Shareholder Proposal to Convert Closed-End Fund Must be Included in Proxy
A closed-end fund must include a shareholder proposal to convert the fund to an interval fund as a result of the SEC’s refusal to allow exclusion of the proposal from the fund’s proxy materials. A shareholder had proposed a resolution requiring the Board to consider converting the fund to an interval structure so as to reduce the discount from NAV. The Fund argued that the Board did discuss whether an interval fund structure benefitted shareholders but rejected the structure, thereby making the proposal moot. The SEC refused to grant no-action relief to exclude the proposal, stating that the “Fund will have an opportunity to include in its proxy statements arguments reflecting its own point of view on the Proposal.”
OUR TAKE: Over the last several months/years, the SEC staff has been increasingly hostile to no-action requests to exclude shareholder proposals.