rnd VP of FIHid A<imlr>i.<lri.Jff()(l

Tekl~ Capllal Manag~ment LLC

100 Federal Street, 1iJI.~ floor

Bosran. MA 02110

~ar<l6uok!•~~p.c4m
~- ~kl!!~~p,_~j!J!)
Mal~· 617•712..9500

Tef: 617·772-6515
From: olmst~d <p msted7p_~rrhll1J.l<.:.!2g, > Sent~ Sunday, December 9, 2018 10:08 PM

To: Daniel Omstead S:!.Q n;l~t_g_~_Q@teki<JGJlh~Qf.!l>; Or. Daniel Om stead <.!lq!@.clewac. nrtal .com:>

Cc;: Dr. Daniel Omstead <!lq!@J.I!l~tfl'KMJitaj.c om> Subjec:.t: Rule 14a-8 Proposal (HQL)" Dr. Omstead,

Please see the attached rule 14a-8 proposal to improve corporate governance and enhance long

term sharcbolder value at de minimis cost.

Sincerely,

John Chevedden

Dechert U.S. Securities and Exchange Commission January 9, 2019 LLP Ameritrade 12120/2018 KAnnAih _Steinl'll' , Re: Your TD Ameritrade Account Ending iAa580 in TO AmerUrade Clearing Inc DTC #.Q.1a8 Deer Kenneth Steinar, Thank you for allowing me 10 assist you today. As you requested, this 1e1ter ccnf!rms !hal, as ol close of buslnoss on neoomber-19;-2018, you have conliRI,JOusly held no less than 500 Shares of

each of !he following stockS in the above raferanood account since October 1, 2017.

Tnklo Lifo Sciences lnvesws IHQL)

If we can be
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Resource Specialist

TDAmeritrade

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