Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 / Notices 29767

Variable Account B to reflect the

proposed substitution. And, in addition

to the prospectus supplements

distributed to owners of Policies, within

5 days after the proposed substitutions,

all owners who were affected by a

substitution will be sent a written notice

informing them that the substitutions

were carried out. Monarch Life will

include in such mailing the supplement

to the prospectus of Variable Account B,

which describes the substitutions.

19. Monarch Life and certain of its

separate accounts (including Variable

Account B) (collectively, ‘‘Accounts’’)

have previously received no-action

assurances from the staff of the

Commission that the staff would not

recommend that the Commission take

any enforcement action against Monarch

Life or the Accounts if post-effective

amendments to registration statements

are not filed under the 1933 Act And the

1970 Act, and updated prospectuses for

the Accounts are not distributed to

owners of existing variable contracts

issued through the Accounts provided

that certain conditions are met

(Monarch Life Insurance Company, pub.

avail. June 9, 1992, the ‘‘June 9th NoAction Letter’’). The conditions of the

June 9th No-Action Letter include

providing various documents to the

variable Policy owners including, but

not limited to, periodic reports,

prospectuses, proxy statements and

related voting instructions pertaining to

the relevant underlying mutual funds.

In accordance with the terms of the June

9th No-Action Letter, Monarch Life does

not update the Variable Account B

prospectus on an annual basis as would

otherwise be required by the 1933 Act

and the 1940 Act. Therefore, Policy

owners do not have the benefit of

receiving an updated Variable Account

B prospectus which would provide

them with certain information

concerning the ML fund. In light of this

fact, Applicants undertake to provide

the Policy owners of Variable Account

B with the same disclosure concerning

the ML Fund as such owners would

receive if Monarch Life updated and

mailed its Variable Account B

prospectus to owners. Such information

includes the fees and expenses of the

ML Fund, and a description of the

investment objectives of each of the

series of the ML Fund.

20. Applicants state that following the

substitutions, Policy owners will be

afforded the same policy rights,

including surrender and other transfer

rights with regard to amounts invested

under the Policies, as they currently

have. (Monarch Life currently imposes

no restrictions or fees on the ability of

Policy owners to make transfers nor

does it intend to impose any after the

proposed substitutions are effected.)

Applicants’ Legal Analysis

21. Section 26(b) of the 1940 Act

provides, in pertinent part, that ‘‘[i]t

shall be unlawful for any depositor or

trustee of a registered unit investment

trust holding the security of a single

issuer to substitute another security for

such security unless the Commission

shall have approved such substitution.’’

The purpose of Section 26(b) is to

protect the expectation of investors in a

unit investment trust that the unit

investment trust will accumulate the

shares of a particular issuer and to

prevent unscrutinized substitutions

which might, in effect, force

shareholders dissatisfied with the

substituted security to redeem their

shares, thereby possibly incurring either

a loss of the sales load deducted from

initial purchase payments, an additional

sales load upon reinvestment of the

redemption proceeds, or both. Section

26(b) affords this protection to investors

by preventing a depositor or trustee of

a unit investment trust holding the

shares of one issuer from substituting

for those shares the shares of another

issuer, unless the Commission approves

that substitution.

22. Applicants maintain that the

purposes, terms and conditions of the

substitution are consistent with the

principles and purposes of Section 26(b)

and do not entail any of the abuses that

Section 26(b) is designed to prevent.

23. Applicants state that the Policies

provide to Monarch Life the right,

subject to Commission approval, to

effect a substitution of the kind

Applicants propose. The prospectus for

the Policies contains disclosure of this

right.

24. Applicants anticipate that, after

the proposed substitutions, the

substitute series will provide Policy

owners with comparable investment

results to those achieved now by the

Oppenheimer Trust. Applicants submit

that the investment objective of each of

the substitute series is identical to the

investment objective of the removed

series that it would replace. Each of the

substitute series is substantially larger

than the removed series that it would

replace. Each of the substitute funds is

a suitable and appropriate investment

vehicle for Policy owners.

25. Applicants generally submit that

the proposed substitutions meet the

standards that the Commission and its

staff have applied to substitutions that

have been approved in the past in that:

a. The substitution will be at net asset

value of the respective units, without

the imposition of any transfer or similar

charge;

b. Monarch Life will assume the

expenses and transaction costs,

including among others, legal and

accounting fees and any brokerage

commissions, relating to the

substitution;

c. The substitution will not alter the

insurance benefits to Policy owners or

the contractual obligations of Monarch

Life;

d. The substitution will not alter tax

benefits to Policy owners;

e. Policy owners may choose simply

to withdraw amounts credited to them

following the substitution under the

conditions that currently exist without

incurring any charges; and

f. The substitution is expected to

confer certain economic benefits to

Policy owners by virtue of the enhanced

asset size of the substitute series.

Conclusion

Applicants submit, for the reasons

summarized above, that the proposed

substitution is consistent with the

protection of investors and the purposes

fairly intended by the policy and

provisions of the 1940 Act.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–14403 Filed 5–29–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–23205; International Series Rel

No. 1137; 812–10810]

Old Mutual South Africa Equity Trust,

et al.; Notice of Application

May 26, 1998.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application under

section 17(b) of the Investment

Company Act of 1940 (the ‘‘Act’’) for an

exemption from section 17(a) of the Act.

SUMMARY OF APPLICATION: Order

requested to permit Old Mutual South

Africa Equity Trust (the ‘‘Trust’’) to

purchase certain securities of DataTec

Limited (‘‘DataTec’’) from Old Mutual

Global Assets Fund Limited (the

‘‘Global Fund’’), an affiliated person of

the Trust.

APPLICANTS: The Trust, the Global Fund,

and Old Mutual Asset Managers

(Bermuda) Limited (the ‘‘Adviser’’).

FILING DATES: The application was filed

on October 6, 1997. Applicants have
29768 Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 / Notices

1Based on holdings as of April 24, 1998.

2Based on holdings as of April 24, 1998.

agreed to file an amendment during the

notice period, the substance of which is

reflected in this notice.

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 applicants with a

copy of the request, personally or by

mail. Hearing requests should be

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

June 22, 1998, and should be

accompanied by proof of service on

applicants, 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, NW, Washington, DC 20549.

Applicants, 61 Front Street, Hamilton,

Bermuda, Attention: Melanie Saunders.

FOR FURTHER INFORMATION CONTACT:

Lawrence W. Pisto, Senior Counsel, at

(202) 942–0527, or Nadya B. Roytblat,

Assistant Director, at (202) 942–0564

(Office of Investment Company

Regulation, Division of Investment

Management).

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, 450 Fifth

Street, NW., Washington, DC 20549 (tel.

(202) 942–8090).

Applicants’ Representations

1. The Trust is an open-end

management investment company

organized as a trust under

Massachusetts law and registered under

the Act. The investment objective of the

Trust is long-term total return in excess

of that of the Johannesburg Stock

Exchange (the ‘‘JSE’’), Actuaries All

Share Index through investment in

equity securities of South African

issuers. Beneficial interests in the Trust

are sold solely in private placement

transactions to investment companies,

common or commingled trust funds, or

similar entities that are ‘‘accredited

investors’’ within the meaning of

Regulation D under the Securities Act of

1993, as well as to certain investment

funds organized outside the United

States. Old Mutual Fund Holdings

(Bermuda) Limited (‘‘Old Mutual Fund

Holdings’’), a wholly-owned subsidiary

of the South African Mutual Life

Assurance Society (‘‘Old Mutual’’),

owns approximately 88.24% of the

voting securities of the Trust.1

2. The Global Fund is organized

under the laws of Bermuda Old Mutual

Fund Holdings is the sole shareholder of

the Global Fund.

3. The Trust and the Global Fund are

advised by the Adviser, a wholly-owned

subsidiary of Old Mutual. The Adviser

is registered under the Investment

Advisers Act of 1940.

4. The Adviser’s sole place of

business is Hamilton, Bermuda. All

purchase and sale decisions with

respect to securities to be purchased or

sold by the Trust are made by Bermudabased personnel of the Adviser, who do

not have any portfolio management

responsibilities for any other accounts

managed by Old Mutual or any of its

affiliates or in which Old Mutual or any

of its affiliates has any direct or indirect

beneficial interest, other than the Trust,

the Global Fund, and certain other

accounts holding primarily securities of

non-South African issuers. Old Mutual’s

principal place of business is Cape

Town, South Africa.

5. Data Tec is a South African

corporation. It is an Internet centric

information technology group

incorporating the leading Internet

service provider in South Africa.

DataTec’s ordinary shares are listed on

the JSE. Applicants state that, for the

period beginning January 19, 1998 and

ending April 24, 1998, the unweighted

average weekly volume of ordinary

shares of DataTec traded on the JSE, as

a percentage of the total number of

ordinary shares of DataTec outstanding

and calculated on an annualized basis,

was 52.75%.

6. Old Mutual, its wholly-owned

subsidiaries and investment vehicles

managed by Old Mutual and its whollyowned subsidiaries, but excluding the

Trust and the Global Fund (collectively,

the ‘‘Old Mutual Group’’), own

approximately 28.34% of the total

outstanding ordinary shares of

DataTec.2

7. Applicants state that it is common

practice in the South African equity

markets for placements to be offered to

large institutional investors at a

discount to the market price. Applicants

also state that the Old Mutual Group is

a major participant in the South African

equity markets.

8. In June 1997, DataTec privately

placed 1,774,318 of its ordinary shares

in order to fund the acquisition of

Logical Networks Plc, a UK based

company (‘‘Logical Networks’’). On

August 11, 1997, the Global Fund

purchased 1,619,555 of these DataTec

shares, representing approximately

2.78% of DataTec’s total outstanding

ordinary shares, at an average weighted

price of SA R24.94 per share, and at a

19.02% discount from the market price.

9. In March, 1998, DataTec privately

placed 2,367,984 of its ordinary shares

in order to fund the acquisition of Blue

Sky (UK) Plc (‘‘Blue Sky’’) and to

complete the funding of Logical

Networks. On March 20, 1998, the

Global Fund purchased 1,677,894 of

these DataTec shares, representing

approximately 2.88% of DataTec’s total

outstanding ordinary shares, at an

average weighted price of SA R28.35 per

share, and at a 60.07% discount from

the market price. The DataTec shares

purchased by the Global Fund on

August 11, 1997 and March 20, 1998

(the ‘‘Settlement Dates’’) are referred to

as the ‘‘DataTec Shares.’’

10. Applicants propose that the Trust

purchase the DataTec Shares from the

Global Fund. The purchase price to be

paid by the Trust will be the price paid

by the Global Fund on the respective

Settlement Data plus carrying costs (the

‘‘Purchase Price’’). The carrying costs

will reimburse the Global Fund for its

estimated cost of funds (the Eurodollar

overnight deposit rate plus 0.5%) from

the respective Settlement Date through

the date on which the Trust purchases

the DataTec Shares (the ‘‘Trust Purchase

Date’’).

11. Applicants state that the proposed

transaction is of substantial value to the

Trust. Since October 1997, the price of

DataTec ordinary shares has increased

by 206% from SA R30.70 per share to

SA R94.00 per share on April 24, 1998.

If the Trust completed the proposed

purchase of the DataTec Shares on April

24, 1998, the Trust would have realized

an immediate benefit of SA R220

million (U.S. $44 million), based on a

purchase price that represented a 71%

discount from the market value of the

DataTec shares on that date.

12. Applicants represent that the

DataTec Shares have all the attributes of

the DataTec ordinary shares listed on

the JSE, and that the DataTec Shares are

freely transferable under South African

law. Applicants also state that the Trust

has not entered into, and will not be

subject to, any agreement or

understanding, express or implied, that

the Trust may not sell the DataTec

Shares on the open market at any time

after its proposed purchase.

Applicants’ Legal Analysis

1. Section 17(a) of the Act makes it

unlawful for any affiliated person of a

registered investment company, or any

affiliated person of such person, acting
Federal Register / Vol. 63, No. 104 / Monday, June 1, 1998 / Notices 29769

as principal, knowingly to sell any

security to the company. Section 2(a)(3)

of the Act defines ‘‘affiliated person’’ of

another person to include: (a) Any

person directly or indirectly owning,

controlling, or holding with power to

vote 5% or more of the outstanding

voting securities of the other person, (b)

any person directly or indirectly

controlling, controlled by, or under

common control with the other person,

or (c) if the other person is an

investment company, any investment

adviser of that person.

2. The Trust and the Global Fund are

controlled by Old Mutual and share a

common investment adviser. Thus, the

Trust and the Global Fund are affiliated

persons within the meaning of section

2(a)(3) of the Act, and the sale of the

DataTec Shares by the Global Fund to

the Trust is prohibited by section 17(a)

of the Act.

3. Section 17(b) of the Act provides

that the SEC may exempt a transaction

from the prohibitions of section 17(a) if

the terms of the proposed transaction,

including the consideration to be paid,

are reasonable and fair and do not

involve overreaching on the part of any

person concerned, and that the

proposed transaction is consistent with

the policy of the registered investment

company concerned and with the

general purposes of the Act.

4. Applicants submit that the

requested relief meets the standards set

forth in section 17(b). Applicants state

that, while the Adviser utilizes analysts

employed by Old Mutual, the decision

to purchase the DataTec Shares was an

independent decision made by the

Adviser solely in the interests of the

Trust and was not improperly

influenced by Old Mutual or its

personnel. Applicants further state that

the board of trustees of the Trust,

including a majority of the trustees who

are not interested persons of the Trust

(the ‘‘Board’’), approved the Trust’s

purchase of the DataTec Shares. In

evaluating the terms of the proposed

transaction, the Board considered the

fact that the Trust Purchase Price will

include reimbursement of the carrying

costs.

5. Applicants state that the

transaction will comply with the

requirements of rule 17a–7 under the

Act, except that (i) the Trust Purchase

Price will be below the current market

price, and (ii) the Trust and the Global

Fund are affiliated persons by reason

other than having a common investment

adviser, common directors, and/or

officers. Applicants further represent

that the Trust will not purchase the

DataTec Shares if on the Trust Purchase

Date the market price of the DataTec

Shares falls below the Trust Purchase

Price. Thus, applicants believe that the

terms of the proposed transaction,

including the consideration to be paid,

are fair and reasonable.

6. Applicants believe that the

transaction does not involve

overreaching on the part of any person

concerned. Applicants state that,

although under section 2(a)(9) of the

Act, the Old Mutual Group

presumptively controls DataTec through

ownership of 28.34% of DataTec’s

voting securities, the Old Mutual Group

does not exercise any control over the

management or day-to-day operations of

DataTec. Applicants state that Old

Mutual Group’s holdings in DataTec

include approximately 6.0% of the total

outstanding shares of DataTec held by

accounts managed by Old Mutual for

external clients, such as pension funds

for charitable organizations and publicly

traded companies. Old Mutual seeks

instructions from these external clients

regarding the voting of DataTec shares

on non-routine matters, including the

election of directors other than the

nominees of DataTec management.

7. Applicants represent that the Old

Mutual Group holds DataTec shares for

investment purposes as a passive

investor. None of the officers or

directors of DataTec are officers or

directors of any entity within the Old

Mutual Group; the Old Mutual Group

has never sought to elect its nominees

to the board of directors of DataTec and

has always either abstained from voting

or voted for the nominees of DataTec

management. Applicants state that,

according to independent research

reports, the directors of DataTec own

approximately 24.70% of DataTec’s

ordinary shares and are the controlling

shareholders of DataTec.

8. Applicants further represent that,

other than the ownership of the DataTec

ordinary shares, the Old Mutual Group

does not have any ownership,

investment or lending relationship with

DataTec. Finally, applicants represent

that the Old Mutual Group has no

ownership, investment or lending

relationship with Logical Networks or

Blue Sky.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–14404 Filed 5–29–98; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

Revocation of License of Small

Business Investment Company

Pursuant to the authority granted to

the United States Small Business

Administration by the Final Order of the

United States District Court for the

Central District of California dated April

21st, 1993, and filed April 23, 1993, the

United States Small Business

Administration hereby revokes the

license of Business Equity &

Development Corporation, a California

corporation, to function as a small

business investment company under

Small Business Investment Company

License No. 09/12–5151 issued to

Business Equity & Development

Corporation on March 19, 1970 and said

license is hereby declared null and void

as of April 23, 1993.

Dated: May 20, 1998.

Small Business Administration.

Harry E. Haskins,

Acting Associate Administrator for

Investment.

[FR Doc. 98–14328 Filed 5–29–98; 8:45 am]

BILLING CODE 8025–01–P

SMALL BUSINESS ADMINISTRATION

Revocation of License of Small

Business Investment Company

Pursuant to the authority granted to

the United States Small Business

Administration by the Final Order of the

United States District Court for the

Middle District of Louisiana dated April

5, 1995, the United States Small

Business Administration hereby revokes

the license of First Southern Capital

Corporation, a Louisiana corporation, to

function as a small business investment

company under Small Business

Investment Company License No. 01/

12–0023 issued to First Southern

Capital Corporation on May 11, 1961

and said license is hereby declared null

and void as of April 5, 1995.

Dated: May 20, 1998.

Small Business Administration.

Harry E. Haskins,

Acting Associate Administrator for

Investment.

[FR Doc. 98–14329 Filed 5–29–98; 8:45 am]

BILLING CODE 8025–01–P

SMALL BUSINESS ADMINISTRATION

Revocation of License of Small

Business Investment Company

Pursuant to the authority granted to

the United States Small Business

Administration by the Final Order of the

United States District Court for the

Eastern District of New York dated July

22, 1993, the United States Small

Business Administration hereby revokes

the license of ODA Capital Corporation,

a New York corporation, to function as