UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
|X| Filed by the Registrant
|_| Filed by a Party other than the Registrant
CHECK THE APPROPRIATE BOX:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE INDIA FUND, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:___________________________________
(2) Aggregate number of securities to which transaction
applies:___________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it is
determined):______________________
(4) Proposed maximum aggregate value of transaction:____________________
(5) Total fee paid:_____________________________________________________
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:_____________________________________________
(2) Form, Schedule or Registration Statement No.:_______________________
(3) Filing Party:_______________________________________________________
(4) Date Filed:_________________________________________________________
THE INDIA FUND, INC.
345 Park Avenue
New York, New York 10154
January [DATE], 2006
Dear Stockholder:
We are pleased to enclose the notice and proxy statement for the Special
Meeting of Stockholders of The India Fund, Inc. (the "Fund") to be held on
February 24, 2006, at the offices of Simpson Thacher & Bartlett LLP, 425
Lexington Avenue, Conference Room J, 30th Floor, New York, New York at 9:00
a.m., New York time. I would like to provide you with additional background and
ask for your vote on important proposals affecting the Fund.
As you may know, on November 8, 2005, after careful consideration of
possible alternatives to the Fund's investment management arrangements, the
Board of Directors approved new management and country advisory agreements with
Blackstone Asia Advisors L.L.C. ("Blackstone Advisors") and Blackstone Fund
Services India Private Limited ("Blackstone India"), respectively, affiliates of
The Blackstone Group L.P. ("Blackstone"). Since December 4, 2005, Blackstone
Advisors and Blackstone India have served as the investment manager and country
adviser, respectively, pursuant to interim agreements, as permitted by the
Investment Company Act of 1940, as amended (the "1940 Act"). Punita Kumar-Sinha,
the Fund's portfolio manager for the last eight years, remains the portfolio
manager of the Fund under new arrangements with Blackstone, and the fees
incurred by the Fund under the new agreements will decrease. At the Meeting, you
will be asked to consider and vote upon these agreements.
THE BOARD OF DIRECTORS OF THE FUND BELIEVES THE PROPOSALS ARE IN THE BEST
INTEREST OF THE FUND AND ITS STOCKHOLDERS AND RECOMMENDS THAT YOU VOTE "FOR" THE
APPROVAL OF THE NEW MANAGEMENT AND COUNTRY ADVISORY AGREEMENTS.
Whether or not you intend to attend the Meeting, you may vote by proxy by
signing and returning your proxy card in the enclosed postage-paid envelope.
Following this letter we have included questions and answers regarding
this proxy statement. This information is designed to help you answer questions
you may have and help you cast your votes, and is being provided as a supplement
to, not a substitute for, the proxy statement, which we urge you to review
carefully.
Please familiarize yourself with the proposal and vote immediately, even
if you plan to attend the meeting. To vote, simply follow the instructions on
the enclosed proxy card.
If your completed proxy card is not received, you may be contacted by
representatives of the Fund or by our proxy solicitor, Georgeson Shareholder
Communications Inc. ("Georgeson"). Georgeson has been engaged to assist the Fund
in soliciting proxies. Representatives of Georgeson will remind you to vote your
shares. You may also call the number provided on your proxy card for additional
information.
Sincerely,
---------------------------
Prakash A. Melwani
President
i
QUESTIONS AND ANSWERS
REGARDING THE PROXY STATEMENT AND
SPECIAL MEETING OF STOCKHOLDERS
WHILE WE ENCOURAGE YOU TO READ THE FULL TEXT OF THE ENCLOSED PROXY STATEMENT,
FOR YOUR CONVENIENCE, WE HAVE PROVIDED A BRIEF OVERVIEW OF THE MATTERS TO BE
VOTED ON.
Q. What am I being asked to vote "FOR" in this proxy?
A. You are being asked to vote in favor of proposals to:
1. Approve a new management agreement between the Fund and Blackstone
Advisors, pursuant to which Blackstone Advisors will become the
Fund's new investment manager.
2. Approve a new country advisory agreement between Blackstone Advisors
and Blackstone India, pursuant to which Blackstone India will become
the Fund's new country adviser.
3. Transact such other business as may be properly presented at the
Meeting or any adjournments thereof.
Q. Why am I being asked to vote on new management agreements?
A. On November 8, 2005, after careful consideration of possible alternatives
to the Fund's investment management arrangements, the Board of Directors,
including a majority of the Independent Directors, determined that it
would be in the best interest of the Fund and its Stockholders to select
Blackstone Advisors and Blackstone India as the new investment advisers
for the Fund and approved, subject to Stockholder approval, new management
and country advisory agreements. In addition, the Board of Directors, as
permitted by the 1940 Act, approved interim management and country
advisory agreements which became effective December 4, 2005. Pursuant to
the interim agreements, Blackstone Advisors currently serves as interim
investment manager to the Fund, and Blackstone India serves as interim
country adviser to the Fund. Blackstone Administrative Services
Partnership L.P. is also the Fund's administrator.
Blackstone Advisors and Blackstone India are each registered investment
advisers affiliates of Blackstone. Blackstone is a leading investment and
advisory firm founded in 1985, with offices in New York, Boston, Atlanta,
London, Hamburg and Mumbai. As of [December 31, 2005], Blackstone had
assets under management of approximately $|_| billion, managed through
over 150 different investment vehicles. Blackstone manages investment
funds, including hedge funds and private equity, real estate, mezzanine
debt and senior debt funds, and also provides corporate advisory, mergers
and acquisitions and restructuring services to a variety of clients.
Blackstone's alternative asset management group, with approximately $10
billion under management in the hedge fund industry, manages assets for
some of the world's leading corporations, pension plans and foundations.
Q. Will there be any significant changes to the Fund's portfolio management?
A. No. Punita Kumar-Sinha, the Fund's portfolio manager for the last eight
years, supported by her investment team, continues to manage the Fund's
assets on a day-to-day basis as portfolio manager under new employment
arrangements with Blackstone Advisors. As a result, the day-to-day
portfolio management of the Fund will be substantially similar.
Q. How do the proposed new agreements differ from my Fund's previous
management agreement?
A. The proposed new management agreement is substantially identical to the
Fund's previous management agreement, except that the management fees
payable by the Fund have been reduced. The proposed new country advisory
agreement is substantially identical to your previous country advisory
agreement.
1
Q. Will the Fund's total advisory and administration services fees increase?
A. No. The fees will be decreased under the new agreements with Blackstone.
Q. How does the Fund's Board of Directors suggest I vote?
A. After careful consideration of possible alternatives to the previous
management arrangements, the Fund's Board of Directors has determined that
it would be in the best interest of the Fund and its Stockholders to
select Blackstone Advisors as the new investment manager and Blackstone
India as the new country adviser for the Fund and recommends that you vote
"FOR" the approval of the new management agreement and "FOR" the approval
of the new country advisory agreement.
Q. Will my vote make a difference?
A. Your vote is needed to ensure that the proposals can be acted upon. The
Fund's Board of Directors encourages all Stockholders to participate in
the governance of their Fund.
Q. Whom do I call if I have questions?
A. If you need any assistance, or have any questions regarding the proposal
or how to vote your shares, please call Georgeson Shareholder
Communications Inc. at 1-866-297-1264.
Q. How do I go about voting my shares?
A. You can vote your shares by completing and signing the enclosed proxy
card, and mailing it in the enclosed postage-paid envelope.
2
THE INDIA FUND, INC.
345 Park Avenue
New York, New York 10154
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
January [DATE], 2006
To the Stockholders:
A Special Meeting of Stockholders of The India Fund, Inc. (the "Fund")
will be held on February 24, 2006, at the offices of Simpson Thacher & Bartlett
LLP, 425 Lexington Avenue, Conference Room J, 30th Floor, New York, New York at
9:00 a.m., New York time, for the purpose of considering and voting upon
proposals to:
1. Approve a new management agreement between the Fund and Blackstone
Asia Advisors L.L.C. ("Blackstone Advisors") (Proposal 1).
2. Approve a new country advisory agreement between Blackstone Advisors
and Blackstone Fund Services India Private Limited ("Blackstone
India") (Proposal 2).
3. Transact such other business as may be properly presented at the
Meeting or any adjournments thereof.
The close of business on January 2, 2006, has been fixed as the record
date for the determination of Stockholders entitled to notice of and to vote at
the meeting.
By order of the Board of Directors,
------------------------------------
Joshua B. Rovine
Secretary
TO AVOID UNNECESSARY EXPENSE OF FURTHER SOLICITATION, WE URGE YOU TO INDICATE
VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN IT AND RETURN IT
PROMPTLY IN THE ENVELOPE PROVIDED, NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS
MAY BE.
3
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance
to you and avoid the time and expense to the Fund involved in validating your
vote if you fail to sign your proxy card properly.
1. INDIVIDUAL ACCOUNTS. Sign your name exactly as it appears in the
registration on the proxy card.
2. JOINT ACCOUNTS. Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. OTHER ACCOUNTS. The capacity of the individual signing the proxy card
should be indicated unless it is reflected in the form of registration. For
example:
REGISTRATION
CORPORATE ACCOUNTS VALID SIGNATURE
ABC Corp. ABC Corp. (by John Doe, Treasurer)
ABC Corp. John Doe, Treasurer
ABC Corp. c/o John Doe, Treasurer John Doe
ABC Corp. Profit Sharing Plan John Doe, Trustee
TRUST ACCOUNTS
ABC Trust Jane B. Doe, Trustee
Jane B. Doe, Trustee u/t/d 12/28/78 Jane B. Doe
CUSTODIAL OR ESTATE ACCOUNTS
John B. Smith, Cust. f/b/o John B. Smith, Jr. UGMA John B. Smith
John B. Smith John B. Smith, Jr., Executor
4
THE INDIA FUND, INC.
345 Park Avenue
New York, New York 10154
PROXY STATEMENT
This proxy statement is furnished in connection with a solicitation by the
Board of Directors of The India Fund, Inc. (the "Fund") of proxies to be used at
the Special Meeting of Stockholders of the Fund (the "Meeting") to be held at
the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York,
New York in Conference Room J on the 30th Floor, on February 24, 2006, at 10:00
a.m., New York time (and at any adjournment or adjournments thereof), for the
purposes set forth in the accompanying Notice of Special Meeting of
Stockholders.
This proxy statement and the accompanying form of proxy are first being
mailed to Stockholders on or about January |_|, 2006.
At the Meeting, Stockholders will vote on proposals to:
1. Approve a new management agreement between the Fund and Blackstone
Asia Advisors L.L.C. ("Blackstone Advisors") (Proposal 1)
2. Approve a new country advisory agreement between the Blackstone
Advisors and Blackstone Fund Services India Private Limited
("Blackstone India") (Proposal 2)
This Proxy Statement sets forth concisely the information Stockholders of
the Fund should know before voting on the Proposals. Please read it carefully
and retain it for future reference. THE FUND'S ANNUAL REPORT, CONTAINING
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004 AND THE FUND'S
SEMI-ANNUAL REPORT FOR THE PERIOD ENDED JUNE 30, 2005, EACH AS FILED ON FORM
N-CSR, ARE AVAILABLE FREE OF CHARGE BY CONTACTING BLACKSTONE ADVISORS, 345 PARK
AVENUE, NEW YORK, NEW YORK 10154, BY CALLING 1-866-800-8933 TOLL-FREE OR ON THE
INTERNET AT WWW.BLACKSTONE.COM. Information about the Fund is included in this
proxy statement. Reports and other information filed by the Fund can be
inspected in person at the Public Reference Room maintained by the Securities
and Exchange Commission (the "SEC") at the address below, and copies of such
materials can be obtained from the Public Reference Branch at the address below.
In addition, shares of common stock of the Fund are listed on the New York Stock
Exchange (the "NYSE") under the ticker symbol "IFN". Reports and other
information concerning the Fund can be inspected by contacting the NYSE at New
York Stock Exchange, Inc., 11 Wall Street, New York, New York 10005. The Fund is
subject to the informational requirements of the Securities Exchange Act of
1934, as amended, and the Investment Company Act of 1940, as amended (the "1940
Act"), and in accordance therewith, file reports and other information,
including proxy materials and charter documents, with the SEC.
You also may view or obtain these documents from the SEC:
In Person: At the SEC's Public Reference Room at 100 F Street,
N.E., Washington, D.C. 20549
By Phone: 1-800-SEC-0330
By Mail: Public Reference Branch
Officer of Consumer Affairs and Information Services
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
(duplicating fee required)
By Email: publicinfo@sec.gov
(duplicating fee required)
1
By Internet: www.sec.gov
Stockholders who execute proxies retain the right to revoke them in person
at the Meeting or by written notice received by the Secretary of the Fund at any
time before they are voted. Proxies that are not revoked will be voted in
accordance with the specifications thereon and, unless specified to the
contrary, will be voted FOR each of the Proposals.
The close of business on January 2, 2006, has been fixed as the record
date for the determination of Stockholders entitled to notice of and to vote at
the Meeting. Each Stockholder is entitled to one vote for each full share and an
appropriate fraction of a vote for each fractional share held.
On the record date there were |_| shares of the Fund's common stock
outstanding.
In the event that a quorum is not present at the Meeting, or in the event
that a quorum is present but sufficient votes to approve any of the proposals
are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to a date not more than 120 days after the original
record date to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares represented at the
Meeting in person or by proxy. The persons named as proxies will vote those
proxies which they are entitled to vote FOR or AGAINST any such proposal at
their discretion. A Stockholder vote may be taken on one or more of the
proposals in this proxy statement prior to any such adjournment if sufficient
votes have been received for approval. Under the By-Laws of the Fund, a quorum
is constituted by the presence in person or by proxy of the holders of record of
a majority of the outstanding shares of common stock of the Fund entitled to
vote at the Meeting.
Votes cast by proxy or in person at the Meeting will be tabulated by the
inspectors of election appointed for the Meeting. The inspectors of election
will determine whether or not a quorum is present at the Meeting. The inspectors
of election will treat abstentions and "broker non-votes" (i.e., shares held by
brokers or nominees, typically in "street name," as to which proxies have been
returned but (i) instructions have not been received from the beneficial owners
or persons entitled to vote and (ii) the broker or nominee does not have
discretionary voting power on a particular matter) as present for purposes of
determining a quorum.
Approval of each proposal will occur only if a sufficient number of votes
at the Meeting are cast FOR that proposal. Abstentions and broker non-votes are
not considered "votes cast" and, therefore, do not constitute a vote FOR.
Abstentions and broker non-votes will have the same effect as a vote AGAINST
Proposals 1 and 2.
Stockholders who plan on attending the Meeting will be required to provide
valid identification in order to gain admission.
The principal business address of the Fund is 345 Park Avenue, New York,
New York 10154. The Fund is a closed-end management investment company,
registered under the 1940 Act. The principal business address of Blackstone
Advisors is 345 Park Avenue, New York, New York 10154. The principal business
address of Blackstone India is Taj President, 90 Cuffe Parade, Room 802, Mumbai
- 400 005, India.
The Board of Directors of the Fund knows of no business other than that
discussed above that will be presented for consideration at the Meeting. If any
other matter is properly presented, it is the intention of the persons named in
the enclosed proxy to vote in accordance with their best judgment.
The date of this Proxy Statement is January |_|, 2006.
2
PROPOSAL 1. APPROVAL OF NEW MANAGEMENT AGREEMENT
BETWEEN THE FUND AND BLACKSTONE ADVISORS
At the Meeting, you will be asked to approve a new management agreement
between the Fund and Blackstone Advisors. Blackstone Advisors has acted as the
Fund's interim investment manager since December 4, 2005. A general description
of the proposed new management agreement is included below. The form of new
management agreement is attached hereto as Exhibit A.
BACKGROUND
On November 8, 2005, after careful consideration of possible alternatives
to the Fund's management and country advisory arrangements, the Board of
Directors, including a majority of the Independent Directors, determined that it
would be in the best interest of the Fund and its Stockholders to select
Blackstone Advisors as the new investment manager for the Fund. At this meeting,
the Directors approved, subject to Stockholder approval, a new management
agreement, pursuant to which Blackstone Advisors would become the Fund's new
investment manager. At the meeting, the Board of Directors also approved an
interim management agreement, as permitted under the 1940 Act, pursuant to which
Blackstone Advisors has served as interim investment manager to the Fund since
December 4, 2005. The Board of Directors also approved new country advisory and
interim country advisory agreements with Blackstone India (discussed below in
Proposal 2) and a new administration agreement, pursuant to which Blackstone
Administrative Services Partnership L.P. ("Blackstone Administration") currently
serves as the Fund's administrator. Blackstone Advisors hired the Fund's
existing portfolio manager and certain other members of the existing portfolio
management team, thereby ensuring continuity of day-to-day management of the
Fund's portfolio.
Blackstone Advisors and Blackstone India are each registered investment
advisers and affiliates of Blackstone. Blackstone is a leading investment and
advisory firm founded in 1985, with offices in New York, Boston, Atlanta,
London, Hamburg and Mumbai. As of [December 31, 2005], Blackstone had assets
under management of approximately $|_| billion, managed through over 150
different investment vehicles. Blackstone manages investment funds, including
hedge funds and private equity, real estate, mezzanine debt and senior debt
funds, and also provides corporate advisory, mergers and acquisitions and
restructuring services to a variety of clients. Blackstone's alternative asset
management group, with approximately $10 billion under management in the hedge
fund industry, manages assets for some of the world's leading corporations,
pension plans and foundations.
COMPARISON OF THE FUND'S PREVIOUS MANAGEMENT AGREEMENT AND THE NEW MANAGEMENT
AGREEMENT
The proposed new management agreement with Blackstone Advisors (the "new
management agreement") is identical to the previous management agreement except
for the name of the investment manager, the date of commencement and the date of
termination of the agreements and revisions to the management fee schedule which
will have the effect of reducing the management fee at current asset levels. The
interim management agreement is also substantially similar to the Fund's
previous management agreement. The following description of the new management
agreement for the Fund is qualified in its entirety by reference to the form of
agreement attached hereto as Exhibit A.
SERVICES TO BE PROVIDED
Pursuant to the new management agreement, the investment manager will
supervise the Fund's investment program, including advising and consulting with
the Fund's Board of Directors regarding the Fund's overall investment strategy,
make, in consultation with the Fund's Board of Directors, investment strategy
decisions for the Fund and manage the investing and reinvesting of the Fund's
assets. Blackstone Advisors will also provide access to research and statistical
data to the Fund. These services are identical to those in the previous
management agreement.
3
EXPENSES AND ADVISORY FEES
The new management agreement provides that the Fund is responsible for all
of its expenses and liabilities, except that the investment manager is
responsible for expenses in connection with maintaining a staff within its
organization to furnish the above services to the Fund.
In consideration of the services to be rendered under the new management
agreement, the Fund will pay the Blackstone Advisors a monthly fee at an annual
rate of: (i) 1.10% of the Fund's average weekly net assets for the first
$500,000,000; (ii) 0.90% of the Fund's average weekly net assets for the next
$500,000,000; (iii) 0.85% of the Fund's average weekly net assets for the next
$500,000,000; and (iv) 0.75% of the Fund's average weekly net assets in excess
of $1,500,000,000. Under the previous management agreement, the Fund paid
Advantage Advisers, Inc. ("Advantage") a monthly fee at an annual rate of: (i)
1.10% of the Fund's average weekly net assets up to and including $600,000,000
and (ii) 0.95% of the Fund's average weekly net assets in excess of
$600,000,000. As a result, fees under the new management agreement will be lower
on any assets in excess of $500,000,000.
LIMITATION OF LIABILITY
In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard for its obligations thereunder ("disabling conduct"),
Blackstone Advisors shall not be liable to the Fund or its Stockholders for any
act or omission in the course of or in connection with the rendering of its
services thereunder. In addition, the Fund, under certain circumstances, will
indemnify Blackstone Advisors against any losses or expenses incurred, including
amounts paid in satisfaction of judgments and reasonable legal costs, not
resulting from disabling conduct. These provisions are identical to those
contained in the previous management agreement.
DURATION AND TERMINATION
The new management agreement has an initial term of two years, and shall
continue in effect thereafter for successive annual periods, but only so long as
such continuance is specifically approved at least annually by the affirmative
vote of (i) a majority of the members of the Fund's Board of Directors who are
not parties to the agreement or "interested persons" (as defined in the 1940
Act) of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) the Fund's Board of Directors or the holders
of a majority of the outstanding voting securities (as defined in the 1940 Act)
of the Fund. Notwithstanding the above, the agreement (a) may nevertheless be
terminated at any time, without penalty, by the Fund's Board of Directors, by
vote of the holders of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund, upon 60 days' written notice delivered to
each party to the agreement, and (b) shall automatically be terminated in the
event of its assignment (as defined in the 1940 Act). This is identical to the
previous management agreement.
COMPARATIVE FEE INFORMATION
The following table provides information with respect to the Fund and the
other fund with a similar objective for which Blackstone Advisors also serves as
investment adviser:
MANAGEMENT FEE (AS A PERCENTAGE OF APPROXIMATE NET ASSETS AS OF
AGREEMENT AVERAGE WEEKLY NET ASSETS) DECEMBER 31, 2005
--------- -------------------------- -----------------
The India Fund, Inc.* 1.10% up to $500,000,000 $|_|
0.90% for next $500,000,000
0.85% for next $500,000,000
0.75% over $1,500,000,000
The Asia Tigers Fund, Inc.* 1.00% up to $500,000,000 $|_|
0.95% for next $500,000,000
0.90% over $1,000,000,000
------------
* Blackstone Advisors has served as investment adviser since December 4,
2005 pursuant to an interim investment management agreement.
4
REASONS FOR APPROVING THE NEW MANAGEMENT AGREEMENT AND BOARD'S RECOMMENDATION
The Board, including the Independent Directors, recommends that
Stockholders of the Fund approve the new management agreement.
At a meeting held in person on November 8, 2005, the Board considered both
the proposed interim and new management agreements between the Fund and
Blackstone Advisors, as well as the proposed interim and new country advisory
agreements between Blackstone Advisors and Blackstone India. The Board,
including the Independent Directors, approved, subject to Stockholder approval,
the new management and country advisory agreements and recommended that
Stockholders of the Fund approve the agreements. In making this decision, the
Independent Directors were represented by independent counsel who assisted them
in their deliberations prior to and during the Board meeting and in the
meeting's executive session. The new management agreement and new country
advisory agreement will become effective on the date the Stockholders of the
Fund approve the agreements.
In addition, the Board of Directors, as permitted by the 1940 Act,
approved interim management and country advisory agreements which became
effective December 4, 2005. Pursuant to the interim agreements, Blackstone
Advisors currently serves as interim investment manager to the Fund, and
Blackstone India serves as interim country adviser to the Fund. The Board of
Directors also approved a new administration agreement, pursuant to which
Blackstone Administration currently serves as the Fund's administrator.
BACKGROUND
Prior to considering and approving the agreements on November 8, 2005, the
Independent Directors undertook certain actions in order to gather information,
including the formation in the spring of 2005 of a joint committee of the Boards
of various funds and participation in meetings of the joint committee to assist
in evaluating the then current management. In addition, the Independent
Directors met several times with the then current management and with the Fund's
portfolio manager to discuss the portfolio manager's employment arrangements and
likelihood of continued employment. The Board of Directors also established a
subcommittee to review various management alternatives. The subcommittee met
several times and approached several organizations that it believed might have
an interest in managing the Fund. The subcommittee also consulted regularly with
counsel to the Independent Directors.
In August 2005, the Independent Directors met in person to hear
presentations and consider proposals from four firms, including the then current
investment manager, for the management of the Fund. At that meeting,
representatives of Blackstone made presentations to and responded to questions
from the Board of Directors. Subsequently, the Independent Directors indicated
that it was their intention not to renew the existing agreements with Advantage
Advisers, Inc. and Imperial Investment Advisers Private Limited, which expired
on December 4, 2005. The Board further indicated that it intended to consider
investment advisory and administration arrangements with Blackstone at a
subsequent meeting and invited Blackstone to make an additional presentation.
To assist the Board in its consideration of the proposed agreements,
Blackstone provided materials and information about Blackstone, Blackstone
Advisors, Blackstone India and Blackstone Administration (collectively referred
to in this Proposal as "Blackstone"), which included, among other things,
descriptions of Blackstone Advisors' qualifications as an investment manager and
Blackstone India's qualifications as country adviser and a description of the
principal activities in which these entities anticipated being involved,
including and in addition to their services to the Fund. Blackstone also
provided descriptions of its business, personnel and operations, services,
proposed compensation by the Fund and compliance. In addition, the Independent
Directors consulted with their counsel on numerous occasions, discussing, among
other things, the legal standards and certain other considerations relevant to
the Directors' deliberations. Fund counsel also provided the Directors with a
memorandum outlining the legal duties of the Board.
The Independent Directors, through their independent legal counsel,
requested and received additional information from Blackstone, including, among
other things, various compliance matters. The lead Independent Director and
independent counsel held several conference calls with Blackstone to review the
actions being taken by Blackstone to ensure a smooth transition for the Fund.
The Independent Directors also requested that Blackstone consider modifying and
reducing the advisory and administrative fees. On November 1, 2005, the
Independent
5
Directors met with Blackstone to preliminarily discuss the materials provided
and to further discuss Blackstone's qualifications as investment manager,
including its proposed compliance program, and its general plans and intentions
regarding the Fund. Blackstone also gave a detailed presentation describing the
substantial efforts Blackstone had undertaken to ensure a smooth transition for
the Fund. Blackstone also agreed to modify the breakpoints in the advisory fee
so that reduced fees would begin at $500,000,000, which would have an immediate
impact on fees paid by the Fund. Blackstone further agreed to add a breakpoint
to the administrative fee which, while not having an immediate impact, could
reduce fees if the Fund's assets were to grow. The Independent Directors also
conferred separately with their counsel on a number of occasions, including in
connection with these meetings.
At an in-person Board of Directors meeting on November 8, 2005, the Board
of Directors further reviewed the material provided by Blackstone and
representatives of Blackstone were available to respond to questions from the
Board of Directors. The Independent Directors then met in executive session with
their counsel to consider the interim management and country advisory agreements
as well as the new management, country advisory and administration agreements.
FACTORS CONSIDERED
In approving the agreements and determining to submit the new management
agreement and country advisory agreements to Stockholders for approval, the
Directors considered a wide variety of factors. Among other things, the
Directors considered:
(i) THE QUALIFICATIONS OF BLACKSTONE ADVISORS AND BLACKSTONE INDIA,
INCLUDING THE NATURE, EXTENT AND QUALITY OF SERVICES TO BE PROVIDED AND THE
INVESTMENT PERFORMANCE OF THE PORTFOLIO MANAGER: The Directors first considered
whether Blackstone was qualified to assume the management of the Fund. The
Directors considered the various significant strengths of and services which
could be provided by Blackstone as a firm, including Blackstone's
well-capitalized organization with global resources, relationships, reputation
and financial strength, its access to existing shared knowledge in capital
markets and trends, its private equity, corporate debt, real estate,
restructuring and corporate advisory services, and its ability to attract
highly-qualified professional talent. The Board noted particularly Blackstone's
considerable experience in managing the assets of various clients, including
large corporations, pension plans and foundations.
The Directors also considered Blackstone's commitment to India, including
its plans to make significant private equity investments in India, as well as
its existing office in Mumbai staffed with a combination of Blackstone
professionals from New York and investment professionals hired locally to
facilitate integration with the rest of the firm and to ensure adoption of
Blackstone best practices in India and thus allow the Fund access to additional
India-based professionals and locally-sourced research.
Next, the Directors considered the fact that Blackstone intended to hire
the Fund's existing portfolio manager and certain other members of the existing
management team, thereby ensuring continuity of day-to-day management of the
portfolio. In particular, the Directors considered the performance and track
record of the portfolio manager, who had served as the Fund's portfolio manager
for eight years. Among other things, they took into consideration the favorable
history of the portfolio manager for the Fund, finding that this has had, and
would likely continue to have, a favorable impact on the success of the Fund,
and noting particularly the success of the Fund's rights offering in early 2005.
The Directors also took into account Blackstone's methodology for compensating
the portfolio manager and the rest of the portfolio management, trading and
research team and the factors that affect their compensation and discussed the
portfolio manager's satisfaction with such arrangements. The Directors also
discussed with Blackstone whether the Fund's portfolio manager will manage other
accounts, and Blackstone indicated that there were no current plans for the
Fund's portfolio manager to manage any other accounts other than the Fund and
The Asia Tigers Fund, Inc.
The Directors also considered Blackstone's investment philosophy with
respect to and its investment outlook for the Fund and discussed whether changes
would be made to the way investment decisions would be made, executed and
recorded. The Directors further considered the strength of Blackstone's
portfolio management activities generally. Blackstone also informed the
Directors that it intended to hire an additional analyst in Boston and in India
as well as a trading support professional and assured the Directors that it
would provide the portfolio
6
management team with such additional resources, including improved systems and
administrative support, as are required or helpful to ensure professional growth
and development and to seek continued market and peer out-performance.
The Directors weighed these significant advantages against the fact that
that Blackstone had not previously served as investment adviser to any U.S.
registered investment company and that Blackstone Advisors and Blackstone India
were newly established. The Directors therefore particularly examined
Blackstone's capability of operating the Fund pursuant to all applicable
regulations. The Directors were advised by Blackstone that it had undertaken all
regulatory action necessary for Blackstone Advisors to assume the role as
investment manager of the Fund and for Blackstone India to assume the role of
country adviser of the Fund, including registering Blackstone Advisors with the
SEC as an investment adviser under the Investment Advisers Act of 1940, as
amended (the "Advisers Act"). Blackstone indicated that Blackstone India's
registration with the SEC as an investment adviser under the Advisers Act as
well as its registration with the appropriate Indian authorities was in process
and would be complete before December 4, 2005, when the existing management and
country advisory agreements were due to expire.
The Directors also particularly considered whether Blackstone would be
able to meet the compliance demands set forth under various regulations, noting
that Blackstone generally had extensive compliance operations (including
sixteen registered investment advisers) with extensive codes of conduct and
compliance manuals for each of its business groups and had recently developed
extensive compliance programs specifically designed for their management of
registered investment companies. Blackstone also indicated to the Directors that
it had added to its compliance staff to ensure that all of the compliance
activities associated with management of the Fund are appropriately handled. The
Directors also reviewed materials regarding Blackstone Advisors' compliance
program, including its compliance manual, and discussed in detail Blackstone's
methods of dealing with potential conflicts of interest. Further, the Directors
also noted that while Blackstone has no other registered investment company
clients, it has extensive experience and an elaborate infrastructure to deal
with investors.
Finally, the Directors also considered the administration of the Fund,
noting that Blackstone intended to continue to use the Fund's existing
sub-administrator and accounting agent, transfer agent and custodian to help
ensure continuity of high quality services to the Fund. Blackstone assured the
Directors that, as Fund administrator it would be fully accountable to the Board
for the Fund's administrative operations. Blackstone also indicated that it
would regularly monitor the performance of all of the Fund's third party
providers and it would consider making any changes to the Fund's administrative
operations and services to its Stockholders that it believes would benefit the
Fund. The Directors further noted Blackstone's extensive finance, accounting and
administrative staff which performs those functions for its existing asset
management businesses and which Blackstone assured the Directors was capable of
handling the additional needs of the Fund. Blackstone also stated that it
planned to add to additional administrative staff and would add additional
finance, accounting and administrative staff in the future if necessary. In
addition, Blackstone retained two consultants, both of whom previously worked
with the Fund, to ensure a smooth transition of the Fund's administrative and
compliance functions.
Blackstone also noted that it planned to implement a new
trading/compliance system and a portfolio accounting system in the future.
Blackstone assured the Directors that the systems would allow for more efficient
trading, compliance and reconciliation processes, as the systems would link
electronically to the custodians and sub-administrator systems. These platforms
would also allow the portfolio management team to analyze the Fund's positions
in a more real-time format. Blackstone indicated that it also intended to
implement other appropriate changes to strengthen the operations of the Fund.
(ii) THE REASONABLENESS OF THE ADVISORY FEES: In evaluating the costs of
the services to be provided by Blackstone Advisors and Blackstone India under
the new management and country advisory agreements and the profitability of
Blackstone Advisors and Blackstone India with the Fund, the Directors
considered, among other things, whether advisory (or management) and
administrative fees or other expenses would change as a result of the new
agreements. Based on their review of the materials provided and the assurances
they had received from Blackstone, the Directors determined that the new
agreements would reduce the total fees payable for advisory (or management) and
administrative services at the Fund's current asset levels and that overall Fund
expenses were not expected to increase materially.
7
As part of their analysis, the Directors gave substantial consideration to
the comparisons of fees of the Fund as described in the materials provided by
Blackstone. The Directors also noted Blackstone's responsiveness to the
Directors' request to modify and reduce the advisory fee. Under the new
management agreement, the Directors noted that changes were being made to the
Fund's fee schedule, which would have the effect of lowering the Fund's fees
paid at asset levels over $500,000,000. Under the new management agreement, the
Fund will pay the Blackstone Advisors a monthly fee at an annual rate of: (i)
1.10% of the Fund's average weekly net assets for the first $500,000,000; (ii)
0.90% of the Fund's average weekly net assets for the next $500,000,000; (iii)
0.85% of the Fund's average weekly net assets for the next $500,000,000; and
(iv) 0.75% of the Fund's average weekly net assets in excess of $1,500,000,000.
Under the previous management agreement, the Fund paid a monthly fee at an
annual rate of: (i) 1.10% of the Fund's average weekly net assets up to and
including $600,000,000 and (ii) 0.95% of the Fund's average weekly net assets in
excess of $600,000,000. Under the new country advisory agreement, Blackstone
Advisors and not the Fund will pay Blackstone India a monthly fee equal to an
annual rate of 0.10% of the Fund's average weekly net assets, unchanged from
that of the previous country advisory agreement.
The Directors reviewed the past investment performance of the Fund under
the portfolio manager, now employed by Blackstone, during her tenure with the
Fund. In particular, the Directors focused on the analysis of the Fund's
performance during the past eight years, recalling that the Fund's performance
was comparable with that of its principal peer fund, and that the Fund
outperformed its benchmark over the last three years and since inception for
both annualized and cumulative returns. Further, the Fund's performance was
strong over all periods in absolute terms. The Directors recognized that past
performance is not an indicator of future performance, but concluded that the
portfolio manager had the necessary expertise to continue to manage the Fund in
accordance with its investment objectives and strategies.
In reviewing the investment advisory fees, the Directors noted that the
fee under the new management agreement was lower than that of the Fund's
principal peer fund. The Directors noted that the Fund's expense ratio, which
was not expected to increase as a result of the new agreements, was slightly
higher than that of its peer fund. Further, the Directors considered the extent
to which Blackstone believed economies of scale would be realized as the Fund
grows and whether the fee levels reflect economies of scale for the benefit of
the Fund's Stockholders, noting that the breakpoints in the fee structure would
have the effect of lowering the Fund's fees paid at certain asset levels. The
Directors were unable to compare the proposed fees with fees charged by
Blackstone to other large institutional and other clients with comparable
objectives, as Blackstone did not have any other clients which have investment
objectives comparable to those of the Fund.
(iii) THE OPERATING EXPENSES OF THE FUND: The Directors recalled that they
had recently considered the operating expenses of the Fund against those of its
principal peer and concluded that the expenses of the Fund were reasonable. In
re-evaluating the operating expenses, the Directors considered, among other
things, whether the operating expenses were likely to change as a result of the
new agreements. Blackstone assured the Directors that it did not anticipate that
the operating expenses or the annualized expense ratio would increase as a
result of the new agreements. The Directors noted that the revised breakpoint in
the advisory fee would have the effect of lowering the Fund's fees paid at asset
levels over $500,000,000. The Directors also noted that a new breakpoint would
be added to the Fund's new administration agreement with Blackstone
Administration, which could reduce fees if the Fund's assets were to grow. Under
the new administration agreement, the Fund pays Blackstone Administration 0.20%
of the Fund's average weekly net assets for the first $1,500,000,000 and 0.15%
of the Fund's average weekly net assets in excess of $1,500,000,000. The
Directors concluded that the expenses of the Fund were reasonable.
(iv) PORTFOLIO TRANSACTIONS: The Directors evaluated the policies and
practices of the Fund and considered the newly implemented policies and
practices of Blackstone Advisors in effecting portfolio transactions. The
Directors inquired as to how Blackstone intended to ensure that portfolio
transactions would be carried out competently and within the scope of applicable
governmental and Fund policy limitations. Blackstone also discussed its plan to
implement a new trading/compliance system in the future, which would help to
ensure more efficient and compliant portfolio trading. The Directors also
inquired of Blackstone about anticipated Fund transactions with affiliates,
portfolio turnover rates, the recapture of brokerage commissions and the
consideration of research services in placing portfolio transactions. The
Directors also noted that Blackstone did not intend to use soft dollars in
connection with portfolio transactions for the Fund. Although Blackstone may
receive unsolicited proprietary research reports from brokers that execute
transactions for the Fund, it will not select brokers based on this research.
8
(v) BLACKSTONE ADVISORS' AND BLACKSTONE INDIA'S MANAGEMENT OF OTHER FUNDS
AND OTHER CLIENT ACCOUNTS AND FEES PAID: The Directors also considered
Blackstone Advisors' and Blackstone India's management of other funds and other
investment products and the fees paid in those instances. The Directors noted
that Blackstone Advisors and Blackstone India did not manage any other similar
funds or accounts, and, accordingly, a comparison was not possible.
(vi) THE PROFITABILITY OF BLACKSTONE ADVISORS, BLACKSTONE INDIA AND THEIR
AFFILIATES WITH RESPECT TO THEIR RELATIONSHIP TO THE FUND: The Directors
considered what benefits Blackstone would derive from the management of the Fund
and whether it would have a financial interest in the matters that were being
considered. The Directors reviewed information regarding the estimated
profitability to Blackstone Advisors and Blackstone India of their relationship
with the Fund and considered whether the profits would be reasonable. The
profitability analysis took into consideration fall out benefits from Blackstone
Advisors' and Blackstone India's relationship with the Fund, including fees
received under the agreements and fees received pursuant to the administration
agreement, although the Directors noted that any such benefits were difficult to
quantify with certainty at this time, and indicated that they would continue to
evaluate them going forward. The Directors found that the estimated profits to
be realized by Blackstone Advisors and Blackstone India from their relationship
with the Fund were likely to be reasonable and consistent with fiduciary duties.
Blackstone also indicated that it and its affiliates would receive the benefits
of synergies with Blackstone's private equity operations in India.
(vii) BLACKSTONE'S COMMITMENT TO THE CONTINUITY OF THE FUND: The Directors
also considered Blackstone's commitment to the continuity of the Fund. The
Directors noted the terms and conditions of the new management and country
advisory agreements were substantially identical to the previous management and
country advisory agreements. Blackstone Advisors also intended to hire the
Fund's existing portfolio manager and certain other members of the existing
management team, thereby ensuring continuity of day-to-day management of the
Fund's portfolio. The Directors also noted the fact that Blackstone intended to
maintain the Fund's relationships with its service providers, including, among
others, the custodian and the transfer agent, and intended to maintain the
division of responsibilities between the adviser and the service providers and
the services provided by each of them, which would also help to ensure
continuity.
The Directors lastly noted that Blackstone had worked very closely with
the portfolio management team and the Directors themselves in planning for a
potential transition, including performing numerous interviews with the
portfolio management team, the custodians, the administrator , the external
accountants and with personnel in Mumbai in order to understand the current
operations of the Fund and to consider where improvements of the operations of
the Fund can be made.
(viii) ALTERNATIVES TO THE AGREEMENTS: The Board also considered possible
alternatives to the management and country advisory arrangements from the
standpoint of the Fund and its Stockholders. As discussed above under
"Background", the Directors undertook an extensive review and evaluation of
prior management and carefully considered a variety of alternatives. The
Directors considered the relative advantages and disadvantages of retaining a
new investment manager (or managers) or hiring internal management to perform
all or a part of the advisory, administrative or operational tasks. In
connection with their examination of these alternatives, the Directors
considered all of the factors described above. The Directors further considered
whether the Fund would have the ability on its own to attract, retain and
supervise highly qualified personnel and obtain high quality services.
APPROVAL AND RECOMMENDATION
As a result of the considerations described above, the Board of Directors
determined to consider and approve new management and country advisory
arrangements with Blackstone. In considering whether to approve the new
agreements, the Directors did not identify any particular information that was
all-important or controlling. Nor did the Board identify any single factor that
was determinative to the decision of the Board and each Director may have
attributed different weights to the various factors. The Directors evaluated all
information available to them, and their determinations were made separately in
respect of each agreement. The Directors also considered comparative information
received in connection with their most recent approval of the continuation of
the previous management, country advisory and administration agreements in
addition to information provided by Blackstone in connection with their
evaluation of the terms and conditions of the new agreements. Based upon their
discussions which took place throughout the year and at the May 17, August 9 and
November 8, 2005 board meetings, as well as
9
on the recommendations of the Board's subcommittee, and after weighing each of
the presentations of the other firms, the Independent Directors are satisfied
that Blackstone Advisors and Blackstone India are qualified to manage the Fund's
investment portfolio. The Directors, including a majority of Independent
Directors, concluded that the terms of the new management agreement and the new
country advisory agreement are fair and reasonable, that the fees stated therein
are reasonable in light of the services to be provided to the Fund, and for
these reasons they therefore have concluded that the new management agreement
and the new country advisory agreement should be approved and recommended to
Fund Stockholders.
INFORMATION CONCERNING BLACKSTONE ADVISORS
Blackstone Advisors is a Delaware limited liability company and a
registered investment adviser under the Advisers Act. Blackstone Advisors is an
affiliate of Blackstone, Blackstone India and Blackstone Administration. The
principal business address of Blackstone Advisors is 345 Park Avenue, New York,
New York 10154.
The names, titles and principal occupations of the current managers of
Blackstone Advisors are set forth in the following table. The business address
of each person listed below is 345 Park Avenue, New York, New York 10154.
NAME TITLE AND PRINCIPAL OCCUPATION
---- ------------------------------
Hamilton E. James President
Robert L. Friedman Chief Administrative Officer and
Chief Legal Officer
Barbara F. Pires Chief Compliance Officer
Michael A. Puglisi Chief Financial Officer
REQUIRED VOTE
As provided by the 1940 Act, approval of the new management agreement will
require the affirmative vote of a "majority of the outstanding voting
securities" of the Fund, which means the affirmative vote of the lesser of (a)
67% or more of the shares of the Fund entitled to vote thereon present or
represented by proxy at the Meeting, if the holders of more than 50% of the
outstanding shares of the Fund entitled to vote thereon are present or
represented by proxy, or (b) more than 50% of the total outstanding shares of
the Fund entitled to vote thereon. For this purpose, abstentions and broker
non-votes will be counted as shares present at the Meeting for quorum purposes
but not voting and will have the same effect as votes cast against the Proposal.
The new management agreement will become effective on the date Stockholders of
the Fund approve both the new management agreement and the new country advisory
agreement.
Please note that unless otherwise instructed, the proxies will vote FOR
Proposal 1.
THE DIRECTORS, INCLUDING THE DIRECTORS WHO ARE NOT "INTERESTED PERSONS" (AS
DEFINED IN THE 1940 ACT) OF THE FUND, BLACKSTONE, OR ANY OF THEIR RESPECTIVE
AFFILIATES RECOMMEND THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE NEW
MANAGEMENT AGREEMENT.
PROPOSAL 2. APPROVAL OF COUNTRY ADVISORY AGREEMENT
BETWEEN THE FUND AND BLACKSTONE INDIA
At the Meeting, you will be asked to approve a new country advisory
agreement between the Fund and Blackstone India. Blackstone India has acted as
the Fund's interim sub-advisor since December 4, 2005. A general description of
the proposed new country advisory agreement is included below. The form of new
country advisory agreement is attached hereto as Exhibit B.
BACKGROUND
As discussed under "Background" under Proposal 1 above, on November 8,
2005, after careful consideration of possible alternatives to the previous
management arrangement, the Board of Directors, including a
10
majority of the Independent Directors, determined that it would be in the best
interest of the Fund and its Stockholders to approve, subject to Stockholder
approval, a new country advisory agreement between the Blackstone Advisors and
Blackstone India, pursuant to which Blackstone India would become the Fund's new
country adviser. The Board of Directors also approved an interim country
advisory agreement on November 8, 2005 as permitted under the 1940 Act, pursuant
to which Blackstone India has served as interim country adviser to the Fund
since December 4, 2005.
Blackstone India is a company organized under the laws of India and a
registered investment adviser under the Advisers Act. Blackstone India, with a
team of analysts who cover approximately 100 companies, procures statistical and
factual information and research regarding investing in India. Blackstone India
provides the Fund's portfolio management team with, among other things, regular
updates of company visits, analysis of earnings results and stock
recommendations.
COMPARISON OF THE FUND'S PREVIOUS COUNTRY ADVISORY AGREEMENT AND THE NEW COUNTRY
ADVISORY AGREEMENT
The proposed new country advisory agreement with Blackstone India is
identical to the previous country advisory agreement except for the name of the
country adviser, the date of commencement and the date of termination of the
agreements. The interim country advisory agreement is also substantially similar
to the Fund's previous country advisory agreement. The following description of
the new country advisory agreement for the Fund is qualified in its entirety by
reference to the form of agreement attached hereto as Exhibit B.
SERVICES TO BE PROVIDED
Pursuant to the new country advisory agreement, the country adviser will
provide or procure statistical and factual information and research regarding
economic and political factors and trends in India and its surrounding region
and provide or procure research and statistical data in relation to investing
and other opportunities in India and its surrounding region. All investment
decisions will be made by the investment manager. These services are identical
to those in the previous country advisory agreement.
EXPENSES AND SUBADVISORY FEES
The new country advisory agreement provides that Blackstone India is
responsible for all of its expenses, including expenses in connection with
providing office space, office facilities and personnel reasonably necessary for
performance of the services to be provided by it to Blackstone Advisors. In
consideration of the services to be rendered, Blackstone Advisors, and not the
Fund, pays to Blackstone India a monthly fee equal to an annual rate of 0.10% of
the Fund's average weekly net assets. This fee is identical to that in the
previous county advisory agreement.
DURATION AND TERMINATION
The new country advisory agreement has an initial term of two years, and
thereafter will continue in effect for successive annual periods provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of the Fund's outstanding voting securities (as defined in the 1940
Act) or by the Fund's Board of Directors and (b) by the vote, cast in person at
a meeting called for the purpose, of a majority of the Fund's directors who are
not parties to the agreement or "interested persons" (as defined in the 1940
Act) of any such party. Notwithstanding the above, the agreement (a) may
nevertheless be terminated at any time, without penalty, by the Fund's Board of
Directors, by vote of holders of a majority of the outstanding voting securities
(as defined in the 1940 Act) of the Fund upon 60 days' written notice delivered
to each party to the agreement and (b) shall automatically be terminated in the
event of its assignment (as defined in the 1940 Act). This is identical to the
previous country advisory agreement.
REASONS FOR APPROVING THE NEW COUNTRY ADVISORY AGREEMENT AND BOARD'S
RECOMMENDATION
The Board, including the Independent Directors, recommends that
Stockholders of the Fund approve the new country advisory agreement. The reasons
for approving the new country advisory agreement and
11
recommending that Stockholders approve the agreement are discussed in detail in
Proposal 1 above under the heading "Reasons for Approving the New Management
Agreement and Board's Recommendation."
INFORMATION CONCERNING BLACKSTONE INDIA
Blackstone India is a private company organized under the laws of India
and a registered investment manager under the Advisers Act. Blackstone India is
an affiliate of Blackstone Advisors and Blackstone Administration. The principal
business address of Blackstone India is Taj President, 90 Cuffe Parade, Room
802, Mumbai - 400 005, India.
The names, titles and principal occupations of the current directors of
Blackstone India are set forth in the following table. The business address of
each person listed below is Taj President, 90 Cuffe Parade, Room 802, Mumbai -
400 005, India.
NAME TITLE AND PRINCIPAL OCCUPATION
---- ------------------------------
Barbara F. Pires Director
Gulzar Govewalla Director
Gregory Miller Alternate Director
Akhil Gupta Alternate Director
REQUIRED VOTE
As provided by the 1940 Act, approval of the new management agreement will
require the affirmative vote of a "majority of the outstanding voting
securities" of the Fund, which means the affirmative vote of the lesser of (a)
67% or more of the shares of the Fund entitled to vote thereon present or
represented by proxy at the Meeting, if the holders of more than 50% of the
outstanding shares of the Fund entitled to vote thereon are present or
represented by proxy, or (b) more than 50% of the total outstanding shares of
the Fund entitled to vote thereon. For this purpose, abstentions and broker
non-votes will be counted as shares present at the Meeting for quorum purposes
but not voting and will have the same effect as votes cast against the Proposal.
The new country advisory agreement will go into effect upon Stockholder approval
of both the new management agreement and the new country advisory agreement.
Please note that unless otherwise instructed, the proxies will vote FOR
Proposal 2.
THE DIRECTORS, INCLUDING THE DIRECTORS WHO ARE NOT "INTERESTED PERSONS"
(AS DEFINED IN THE 1940 ACT) OF THE FUND, BLACKSTONE, OR ANY OF THEIR
RESPECTIVE AFFILIATES RECOMMEND THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL
OF THE NEW COUNTRY ADVISORY AGREEMENT.
ADDITIONAL INFORMATION
BENEFICIAL SHARE OWNERSHIP
The following table sets forth the beneficial ownership of shares of the
Fund, as of January |_|, 2006, by each person (including any group) known to the
Fund to be deemed to be the beneficial owner of more than 5% of the outstanding
shares of the Fund:
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OWNERSHIP
------------------------ ------------------ -----------------
[To come.]
12
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OWNERSHIP
------------------------ ------------------ -----------------
In addition, as of January |_|, 2006, Cede & Co., a nominee for
participants in The Depository Trust Company, held of record |_| shares, equal
to |_|% of the outstanding shares of the Fund.
SECURITY OWNERSHIP OF MANAGEMENT
The following table provides information concerning the number and dollar
range of equity securities owned beneficially by each Director, as well as all
Directors and executive officers as a group, as of January |_|, 2006:
NAME OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
---------------- -------------------- -----
DIRECTORS
Prakash A. Melwani [None] [0.0]%
Peter G. Peterson [None] [0.0]%
Lawrence K. Becker None 0.0%
Leslie H. Gelb None 0.0%
J. Marc Hardy None 0.0%
Stephane R.F. Henry None 0.0%
Luis F. Rubio None 0.0%
Jeswald W. Salacuse 569.4303 |_|%
([nature of ownership])
ALL DIRECTORS AND EXECUTIVE OFFICERS (AS A GROUP) 569.4303 |_|%
([nature of ownership])
As of January |_|, 2006, the holdings of no Director or executive officer,
nor the Directors and executive officers of the Fund as a group, represented
more than 1% of the outstanding shares of the Fund's common stock. At January
|_|, 2006, no Director or nominee for election as Director who is not an
"interested person" of the Fund as defined in the 1940 Act, nor any immediate
family member of such persons, owned beneficially or of record any shares of
Blackstone Advisors, the Fund's investment manager, Blackstone India, the Fund's
country adviser, or any person or entity (other than the Fund) directly or
indirectly controlling, controlled by, or under common control with Blackstone
Advisors or Blackstone India.
SERVICE PROVIDERS
Blackstone Advisors currently serves as the Fund's interim investment
manager under the interim management agreement. The address of Blackstone
Advisors is 345 Park Avenue, New York, New York 10154.
Blackstone India currently serves as the Fund's interim country adviser
under the interim country advisory agreement. The address of Blackstone India is
#212, Taj Mahal Palace and Tower, Apollo Bunder, Mumbai - 400 001, India.
Blackstone Administration currently serves as the Fund's administrator
under the administration agreement. The address of Blackstone Administration is
345 Park Avenue, New York, New York 10154. Blackstone Administration
subcontracts certain of its responsibilities to PFPC Inc. The address of PFPC
Inc. is 400 Bellevue Parkway, Wilmington, Delaware 19809.
13
OTHER BUSINESS
The Fund's Board of Directors does not know of any other matter that may
come before the Meeting. If any other matter properly comes before the Meeting,
it is the intention of the persons named in the proxy to vote the proxies in
accordance with their judgment on that matter.
STOCKHOLDER PROPOSALS
All proposals by Stockholders of the Fund that are intended to be
presented at the Fund's next Annual Meeting of Stockholders, to be held in 2006,
must have been received by the Fund for inclusion in the Fund's proxy statement
and proxy relating to that meeting no later than December 6, 2005. Any
Stockholder who desires to bring a proposal for consideration at the Fund's year
2006 Annual Meeting of Stockholders without including such proposal in the
Fund's proxy statement must deliver written notice thereof to the Secretary or
Assistant Secretary of the Fund (addressed to The India Fund, Inc., 345 Park
Avenue, New York, New York 10154) during the 30-day period from December 31,
2005 to January 31, 2006.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Fund has adopted procedures by which Fund Stockholders may send
communications to the Board of Directors. Stockholders may mail written
communications to the Board to the attention of the Board of Directors of The
India Fund, Inc., c/o the Fund's Chief Legal Officer, 345 Park Avenue, New York,
New York 10154. Stockholder communications must (i) be in writing and be signed
by the Stockholder and (ii) identify the number of shares held by the
Stockholder. The Chief Legal Officer of the Fund is responsible for reviewing
properly submitted Stockholder communications. The Chief Legal Officer shall
either (i) provide a copy of each properly submitted Stockholder communication
to the Board at its next regularly scheduled board meeting or (ii) if the Chief
Legal Officer determines that the communication requires more immediate
attention, forward the communication to the Directors promptly after receipt.
The Chief Legal Officer may, in good faith, determine that a Stockholder
communication should not be provided to the Board because it does not reasonably
relate to the Fund or its operations, management, activities, policies, service
providers, Board, officers, Stockholders or other matters relating to an
investment in the Fund or is otherwise ministerial in nature. These procedures
shall not apply to (i) any communication from an officer or Director of the
Fund, (ii) any communication from an employee or agent of the Fund, unless such
communication is made solely in such employee's or agent's capacity as a
Stockholder of the Fund, or (iii) any Stockholder proposal submitted pursuant to
Rule 14a-8 under the Securities Exchange Act of 1934, as amended, or any
communication made in connection with such a proposal.
The Fund's Directors are not required to attend the Fund's Annual Meeting
of Stockholders or to otherwise make themselves available to Stockholders for
communications, other than by the aforementioned procedures. The only Director
to attend the Fund's April 21, 2005 Annual Meeting of Stockholders was Bryan
McKigney, who resigned as a Director of the Fund effective December 4, 2005.
EXPENSES OF PROXY SOLICITATION
The costs of preparing, assembling and mailing material in connection with
this solicitation of proxies will be borne by the Fund. Proxies may also be
solicited personally by officers of the Fund and by regular employees of
Blackstone, its respective affiliates, or other representatives of the Fund, and
may be accomplished by telephone in addition to the use of mails. Brokerage
houses, banks and other fiduciaries may be requested to forward proxy
solicitation material to their principals to obtain authorization for the
execution of proxies, and they will be reimbursed by the Fund for out-of-pocket
expenses incurred in this connection.
In addition, Georgeson Shareholder Communications Inc. ("Georgeson"), a
proxy solicitation firm, has been retained to assist in the solicitation of the
proxy vote. It is anticipated that Georgeson will be paid an amount estimated at
$9,500 plus reasonable out-of-pocket expenses. Therefore, expenses of the
Meeting will include costs of (i) preparing, assembling and mailing material in
connection with the solicitation, (ii) soliciting proxies by officers or
employees, personally or by telephone or telegraph, (iii) reimbursing brokerage
houses, banks and other fiduciaries and (iv) compensating the proxy solicitor.
14
Georgeson may call Stockholders to ask if they would be willing to have
their votes recorded by telephone. The telephone voting procedure is designed to
authenticate Stockholders' identities, to allow Stockholders to authorize the
voting of their shares in accordance with their instructions and to confirm that
their instructions have been recorded properly. A Stockholder voting by
telephone would be asked for his or her social security number or other
identifying information and would be given an opportunity to authorize proxies
to vote his or her shares in accordance with his or her instructions. To ensure
that the Stockholder's instructions have been recorded correctly, he or she will
receive a confirmation of such instructions in the mail. The confirmation is a
replica of the proxy card but with marks indicating how the Stockholder voted,
along with a special toll-free number which will be available in the event the
Stockholder wishes to change or revoke the vote. Although a Stockholder's vote
may be taken by telephone, each Stockholder will receive a copy of this proxy
statement and may vote by mailing the enclosed proxy card. If you have any
questions or need assistance in voting, please contact Georgeson at its
toll-free number, 1-866-297-1264.
January [DATE], 2006
15
EXHIBIT A
FORM OF NEW MANAGEMENT AGREEMENT
Management Agreement dated and effective as of |_|, 200[6], between
The India Fund, Inc., a Maryland corporation (herein referred to as the "Fund"),
and Blackstone Asia Advisors L.L.C., a Delaware limited liability company
(herein referred to as the "Investment Manager") (this "Agreement").
1. APPOINTMENT OF INVESTMENT MANAGER. The Investment Manager hereby
undertakes and agrees, upon the terms and conditions herein set forth, to
provide overall investment management services for the Fund and in connection
therewith to: (i) supervise the Fund's investment program, including advising
and consulting with the Fund's Board of Directors regarding the Fund's overall
investment strategy; (ii) make, in consultation with the Fund's Board of
Directors, investment strategy decisions for the Fund; (iii) manage the
investing and reinvesting of the Fund's assets; (iv) place purchase and sale
orders on behalf of the Fund; (v) advise the Fund with respect to all matters
relating to the Fund's use of leveraging techniques; (vi) provide or procure the
provision of research and statistical data to the Fund in relation to investing
and other matters within the scope of the investment objective and limitations
of the Fund; (vii) monitor the performance of the Fund's outside service
providers, including the Fund's administrator, transfer agent and custodian;
(viii) be responsible for compliance by the Fund with U.S. federal, state and
other applicable laws and regulations; and (ix) pay the salaries, fees and
expenses of such of the Fund's directors, officers or employees who are
directors, officers or employees of the Investment Manager or any of its
affiliates, except that the Fund will bear travel expenses or an appropriate
portion thereof of directors and officers of the Fund who are directors,
officers or employees of the Investment Manager to the extent that such expenses
relate to attendance at meetings of the Board of Directors or any committees
thereof. The Investment Manager may delegate any of the foregoing
responsibilities to a third party with the consent of the Fund.
2. EXPENSES. In connection herewith, the Investment Manager agrees
to maintain a staff within its organization to furnish the above services to the
Fund. The Investment Manager shall bear all expenses arising out of its duties
hereunder.
Except as provided in Section 1 hereof, the Fund shall be
responsible for all of the Fund's expenses and liabilities, including
organizational and offering expenses (which include out-of-pocket expenses, but
not overhead or employee costs of the Investment Manager); expenses for legal,
accounting and auditing services; taxes and governmental fees; dues and expenses
incurred in connection with membership in investment company organizations; fees
and expenses incurred in connection with listing the Fund's shares on any stock
exchange; costs of printing and distributing shareholder reports, proxy
materials, prospectuses, stock certificates and distribution of dividends;
charges of the Fund's custodians and sub-custodians, administrators and
sub-administrators, registrars, transfer agents, dividend disbursing agents and
dividend reinvestment plan agents; payment for portfolio pricing services to a
pricing agent, if any; registration and filing fees of the Securities and
Exchange Commission (the "Commission"); expenses of registering or qualifying
securities of the Fund for sale in the various states; freight and other charges
in connection with the shipment of the Fund's portfolio securities; fees and
expenses of non-interested directors or non-interested members of any advisory
or investment board, committee or panel of the Fund; travel expenses or an
appropriate portion thereof of directors and officers of the Fund, or members of
any advisory or investment board, committee or panel of the Fund, to the extent
that such expenses relate to attendance at meetings of the Board of Directors or
any committee thereof, or of any such advisory or investment board, committee or
panel; salaries of shareholder relations personnel; costs of shareholders
meetings; insurance; interest; brokerage costs; and litigation and other
extraordinary or non-recurring expenses.
3. TRANSACTIONS WITH AFFILIATES. The Investment Manager is
authorized on behalf of the Fund, from time to time when deemed to be in the
best interests of the Fund and to the extent permitted by applicable law, to
purchase and/or sell securities in which the Investment Manager or any of its
affiliates underwrites, deals in and/or makes a market and/or may perform or
seek to perform investment banking services for issuers of such securities. The
Investment Manager is further authorized, to the extent permitted by applicable
law, to select brokers (including any brokers affiliated with the Investment
Manager) for the execution of trades for the Fund.
2
4. BEST EXECUTION; RESEARCH SERVICES. The Investment Manager is
authorized, for the purchase and sale of the Fund's portfolio securities, to
employ such dealers and brokers as may, in the judgment of the Investment
Manager, implement the policy of the Fund to obtain the best results, taking
into account such factors as price, including dealer spread, the size, type and
difficulty of the transaction involved, the firm's general execution and
operational facilities and the firm's risk in positioning the securities
involved. Consistent with this policy, the Investment Manager is authorized to
direct the execution of the Fund's portfolio transactions to dealers and brokers
furnishing statistical information or research deemed by the Investment Manager
to be useful or valuable to the performance of its investment advisory functions
for the Fund. It is understood that in these circumstances, as contemplated by
Section 28(e) of the Securities Exchange Act of 1934, as amended, the
commissions paid may be higher than those which the Fund might otherwise have
paid to another broker if those services had not been provided. Information so
received will be in addition to and not in lieu of the services required to be
performed by the Investment Manager. It is understood that the expenses of the
Investment Manager will not necessarily be reduced as a result of the receipt of
such information or research. Research services furnished to the Investment
Manager by brokers who effect securities transactions for the Fund may be used
by the Investment Manager in servicing other investment companies and accounts
which it manages. Similarly, research services furnished to the Investment
Manager by brokers who effect securities transactions for other investment
companies and accounts which the Investment Manager manages may be used by the
Investment Manager in servicing the Fund. It is understood that not all of these
research services are used by the Investment Manager in managing any particular
account, including the Fund.
5. REMUNERATION. In consideration of the services to be rendered by
the Investment Manager under this Agreement, the Fund shall pay the Investment
Manager a monthly fee in United States dollars on the fifth business day of each
month for the previous month at an annual rate of: (i) 1.10% of the Fund's
average weekly net assets for the first $500,000,000 of the Fund's average
weekly net assets; (ii) 0.90% of the Fund's average weekly net assets for the
next $500,000,000 of the Fund's average weekly net assets; (iii) 0.85% of the
Fund's average weekly net assets for the next $500,000,000 of the Fund's average
weekly net assets; and (iv) 0.75% of the Fund's average weekly net assets in
excess of $1,500,000,000 of the Fund's average weekly net assets. If the fee
payable to the Investment Manager pursuant to this Section 5 begins to accrue
before the end of any month or if this Agreement terminates before the end of
any month, the fee for the period from such date to the end of such month or
from the beginning of such month to the date of termination, as the case may be,
shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs. For purposes of
calculating each such monthly fee, the value of the Fund's net assets shall be
computed at the time and in the manner specified in the Registration Statement
on Form N-2, as in effect from time to time, filed with the Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"), and the Securities
Act of 1933, as amended.
6. REPRESENTATIONS AND WARRANTIES. The Investment Manager represents
and warrants that it is duly registered and authorized as an investment adviser
under the Investment Advisers Act of 1940, as amended, and the Investment
Manager agrees to maintain effective all requisite registrations, authorizations
and licenses, as the case may be, until the termination of this Agreement.
7. SERVICES NOT DEEMED EXCLUSIVE. The services provided hereunder by
the Investment Manager are not to be deemed exclusive, and the Investment
Manager and any of its affiliates or related persons are free to render similar
services to others and to use the research developed in connection with this
Agreement for other clients or affiliates. Nothing herein shall be construed as
constituting the Investment Manager an agent of the Fund.
8. LIMIT OF LIABILITY. The Investment Manager shall exercise its
best judgment in rendering the services in accordance with the terms of this
Agreement. The Investment Manager shall not be liable for any error of judgment
or mistake of law or for any act or omission or any loss suffered by the Fund in
connection with the matters to which this Agreement relates, provided that
nothing herein shall be deemed to protect or purport to protect the Investment
Manager against any liability to the Fund or its shareholders to which the
Investment Manager would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this Agreement
("disabling conduct"). The Fund will indemnify the Investment Manager against,
and hold it harmless from, any and all losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses), including any amounts
paid in satisfaction of judgments, in compromise or as fines or penalties, not
resulting from disabling
3
conduct by the Investment Manager. Indemnification shall be made only following:
(i) a final decision on the merits by a court or other body before which the
proceeding was brought that the Investment Manager was not liable by reason of
disabling conduct or (ii) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the Investment Manager was
not liable by reason of disabling conduct by (a) the vote of a majority of a
quorum of directors of the Fund who are neither "interested persons" of the Fund
nor parties to the proceeding ("disinterested non-party directors") or (b) an
independent legal counsel in a written opinion. The Investment Manager shall be
entitled to advances from the Fund for payment of the reasonable expenses
(including reasonable counsel fees and expenses) incurred by it in connection
with the matter as to which it is seeking indemnification in the manner and to
the fullest extent permissible under law. Prior to any such advance, the
Investment Manager shall provide to the Fund a written affirmation of its good
faith belief that the standard of conduct necessary for indemnification by the
Fund has been met and a written undertaking to repay any such advance if it
should ultimately be determined that the standard of conduct has not been met.
In addition, at least one of the following additional conditions shall be met:
(a) the Investment Manager shall provide a security in form and amount
acceptable to the Fund for its undertaking; (b) the Fund is insured against
losses arising by reason of the advance; or (c) a majority of a quorum of
disinterested non-party directors or independent legal counsel, in a written
opinion, shall have determined, based on a review of facts readily available to
the Fund at the time the advance is proposed to be made, that there is reason to
believe that the Investment Manager will ultimately be found to be entitled to
indemnification.
9. DURATION AND TERMINATION. This Agreement shall remain in effect
until [TWO YEARS AFTER SHAREHOLDER APPROVAL], and shall continue in effect
thereafter for successive annual periods, but only so long as such continuance
is specifically approved at least annually by the affirmative vote of (i) a
majority of the members of the Fund's Board of Directors who are not parties to
this Agreement or "interested persons" (as defined in the 1940 Act) of any such
party, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) the Fund's Board of Directors or the holders of a majority of
the outstanding voting securities (as defined in the 1940 Act) of the Fund.
Notwithstanding the above, this Agreement (a) may nevertheless be
terminated at any time, without penalty, by the Fund's Board of Directors, by
vote of the holders of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund or by the Investment Manager, upon 60 days'
written notice delivered to each party hereto, and (b) shall automatically be
terminated in the event of its assignment (as defined in the 1940 Act). Any such
notice shall be deemed given when received by the addressee.
10. GOVERNING LAW. This Agreement shall be governed, construed and
interpreted in accordance with the laws of the State of New York, PROVIDED,
HOWEVER, that nothing herein shall be construed as being inconsistent with the
1940 Act.
11. NOTICES. Any notice hereunder shall be in writing and shall be
delivered in person or by telex or facsimile (followed by delivery in person) to
the parties at the addresses set forth below.
If to the Fund:
The India Fund, Inc.
345 Park Avenue
New York, New York 10154
Attn: [NAME]
If to the Investment Manager:
Blackstone Asia Advisors L.L.C.
345 Park Avenue
New York, New York 10154
Attn: [NAME]
4
with a copy to:
[ADDRESS]
or to such other address as to which the recipient shall have informed the other
party in writing.
Unless specifically provided elsewhere, notice given as provided
above shall be deemed to have been given, if by personal delivery, on the day of
such delivery, and, if by facsimile and mail, on the date on which such
facsimile or mail is sent.
12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the parties hereto caused their duly authorized
signatories to execute this Agreement as of the day and year first written
above.
THE INDIA FUND, INC.
By: ________________________________
Name: [NAME]
Title: [TITLE]
BLACKSTONE ASIA ADVISORS L.L.C.
By: ______________________________
Name: [NAME]
Title: [TITLE]
EXHIBIT B
FORM OF NEW COUNTRY ADVISORY AGREEMENT
Blackstone Asia Advisors L.L.C.
345 Park Avenue
New York, New York 10154
Blackstone Fund Services India Private Limited
Taj President - Mumbai
Room No. 802
90, Cuffe Parade
Mumbai - 400 005
India
Ladies and Gentlemen:
This will confirm that the agreement among the undersigned (the
"Investment Manager") and you (the "Country Adviser") is as follows:
1. The Investment Manager has been employed pursuant to an interim
management agreement effective as of December 4, 2005, between an investment
company (the "Company") registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the Investment Manager (the "Management
Agreement"). The Company engages in the business of investing and reinvesting
its assets in the manner and in accordance with the investment objective and
limitations specified in the Company's articles of incorporation, as amended
from time to time in the registration statement on Form N-2, as in effect from
time to time, and in such manner and to such extent as may from time to time be
authorized by the Board of Directors of the Company. Copies of the documents
referred to in the preceding sentence have been furnished to the Country
Adviser. Any amendments to these documents shall be furnished to the Country
Adviser.
2. Subject to the approval by the Company, the Investment Manager
engages the Country Adviser on an independent contractor relationship basis to:
(a) provide and procure statistical and factual information and research
regarding economic and political factors and trends in India and its surrounding
region and (b) provide or procure research and statistical data in relation to
investing and other opportunities in India and its surrounding region. The
Country Adviser will not make any investment decisions with respect to the
Company.
3. The Country Adviser shall, at its expense, provide office space,
office facilities and personnel reasonably necessary for performance by it of
the services to be provided by the Country Adviser pursuant to this Agreement.
4. The Country Adviser may contract on its own behalf with or
consult with such banks, other securities firms, brokers or other parties
without additional expense to the Company, as it may deem appropriate regarding
research and statistical data or otherwise.
5. In consideration of the services to be rendered by the Country
Adviser under this Agreement, the Investment Manager shall pay the Country
Adviser a monthly fee in United States dollars on the fifth business day of each
month for the previous month at an annual rate of: 0.10% of the Fund's average
weekly net assets. If the fee payable to the Investment Adviser pursuant to this
Section 5 begins to accrue before the end of any month or if this Agreement
terminates before the end of any month, the fee for the period from such date to
the end of such month or from the beginning of such month to the date of
termination, as the case may be, shall be prorated according to the proportion
which such period bears to the full month in which such effectiveness or
termination occurs.
6. The Country Adviser represents and warrants that it will be duly
registered and authorized as an investment adviser under the Investment Advisers
Act of 1940, as amended (the "Advisers Act"), and the Country Adviser agrees to
maintain effective all requisite registrations, authorizations and licenses, as
the case may be, until termination of this Agreement.
7. This Agreement shall become effective on December 4, 2005 and
shall remain in effect until May 3, 2006, and shall terminate automatically on
that date. Notwithstanding the above, this Agreement (a) may nevertheless be
terminated at any time, without penalty, by the Company's Board of Directors, by
vote of holders of a majority of the outstanding voting securities (as defined
in the 1940 Act) of the Company or by the Investment Manager upon 60 days'
written notice delivered to each party hereto and (b) shall automatically be
terminated in the event of its assignment (as defined in the 1940 Act). Any such
notice shall be deemed given when received by the addressee.
8. Nothing herein shall be deemed to limit or restrict the right of
the Country Adviser, any affiliate of the Country Adviser or any employee of the
Country Adviser to engage in any other business or to devote time and attention
to the management or other aspects of any other business, whether of a similar
or dissimilar nature, or to render services of any kind to any other
corporation, firm, individual or association. Nothing herein shall be construed
as constituting the Country Adviser an agent of the Investment Manager or the
Company.
9. This Agreement shall be governed by the laws of the State of New
York; PROVIDED, HOWEVER, that nothing herein shall be construed as being
inconsistent with the 1940 Act.
10. NOTICES. Any notice hereunder shall be in writing and shall be
delivered in person or by telex or facsimile (followed by delivery in person) to
the parties at the addresses set forth below.
If to the Country Adviser:
Blackstone Fund Services India Private Limited
Taj President - Mumbai
Room No. 802
90, Cuffe Parade
Mumbai - 400 005
India
If to the Investment Manager:
Blackstone Asia Advisors L.L.C.
345 Park Avenue
New York, New York 10154
or to such other address as to which the recipient shall have informed the other
party in writing.
Unless specifically provided elsewhere, notice given as provided
above shall be deemed to have been given, if by personal delivery, on the day of
such delivery, and, if by facsimile and mail, on the date on which such
facsimile is sent or mailed.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
2
If the foregoing correctly sets forth the agreement between the
Investment Manager and the Country Adviser, please so indicate by signing and
returning to the Investment Manager the enclosed copy hereof.
Very truly yours,
BLACKSTONE ASIA ADVISORS L.L.C.
By:
--------------------------------------
Name: [NAME]
Title: [TITLE]
ACCEPTED:
BLACKSTONE FUND SERVICES INDIA
PRIVATE LIMITED
By:
-----------------------------------------
Name: [NAME]
Title: [TITLE]
3
EXHIBIT C
THE ASIA TIGERS FUND, INC.
THE INDIA FUND, INC.
AUDIT COMMITTEE CHARTER
December 18, 2003, as amended on November 8, 2005
This charter sets forth the purpose, authority and responsibilities
of the Audit Committee of each of the Board of Directors (the "Board") of the
investment companies set forth above (each, a "Fund").
PURPOSES
The Audit Committee of the Board (the "Committee") has, as its
primary purpose, oversight responsibility with respect to: (a) the adequacy of
the Fund's accounting and financial reporting processes, policies and practices;
(b) the integrity of the Fund's financial statements and the independent audit
thereof; (c) the adequacy of the Fund's overall system of internal controls and,
as appropriate, the internal controls of certain service providers; (d) the
Fund's compliance with certain legal and regulatory requirements; (e)
determining the qualification and independence of the Fund's independent
auditors; and (f) the Fund's internal audit function, if any.
The function of the Committee is oversight; it is the responsibility
of the Fund's investment adviser (the "Adviser") to maintain appropriate systems
for accounting and internal control, and the independent auditors'
responsibility to plan and carry out a proper audit.
AUTHORITY
The Committee has been duly established by the Board and shall have
the resources and authority appropriate to discharge its responsibilities,
including the authority to retain counsel and other experts or consultants at
the expense of the Fund and approve the fees payable to such advisors and any
other terms of their retention. The Committee has the authority and
responsibility to retain and terminate the Fund's independent auditors. In
connection therewith, the Committee must evaluate the independence of the Fund's
independent auditors and receive the auditors' specific representations as to
their independence.
COMPOSITION AND TERM OF COMMITTEE MEMBERS
The Committee shall be comprised of the Directors who are
"Independent," which term shall mean each Director (i) who is not an "interested
person," as defined in the Investment Company Act of 1940, as amended, of the
Fund; and (ii) who has not accepted directly or indirectly any consulting,
advisory, or other compensatory fee from the Fund (other than fees for serving
as a Director or member of the Committee or any other committee of the Board).
The members of the Committee shall designate one member to serve as Chairman of
the Committee.
No member of the Committee may serve on the audit committees of more
than three public companies, including the Funds, unless the Board determines
that such simultaneous service would not impair the ability of such member
effectively to serve on the Committee.
Each member of the Committee shall be "Independent," as defined in
the New York Stock Exchange (the "NYSE") Listed Company Manual ss.303A, and
shall be free of any relationship that, in the judgment of the Board, may
interfere with the exercise of his or her independent judgment.
Each member of the Committee shall serve until a successor is
appointed.
4
The Board shall determine whether: the Committee has at least one
member who is an "audit committee financial expert" ("ACFE"), as such term is
defined in the rules adopted under Section 407 of the Sarbanes-Oxley Act of
2002. The designation of a person as an ACFE is not intended to impose any
greater responsibility or liability on that person than the responsibility and
liability imposed on such person as a member of the Committee, nor does it
decrease the duties and obligations of other Committee members or the Board. In
addition, with respect to those Funds listed on the NYSE, each member of the
Committee must be financially literate and at least one member of the Audit
Committee must have accounting or related financial management expertise, as the
Board of Directors interprets such qualifications in its business judgment under
the NYSE listing requirements.
MEETINGS
The Committee shall meet on a regular basis, no less frequently than
semi-annually, and is empowered to hold special meetings as circumstances
require. Periodically, the Committee shall meet to discuss with management the
Fund's annual audited financial statements and semi-annual financial statements.
Periodically, the Committee should meet separately with management, the Fund's
administrator and independent auditors to discuss any matters that the Committee
or any of these persons or firms believe should be discussed privately. The
Committee may request any officer or employee of the Adviser or the Fund's legal
counsel (or counsel to the Independent Board members) or independent auditors to
attend a meeting of the Committee or to meet with any members of, or consultants
to, the Committee.
Minutes of each meeting will be taken and circulated to all members
of the Committee in a timely manner.
Any action of the Committee requires the vote of a majority of the
Committee members present, whether in person or otherwise, at the meeting at
which such action is considered. At any meeting of the Committee, one member of
the Committee shall constitute a quorum for the purpose of taking any action.
DUTIES AND POWERS AND OF THE COMMITTEE
The duties and powers of the Committee include, but are not limited
to, the following:
o bear direct responsibility for the appointment, compensation, retention
and oversight of the work of the Fund's independent auditors for the
purpose of preparing or issuing an audit report or performing other audit,
review or attest services for the Fund, and the independent auditors must
report directly to the Committee;
o set the compensation of the independent auditors, such amount to be paid
by the Fund;
o evaluate the independence of the Fund's independent auditors, including
whether the auditors provide any consulting services to the Adviser or its
affiliated companies, and receive the auditors' specific representations
as to their independence;
o to the extent required by applicable law, pre-approve: (i) all audit and
non-audit services that the Fund's independent auditors provide to the
Fund, and (ii) all non-audit services that the Fund's independent auditors
provide to the Adviser and any entity controlling, controlled by, or under
common control with the Adviser that provides ongoing services to the
Fund, if the engagement relates directly to the operations and financial
reporting of the Fund; provided that the Committee may implement policies
and procedures by which such services are approved other than by the full
Committee prior to their ratification by the Committee.
o meet with the Fund's independent auditors, including private meetings, as
necessary to (i) review the arrangements for and scope of the annual audit
and any special audits; (ii) discuss any matters of concern relating to
the Fund's financial statements, including any adjustments to such
statements recommended by the auditors, or other results of the audit(s);
(iii) consider the auditors' comments with respect to the Fund's
5
financial policies, procedures and internal accounting controls and
management's responses thereto; and (iv) review the form of opinion the
auditors propose to render to the Directors and the members of the Fund;
o review reports prepared by the Fund's independent auditors detailing the
fees paid to the Fund's independent auditors for: (i) audit services
(includes all services necessary to perform an audit, services provided in
connection with statutory and regulatory filings or engagements and other
services generally provided by independent auditors, such as comfort
letters, statutory audits, attest services, consents and assistance with,
and review of, documents filed with the Securities and Exchange Commission
("SEC")); (ii) audit-related services (covers assurance and due diligence
services, including, employee benefit plan audits, due diligence related
to mergers and acquisitions, consultations and audits in connection with
acquisitions, internal control reviews and consultations concerning
financial accounting and reporting standards); (iii) tax services
(services performed by a professional staff in the accounting firm's tax
division, except those services related to the audit, including tax
compliance, tax planning and tax advice) and (iv) other services (includes
financial information systems implementation and design).
o ensure that the Fund's independent auditors prepare and deliver annually
to the Committee a written statement (the "Auditors' Statement")
describing: (i) the auditors' internal quality control procedures; (ii)
any material issues raised by the most recent internal quality control
review or peer review of the auditors, or by any inquiry or investigation
by governmental or professional authorities within the preceding five
years respecting one or more independent audits carried out by the
auditors, and any steps taken to deal with any such issues; and (iii) all
relationships between the independent auditors and the Fund, including
each non-audit service provided to the Fund and the matters set forth in
Independence Standards Board No. 1;
o receive and review a written report (or update, with respect to a
semi-annual filing), as of a date 90 days or less prior to the filing of
the Fund's annual (or semi-annual) report with the SEC, to the Committee
from the Fund's independent auditors regarding any: (i) critical
accounting policies to be used; (ii) alternative accounting treatments
that have been discussed with the Fund's management along with a
description of the ramifications of the use of such alternative treatments
and the treatment preferred by the independent auditors; (iii) material
written communications between the auditor and management of the Fund; and
(iv) all non-audit services provided to any entity in the Fund's
investment company complex that were not pre-approved by the Committee;
o oversee the Fund's internal controls and annual and semi-annual financial
reporting process, including results of the annual audit. Oversee internal
accounting controls relating to the activities of the Fund's custodian and
administrator and the Adviser through the periodic review of reports,
discussions with appropriate officers and consideration of reviews
provided by internal audit staff;
o meet with the Fund's internal auditors (or other personnel responsible for
the internal audit function), if any, following an internal audit of the
Fund to discuss significant risks and exposures, if any, to the Fund's
risk management processes and system of internal controls, and the steps
taken to monitor and minimize such risks;
o review of any issues brought to the Committee's attention by independent
auditors or the Fund's management, including those relating to any
deficiencies in the design or operation of internal controls which could
adversely affect the Fund's ability to record, process, summarize and
report financial data, any material weaknesses in internal controls and
any fraud, whether or not material, that involves management or other
employees who have a significant role in the Fund's internal controls;
o review and evaluate the qualifications, performance and independence of
the lead partner of the Fund's independent auditors;
6
o require the Fund's independent auditors to report any instance of an audit
partner of those auditors earning or receiving compensation based on that
partner procuring engagements with the Fund to provide any services other
than audit, review or attest services;
o resolve any disagreements between the Fund's management and independent
auditors concerning the Fund's financial reporting;
o to the extent there are Directors who are not members of the Committee,
report its activities to the full Board on a regular basis and make such
recommendations with respect to the above and other matters as the
Committee may deem necessary or appropriate;
o discuss the Fund's earnings press releases, financial information and
earnings guidance provided to analysts and ratings agencies, if any;
o review policies with respect to risk assessment and risk management;
o review hiring policies for employees or former employees of the Fund's
independent accountants;
o establish and maintain the procedures set forth in Exhibit B regarding:
(i) the receipt, retention and treatment of complaints received by the
Funds or the Adviser regarding accounting, internal accounting controls or
auditing matters; and (ii) the confidential, anonymous submission by
employees of the Fund, the Adviser, any sub-adviser, administrator,
principal underwriter or provider of accounting-related services of
concerns regarding questionable accounting or auditing matters; and
o review such other matters as may be appropriately delegated to the
Committee by the Board.
ANNUAL PERFORMANCE EVALUATION
The Committee shall perform a review and evaluation, at least
annually, of the performance of the Committee and its members, including
reviewing the compliance of the Committee with this charter. The Committee shall
conduct such evaluations and reviews in such manner as it deems appropriate.
7
EXHIBIT A
WHISTLEBLOWER PROCEDURES
RESPONSIBILITIES OF AUDIT COMMITTEE OF THE FUND (THE "AUDIT COMMITTEE") WITH
RESPECT TO SPECIFIED COMPLAINTS
The Audit Committee shall receive, retain, investigate and act on
complaints and concerns of Covered Persons(1) ("Reports") regarding:
questionable accounting, internal accounting controls and auditing
matters, including those regarding the circumvention or attempted
circumvention of internal accounting controls or that would otherwise
constitute a violation of the Fund's accounting policies (each an
"Accounting Allegation");
compliance with legal and regulatory requirements ("Legal
Allegation"); and
retaliation against Covered Persons who make Accounting Allegations
or Legal Allegations ("Retaliatory Act").
In the discretion of the Audit Committee, responsibilities of the Audit
Committee created by these procedures may be delegated to the Chairman of the
Audit Committee.
PROCEDURES FOR RECEIVING REPORTS
Any Report that is made directly to management, whether openly,
confidentially or anonymously, shall be promptly reported to the Audit
Committee.
Each Report forwarded to the Audit Committee by management and each Report
that is made directly to the Audit Committee, whether openly, confidentially or
anonymously, shall be reviewed by the Audit Committee, who may, in their
discretion, consult with any member of management who is not the subject of the
allegation and who may have appropriate expertise to assist the Audit Committee.
The Audit Committee shall determine whether the Audit Committee or management
should investigate the Report, taking into account the considerations set forth
in Section C below.
--------------------
(1) For purposes of these Procedures, "Covered Person" means any "Fund Covered
Person" or "Vendor Covered Person"; "Fund Covered Persons" means officers
of the Fund as well as those employees of the Fund's investment adviser
and sub-adviser that provide services on behalf of those entities to the
Fund; and "Vendor Covered Persons" means those employees of the Fund's
custodian, administrator, transfer agent, auction agent and other
third-party agents that, pursuant to agreements with the Fund, provide
services to or on behalf of the Fund.
2
If the Audit Committee determines that management should investigate
the Report, the Audit Committee shall notify the Fund's Chief Legal
Officer in writing of that conclusion. Management shall thereafter
promptly investigate the Report and shall report the results of its
investigation, in writing, to the Audit Committee. Management shall be
free in its discretion to engage outside auditors, counsel or other
experts to assist in the investigation and in the analysis of results.
If the Audit Committee determines that it should investigate the
Report, the Audit Committee shall promptly determine what professional
assistance, if any, it needs in order to conduct the investigation. The
Audit Committee shall be free in its discretion to engage outside
auditors, counsel or other experts to assist in the investigation and in
the analysis of results.
CONSIDERATIONS RELATIVE TO WHETHER THE AUDIT COMMITTEE OR MANAGEMENT SHOULD
INVESTIGATE A REPORT
In determining whether management or the Audit Committee should
investigate a Report, the Audit Committee shall consider, among any other
factors that are appropriate under the circumstances, the following:
Who is the alleged wrongdoer? If an executive officer, senior financial
officer or other high management official is alleged to have engaged in
wrongdoing, that factor alone may militate in favor of the Audit Committee
conducting the investigation.
How serious is the alleged wrongdoing? The more serious the alleged
wrongdoing, the more appropriate that the Audit Committee should undertake the
investigation. If the alleged wrongdoing would constitute a crime involving the
integrity of the financial statements of the Fund, that factor alone may
militate in favor of the Audit Committee conducting the investigation.
How credible is the allegation of wrongdoing? The more credible the
allegation, the more appropriate that the Audit Committee should undertake the
investigation. In assessing credibility, the Audit Committee should consider all
facts surrounding the allegation, including but not limited to whether similar
allegations have been made in the press or by analysts.
PROTECTION OF WHISTLEBLOWERS
Consistent with the policies of the Fund, the Audit Committee shall
not retaliate, and shall not tolerate any retaliation by management or any other
person or group, directly or indirectly, against anyone who, in good faith,
makes an Accounting Allegation or Legal Allegation, reports a Retaliatory Act or
provides assistance to
3
the Audit Committee, management or any other person or group, including any
governmental, regulatory or law enforcement body, investigating a Report. The
Audit Committee shall not, unless compelled by judicial or other legal process,
reveal the identity of any person who makes an Accounting Allegation or Legal
Allegation or reports a Retaliatory Act and who asks that his or her identity as
the person who made such Report remain confidential and shall not make any
effort, or tolerate any effort made by any other person or group, to ascertain
the identity of any person who makes a Report anonymously.
RECORDS
The Audit Committee shall retain for a period of seven years all
records relating to any Accounting Allegation or Legal Allegation or report of a
Retaliatory Act and to the investigation of any such Report.
PROCEDURES FOR MAKING COMPLAINTS
In addition to any other avenue available to a Covered Person, any
Covered Person may report to the Audit Committee openly, confidentially or
anonymously any Accounting Allegation or Legal Allegation or report of a
Retaliatory Act. Accounting Allegations, Legal Allegations and reports of a
Retaliatory Act can be made orally or in writing to the Chairman of the Audit
Committee. Such Reports can also be made directly to management openly,
confidentially or anonymously by contacting the Fund's Chief Legal Officer in
writing or in person.
PROXY THE INDIA FUND, INC. PROXY
SPECIAL MEETING OF STOCKHOLDERS--FEBRUARY 24, 2006
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS
The undersigned hereby appoints Robert L. Friedman, Joshua B. Rovine and
Barbara Pires, and each of them, attorneys and proxies for the undersigned, with
full power of substitution and revocation, to represent the undersigned at the
Special Meeting of Stockholders of the Fund to be held at the offices of Simpson
Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York, in Conference
Room J on the 30th Floor on February 24, 2006, at 9:00 a.m., and at any
adjournments or postponements thereof, upon the matters set forth in the Notice
of Meeting and Proxy Statement dated January |_|, 2006 and upon all other
matters properly coming before said Meeting.
Please indicate your vote by an "X" in the appropriate box on the reverse
side. This proxy, if properly executed, will be voted in the manner directed by
the stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS
1 AND 2. Please refer to the Proxy Statement for a discussion of the Proposals.
VOTE VIA THE TELEPHONE: 1-|_|-|_|-|_|
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_________________________________ ___________________________________
_________________________________ ___________________________________
_________________________________ ___________________________________
_________________________________ ___________________________________
SEE REVERSE (CONTINUED, AND TO BE SIGNED AND DATED, ON THE SEE REVERSE
SIDE REVERSE SIDE) SIDE
5
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
PLEASE MARK VOTES AS IN THIS EXAMPLE: |X|
1. To approve a new management agreement between the Fund and Blackstone Asia
Advisors L.L.C.
FOR AGAINST ABSTAIN
--- ------- -------
|_| |_| |_|
2. To approve a new country advisory agreement between Blackstone Asia
Advisors L.L.C. and Blackson Fund Services India Private Limtied.
FOR AGAINST ABSTAIN
--- ------- -------
|_| |_| |_|
3. The persons named as proxies are authorized to vote in their discretion on
any other business as may properly come before the Meeting.
|_| Please mark the box at left if you plan |_| Change of address and/or comments appear
to attend the Meeting. on reverse.
Note: Please sign exactly as your name appears on this Proxy. If joint owners,
EITHER may sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full title. PLEASE
SIGN, DATE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
_______________________ ________ _________________________ __________
Signature Date Signature Date