Federal Register / Vol. 62, No. 4 / Tuesday, January 7, 1997 / Notices 1005

1 Investment Company Act Release No. 14275

(Dec. 14, 1984) (release adopting rule 3a–5 under

the Act). Rule 3a–5 provides an exemption from the

definition of investment company for certain

companies organized primarily to finance the

business operations of their parent companies or

companies controlled by their parent companies.

has been made in accordance with the

rules of the exchanges and what terms,

if any, should be imposed by the

Commission for the protection of

investors. The Commission, based on

the information submitted to it, will

issue an order granting the application

after the date mentioned above, unless

the Commission determines to order a

hearing on the matter.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 97–240 Filed 1–6–97; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–22425; International Series

Release No. 1041; 812–10184]

Canadian Imperial Holdings Inc.;

Notice of Application

December 31, 1996.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANT: Canadian Imperial Holdings

Inc.

RELEVANT ACT SECTIONS: Order requested

under section 6(c) of the Act that would

exempt applicant from all provisions of

the Act.

SUMMARY OF APPLICATION: Applicant

requests an order that would permit it

to sell certain debt securities and use

the proceeds to finance the business

activities of its parent company,

Canadian Imperial Bank of Commerce

(‘‘CIBC’’), and certain companies

controlled by CIBC.

FILING DATE: The applicant was filed on

June 6, 1996 and was amended on

December 20, 1996.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving applicant with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

January 27, 1997, and should be

accompanied by proof of service on

applicant, in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, N.W., Washington, D.C. 20549.

Applicant, 425 Lexington Avenue, 9th

Floor, New York, New York 10017.

FOR FURTHER INFORMATION CONTACT:

Sarah A. Buescher, Staff Attorney, at

(202) 942-0573, or Alison E. Baur,

Branch Chief, at (202) 942-0564

(Division of Investment Management,

Office of Investment Company

Regulation).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee at the SEC’s

Public Reference Branch.

Applicant’s Representations

1. Applicant is a Delaware

corporation formed in December, 1981.

All of applicant’s outstanding voting

securities are owned by CIBC. CIBC, a

diversified financial institution

governed by the Bank Act (Canada),

provides, directly and through its

subsidiaries, a broad range of personal,

commercial, investment, and corporate

banking services for its customers

throughout the world. CIBC Inc. (‘‘CI’’)

is a wholly-owned subsidiary of

applicant that engages in the business of

making loans primarily to commercial

and industrial companies, real estate

related loans and lease activities, and

loans to depository institutions and

foreign governments. CIBC Leasing Inc.,

also a wholly-owned subsidiary of

applicant, engages in commercial

leasing activities, primarily equipment

leases to manufacturing companies.

2. In addition to owning CI and CIBC

Leasing Inc., applicant acts as a holding

company for CIBC’s United States

subsidiaries (‘‘U.S. Subsidiaries’’).

Applicant also engages in financing

activities and provides funds for CIBC,

CI, CIBC Leasing Inc., and the U.S.

Subsidiaries (collectively, the ‘‘CIBC

Entities’’). Applicant proposes to obtain

funds through the offer and sale of its

debt securities in the United States and

in overseas markets, and to lend the

proceeds to the CIBC Entities.

3. Due to the nature of the debt

markets, applicant may borrow in

amounts exceeding the amounts

required by the CIBC Entities at any

given time. However, at least 85% of the

cash or cash equivalents raised by

applicant through the sale of debt

securities will be loaned to the CIBC

Entities as soon as practicable, but in no

event later than six months after

applicant’s receipt of such cash or cash

equivalents. Amounts that are not

loaned to the CIBC Entities will be

invested in government securities,

securities of CIBC, CI or a company

controlled by CIBC (or, in the case of a

partnership or joint venture, the

securities of the partners or participants

in the joint venture), debt securities

(including repurchase agreements)

which are exempted from the provisions

of the Securities Act of 1933 (the

‘‘Securities Act’’) by section 3(a)(3) of

the Securities Act, or equity securities of

unaffiliated companies in an amount

that does not exceed 4% of applicant’s

assets.

4. Any issuance of debt securities by

applicant will be guaranteed

unconditionally by CIBC as to the

payment of principal, interest, and

premium on the securities, if any (the

‘‘Guarantee’’), in accordance with rule

3a–5(a)(1). The Guarantee will provide

each holder of applicant’s debt

securities a direct right of action against

CIBC to enforce CIBC’s obligations

under the Guarantee without first

proceeding against applicant.

Applicant’s Legal Analysis

1. Applicant requests relief under

section 6(c) of the Act for an exemption

from all provisions of the Act. The

Commission has determined that it is

appropriate to exempt a finance

subsidiary from all provisions of the Act

where the primary purpose of the

finance subsidiary is to finance the

business operations of its parent or

other subsidiaries controlled by its

parent and where any purchaser of the

finance subsidiary’s securities

ultimately looks to the parent for

repayment and not to the finance

subsidiary.1

2. Rule 3a–5(b)(3)(i) in relevant part

defines a ‘‘company controlled by the

parent company’’ to be a corporation,

partnership, or joint venture that is not

considered an investment company

under section 3(a) or that is excepted or

exempted by order from the definition

of investment company by section 3(b)

or by the rules and regulations under

section 3(a). Certain of the CIBC Entities

do not fit within the technical definition

of ‘‘companies controlled by the parent

company’’ because they derive their

non-investment company status from

section 3(c) of the Act.

3. In the release adopting rule 3a–5,

the Commission stated that it may be

appropriate to grant exemptive relief to

the finance subsidiary of a section 3(c)

issuer, but only on a case-by-case basis

upon an examination of all relevant
1006 Federal Register / Vol. 62, No. 4 / Tuesday, January 7, 1997 / Notices

1Rule 17a–8 provides an exemption from section

17(a) of the Act for certain reorganizations among

registered investment companies that may be

affiliated persons, or affiliated persons of an

affiliated person, solely by reason of having a

common investment adviser, common directors,

and/or common officers.

facts. According to the adopting release,

the concern was that a company may be

considered a non-investment company

for the purposes of the Act under

section 3(c) and still be engaged

primarily in investment company

activities. Applicant states that none of

the CIBC Entities to which applicant

may loan money are engaged primarily

in investment company activities. In

addition, if CIBC issued the securities

that are to be issued by applicant and

use the proceeds, none of the CIBC

Entities would be subject to regulation

under the Act. While CIBC has chosen

instead to use applicant as a financing

vehicle, the Guarantee ensures that

holders of applicant’s securities will

have direct access to CIBC’s credit.

4. Under rule 3a–5(a)(6), a finance

subsidiary may only invest in

government securities, securities of its

parent company or a company

controlled by its parent company, or

debt securities exempt under section

3(a)(3) of the Securities Act. Applicant

intends to invest in equity securities of

unaffiliated companies in an amount

that does not exceed 4% of its assets.

Applicant will hold such securities due

to non-U.S. tax constraints applicable to

CIBC. Applicant’s primary purpose,

however, will continue to be the

financing of the business operations of

CIBC and companies controlled by

CIBC. In addition, purchasers of

applicant’s debt securities will receive

disclosure documents that make clear

that such purchasers should ultimately

look to CIBC for repayment pursuant to

CIBC’s guarantee. Thus, applicant

asserts that, because neither its structure

nor its mode of operation will resemble

that of an investment company, the

holders of applicant’s securities will not

rely on applicant’s management of

securities issued by unaffiliated

companies.

5. Section 6(c) provides, in relevant

part, that the SEC may, conditionally or

unconditionally, by order, exempt any

person or class of persons from any

provision of the Act or from any rule

thereunder, if such exemption is

necessary or appropriate in the public

interest, consistent with the protection

of investors, and consistent with the

purposes fairly intended by the policy

and provisions of the Act. Applicant

submits that the relief requested

satisfies the section 6(c) standard.

Applicant’s Condition

Applicant agrees that any order issued

on this application shall be subject to

the following condition:

Applicant will comply with all of the

provisions of rule 3a–5 under the Act,

except: (a) applicant will be permitted

to invest in or make loans to

corporations, partnerships, and joint

ventures that do not meet the portion of

the definition of ‘‘company controlled

by the parent company’’ in rule 3a–

5(b)(3)(i) solely because they are

excluded from the definition of

investment company by section 3(c) (1),

(3), (4), (6), or (7), provided that any

such entity excluded from the definition

of investment company pursuant to

section 3(c)(1) will only engage in

lending, leasing or related activities

(such as entering into credit derivatives

to manage that credit risk exposures of

its lending and leasing activities) and

will not be structured solely as a means

of avoiding regulation under the Act,

and provided further, that any such

entity excluded from the definition of

investment company pursuant to

section 3(c)(6) of the Act will not be

engaged primarily, directly or

indirectly, in one or more of the

businesses described in section 3(c)(5)

of the Act; and (b) applicant will be

permitted to invest in, reinvest in, own,

hold, or trade in equity securities of

unaffiliated companies with a purchase

price not in excess of $200 million (or

any higher amount not in excess of 4%

of applicant’s assets).

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–239 Filed 1–6–97; 8:45 am]

BILLING CODE 8010–01–M

[Investment Company Act Release No.

22421; 811–7069]

Senior High Income Portfolio II, Inc.;

Notice of Application

December 30, 1996.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Deregistration under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANT: Senior High Income Portfolio

II, Inc.

RELEVANT ACT SECTION: Order requested

under section 8(f) of the Act.

SUMMARY OF APPLICATION: Applicant

requests an order declaring that it has

ceased to be an investment company.

FILING DATE: The application was filed

on October 8, 1996 and amended on

December 13, 1996.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving applicant with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

January 24, 1997, and should be

accompanied by proof of service on the

applicant, in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons may request notification of a

hearing by writing to the SEC’s

Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, N.W., Washington, D.C. 20549.

Applicant, 800 Scudders Mill Road,

Plainsboro, New Jersey 08536.

FOR FURTHER INFORMATION CONTACT:

Kathleen L. Knisely, Staff Attorney, at

(202) 942–0517, or Alison E. Baur,

Branch Chief, at (202) 942–0564

(Division of Investment Management,

Office of Investment Company

Regulation).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee from the SEC’s

Public Reference Branch.

Applicant’s Representations

1. Applicant is a closed-end, nondiversified management investment

company organized as a Maryland

corporation. On July 19, 1993, applicant

filed a Notification of Registration on

Form N–8A pursuant to section 8(a) of

the Act and a registration statement on

Form N–2 under the Act and the

Securities Act of 1933. The registration

statement became effective on

September 17, 1993, and applicant

commenced the initial public offering

the same day.

2. On December 6, 1995, applicant’s

board of directors approved an

Agreement and Plan of Merger (the

‘‘Plan’’) whereby applicant would

transfer its assets to Senior High Income

Portfolio, Inc. (‘‘SHIP I’’), a registered

closed-end management investment

company, in exchange for shares of

SHIP I. Pursuant to rule 17a–8 under the

Act,1 applicant’s board of directors

determined that the proposed

reorganization was in the best interest of

applicant and that the interests of the

existing shareholders would not be