he Board of the Jardine Fleming India Fund
, which has been mulling such options as liquidation and terminating its current investment advisory contract, has opted for the latter. The fund is a closed-end, non-diversified management investment company that seeks capital appreciation by investing primarily in stocks of Indian companies.
The Board is now in the final stages of negotiations with a new investment manager, a global investments concern with considerable experience in the Indian market and a favorable track record, according to a firm spokesman. The proposal will be submitted to shareholders for their approval at the Fund's annual meeting on May 8, 2003.
The Fund's current investment adviser, JF International Management
(JFIMI), which is now J.P. Morgan
, has agreed to terminate the advisory agreement effective May 8, 2003. A Douglas Eu, a director and president of the Fund, is resigning as a director and president, also effective in May. The decision to end the advisory agreement was reportedly spurred by an institutional arbitrageur shareholder, U.K.-based Laxey
, who wanted to break the fund up for opportunistic reasons.
The Board, which aims to be proactive, believes liquidation is not the best option while a pending dispute in the Indian courts regarding the tax status of offshore investors relying on the India-Mauritius tax treaty, like the fund, remains unresolved. The fund could be required to retain a very significant amount from liquidation proceeds, pending the outcome. Also, the Fund may be required to retain additional amounts to cover interest and penalties, which are difficult to determine.
The Board also notes that the fundamentals of the Indian economy are presently encouraging, and that many of the traditional means of valuing the Indian market are now at more attractive levels than at the time of the launch of the Fund.
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