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Dresdner RCM Capital Funds, Inc. Exhibit 12.1
_______________, 2000
Dresdner RCM Capital Funds, Inc.
Four Embarcadero Center
San Francisco, California 94111
Re: Reorganization of ____________________ Fund
into _______________________ Fund
Ladies and Gentlemen:
You have requested our opinion as counsel for Dresdner RCM
Capital Funds, Inc., a Maryland corporation (the "Capital Company"), with
respect to certain federal income tax matters in connection with the
reorganization by and between the __________________________ Fund (the
"Acquiring Fund"), a series of Dresdner RCM Global Funds, Inc., a Maryland
corporation (the "Global Company"), and the ______________________ Fund (the
"Target Fund"), a series of the Capital Company. This opinion is rendered in
connection with the transaction described in the Agreement and Plan of
Reorganization dated as of _____________, 2000 (the "Reorganization Agreement"),
by the Global Company for itself and on behalf of the Acquiring Fund and by the
Capital Company for itself and on behalf of the Target Fund, and adopts the
applicable defined terms therein.
This letter and the opinion expressed herein are for delivery
to the Capital Company and may be relied upon only by the Capital Company, the
Target Fund and its shareholders. This opinion also may be disclosed by the
Capital Company and Target Fund or any of its shareholders in connection with an
audit or other administrative proceeding before the Internal Revenue Service
(the "Service") affecting the Capital Company and Target Fund or any of its
shareholders or in connection with any judicial proceeding relating to the
federal, state or local tax liability of the Capital Company and Target Fund or
any of its shareholders.
For purposes of this opinion we have assumed the truth and
accuracy of the following facts:
The Global Company was duly created pursuant to its Articles
of Incorporation for the purpose of acting as a management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and is
validly existing under the laws of Maryland. The Global Company is registered as
an investment company classified as a diversified, open-end management company
under the 1940 Act.
The Acquiring Fund is a series of the Global Company duly
established under the laws of Maryland, and is validly existing under the laws
of that state. The Acquiring Fund has an authorized capital of ______________
shares and each outstanding share of the Acquiring Fund is fully transferable
and has full voting rights.
The Capital Company was duly created pursuant to its Articles
of Incorporation for the purpose of acting as a management investment company
under the 1940 Act, and is validly existing under
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Dresdner RCM Capital Funds, Inc. Exhibit 12.1
_______________, 2000
the laws of Maryland. The Capital Company is registered as an investment
company classified as a diversified, open-end management company under the
1940 Act.
The Target Fund is a series of the Capital Company duly
established under the laws of Maryland, and is validly existing under the laws
of that state. The shares of the Target Fund are widely held. The Target Fund
has an authorized capital of _____________ shares and each outstanding share of
the Target Fund is fully transferable and has full voting rights.
For valid business purposes, the following transaction (the
"Transaction") will take place in accordance with the laws of the State of
Maryland and pursuant to the Reorganization Agreement:
(a) On the date of the closing (the "Closing Date"), the
Capital Company will cause the Target Fund to transfer substantially all of its
assets to the Acquiring Fund. Solely in exchange therefor, the Global Company
will cause the Acquiring Fund to assume all of the liabilities of the Target
Fund and to deliver to the Target Fund a number of shares of voting common stock
of the Acquiring Fund which represents 50 % or more of the aggregate voting
shares of the Acquiring Fund.
(b) The Capital Company will then cause the Target Fund to
liquidate and distribute all of the shares of the Acquiring Fund to the
shareholders of the Target Fund in proportion to their respective interests in
the Target Fund in exchange for their shares in the Target Fund.
(c) The Capital Company will then cause the Target Fund to
wind up and dissolve as soon as practicable thereafter.
In rendering the opinions stated below, we have examined and
relied upon the following, assuming the truth and accuracy of any statements
contained therein:
(1) The Reorganization Agreement; and
(2) Such other documents, records and instruments as we
have deemed necessary in order to enable us to render
the opinions referred to in this letter.
For purposes of rendering the opinions stated below, we have
in addition relied upon the following representations by the Global Company on
behalf of Acquiring Fund and the Capital Company on behalf of Target Fund, as
applicable:
(A) The fair market value of the shares of the Acquiring Fund
received by each shareholder of the Target Fund will be approximately equal to
the fair market value of the shares of the Target Fund surrendered in the
exchange.
(B) There is no plan or intention by the Acquiring Fund or any
person related to the Acquiring Fund, as defined in section 1.368-1(e)(3) of the
Treasury Regulations, to acquire or redeem any of the stock of the Acquiring
Fund issued in the transaction either directly or through any transaction,
agreement, or arrangement with any other person, other than redemptions in the
ordinary course of the Acquiring Fund's business as an open-end investment
company, as required by section 22(e) of the 1940 Act. For this purpose, section
1.368-1(e)(3) of the Treasury Regulations generally provides that two
corporations are related if they are members of the same affiliated group (I.E.,
one or more chains of corporations connected through stock ownership with a
common parent corporation where: (i) stock with at least 80% of the total voting
power and value of each corporation in the chain is
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Dresdner RCM Capital Funds, Inc. Exhibit 12.1
_______________, 2000
owned directly by one or more of the other corporations in the chain; and
(ii) the common parent owns directly stock with at least 80% of the voting
power and value of at least one of the corporations in the chain for
consolidated return purposes ("Affiliated Group Relationship") or if one
corporation owns stock possessing at least 50% or more of the voting power or
value of the other corporation (the "Parent-Subsidiary Relationship")).
(C) During the five-year period ending on the date of the
Transaction, neither the Target Fund nor any person related to the Target Fund
by having a Parent-Subsidiary Relationship will have directly or through any
transaction, agreement, or arrangement with any other person, (i) acquired stock
of the Target Fund with consideration other than shares of the Acquiring Fund or
the Target Fund (except for shares of the Target Fund stock acquired from
dissenters in the transaction), (ii) redeemed or made distributions with respect
to the Target Fund shares, except for redemptions in the ordinary course of the
Target Fund's business as an open-end investment company as required by section
22(e) of the 1940 Act and distributions necessary to qualify for the special tax
treatment afforded regulated investment companies under Section 852 of the
Internal Revenue Code of 1986, as amended (the "Code"), and made in the ordinary
course of the Target Fund's business as a qualified regulated investment
company.
(D) Prior to or in the Transaction, neither the Acquiring Fund
nor any person related to the Acquiring Fund (i.e. having either an Affiliated
Group Relationship or a Parent-Subsidiary Relationship with the Acquiring Fund)
will have acquired directly or through any transaction, agreement or arrangement
with any other person, stock of the Target Fund with consideration other than
shares of the Acquiring Fund.
(E) The aggregate value of the acquisitions, redemptions, and
distributions discussed in paragraphs (B), (C) and (D) above will not exceed
50 % of the value (without giving effect to the acquisitions, redemptions and
distributions) of the proprietary interest in Target Fund on the effective date
of the proposed transaction.
(F) The Acquiring Fund will acquire at least 90 % of the fair
market value of the net assets and at least 70 % of the fair market value of the
gross assets held by the Target Fund immediately prior to the Transaction. For
purposes of this representation, amounts used by the Target Fund to pay its
reorganization expenses, amounts paid by the Target Fund to shareholders who
receive cash or other property, and all redemptions and distributions (except
for distributions and redemptions occurring in the ordinary course of the Target
Fund's business as an investment company) made by the Target Fund immediately
preceding the transfer have been included as assets of the Target Fund held
immediately prior to the Transaction.
(G) After the Transaction, the shareholders of the Target Fund
will be in control of the Acquiring Fund within the meaning of Section
368(a)(2)(H) of the Code, which provides that control means the ownership of
shares possessing at least 50 % of the total combined voting power of all
classes of shares entitled to vote, or at least 50 % of the total value of all
classes of shares.
(H) The Acquiring Fund has no plan or intention to reacquire
any of its shares issued in the Transaction, except for acquisitions made in the
ordinary course of its business as a series of an investment company.
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Dresdner RCM Capital Funds, Inc. Exhibit 12.1
_______________, 2000
(I) The Acquiring Fund has no plan or intention to sell or
otherwise dispose of any of the assets of the Target Fund acquired in the
Transaction, except for dispositions made in the ordinary course of its business
as a series of an investment company.
(J) In pursuance of the plan of reorganization, the Target
Fund will distribute as soon as practicable the shares of the Acquiring Fund it
receives in the Transaction.
(K) The liabilities of the Target Fund assumed by the
Acquiring Fund plus the liabilities to which the assets are subject were
incurred by the Target Fund in the ordinary course of its business and are
associated with the assets transferred.
(L) The fair market value of the assets of the Target Fund
transferred to the Acquiring Fund will equal or exceed the sum of the
liabilities assumed by the Acquiring Fund, plus the amount of liabilities, if
any, to which the transferred assets are subject.
(M) The total adjusted basis of the assets of the Target Fund
transferred to the Acquiring Fund will equal or exceed the sum of the
liabilities to be assumed by the Acquiring Fund, plus the amount of liabilities,
if any, to which the transferred assets are subject.
(N) Following the Transaction, the Acquiring Fund will
continue the historic business of the Target Fund or use a significant portion
of the Target Fund's historic business assets in a business.
(O) At the time of the Transaction, the Acquiring Fund will
not have any outstanding warrants, options, convertible securities, or any other
type of right pursuant to which any person could acquire shares in the Acquiring
Fund that, if exercised or converted, would affect the Target Fund's
shareholders' acquisition or retention of control of the Acquiring Fund, as
defined in Section 368(a)(2)(H) of the Code, which provides that control means
the ownership of shares possessing at least 50 % of the total combined voting
power of all classes of shares entitled to vote, or at least 50 % of the total
value of all classes of shares.
(P) There is no intercorporate indebtedness existing between
the Target Fund and the Acquiring Fund that was issued, acquired, or will be
settled at a discount.
(Q) The Target Fund and the Acquiring Fund meet the
requirements of a regulated investment company as defined in Sections
368(a)(2)(F)(ii) and (iii) of the Code. Section 368(a)(2)(F)(ii) of the Code
requires that not more than 25% of the value of investment company's total
assets is invested in the stock and securities of any one issuer and not more
than 50% of the value of its total assets is invested in the stock and
securities of five or fewer issuers. Section 368(a)(2)(F)(iii) of the Code
requires that 50% or more of the value of the investment company's total assets
are stock and securities and 80% or more of the value of its total assets are
assets held for investment.
(R) The Target Fund is not under the jurisdiction of a court
in a case under Title 11 of the United States Code or a receivership,
foreclosure, or similar proceeding in a Federal or state court.
(S) The investment advisor to both the Acquiring Fund and the
Target Fund will pay or assume only those expenses of the Target Fund and the
Target Fund's shareholders that are solely and directly related to the
transaction in accordance with the guidelines established in Revenue
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Dresdner RCM Capital Funds, Inc. Exhibit 12.1
_______________, 2000
Ruling 73-54, 1973-1 C.B. 187 (such as legal and accounting expenses,
appraisal fees, administrative costs, security underwriting and registration
fees and expenses, and transfer agents' fees and expenses). Otherwise, the
Acquiring Fund, the Target Fund, and the shareholders of the Target Fund will
pay their respective expenses, if any, incurred in connection with the
transaction.
(T) The Target Fund has elected to be taxed as a "regulated
investment company" under Section 851 of the Code and, for all of its taxable
periods (including the last short taxable period ending on the date of the
transaction for the Target Fund), has qualified for the special tax treatment
afforded regulated investment companies under the Code, and after the
transaction, the Acquiring Fund intends to continue to so qualify.
Our opinions set forth in this letter are based upon the Code,
regulations of the Treasury Department, published administrative announcements
and rulings of the Service and court decisions, all as of the date of this
letter. Based on the foregoing facts and representations, and provided that the
transaction will take place in accordance with the terms of the Reorganization
Agreement, and further provided that the Target Fund distributes the shares of
the Acquiring Fund received in the transaction as soon as practicable, we are of
the opinion that:
(a) The transfer of substantially all of the Target Fund's
assets to the Acquiring Fund in exchange for shares of the Acquiring Fund
("Shares") and the assumption of the Target Fund's liabilities, and the
distribution of the Shares to the Target Fund shareholders in liquidation of the
Target Fund, will constitute a "reorganization" (the "Reorganization") within
the meaning of Section 368(a) of the Code;
(b) No gain or loss will be recognized by the Acquiring Fund
upon the receipt of the assets of the Target Fund solely in exchange for Shares
and the assumption by the Acquiring Fund of the Target Fund's liabilities;
(c) No gain or loss will be recognized by the Target Fund upon
the transfer of its assets to the Acquiring Fund in exchange for Shares and the
assumption by the Acquiring Fund of the Target Fund's liabilities;
(d) No gain or loss will be recognized by the Target Fund's
shareholders upon exchange of their shares of the Target Fund for Shares;
(e) The tax basis of Shares received by each Target Fund
shareholder pursuant to the Reorganization will be the same as the tax basis of
the Target Fund shares held by that shareholder immediately before the
Reorganization;
(f) The tax basis of the assets of the Target Fund acquired by
the Acquiring Fund will be the same as the tax basis of such assets to the
Target Fund immediately prior to the Reorganization;
(g) The holding period of Shares to be received by each Target
Fund shareholder will include the period during which the Target Fund shares
exchanged therefor were held by such shareholder;
(h) The holding period of the assets of the Target Fund
acquired by the Acquiring Fund will include the period during which those assets
were held by the Acquiring Fund;
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Dresdner RCM Capital Funds, Inc. Exhibit 12.1
_______________, 2000
The opinions set forth above represent our conclusions as to
the application of Federal income tax law existing as of the date of this letter
to the transaction described above, and we can give no assurance that
legislative enactments, administrative changes or court decisions may not be
forthcoming which would require modifications or revocations of our opinions
expressed herein. Moreover, there can be no assurance that positions contrary to
our opinions will not be taken by the Service, or that a court considering the
issues would not hold contrary to such opinions. Further, all the opinions set
forth above represent our conclusions based upon the documents and facts
referred to above. Any material amendments to such documents or changes in any
significant facts would affect the opinions referred to herein. Although we have
made such inquiries and performed such investigation as we have deemed necessary
to fulfill our professional responsibilities, we have not undertaken an
independent investigation of the facts referred to in this letter.
We express no opinion as to any Federal income tax issue or
other matter except those set forth above.
Very truly yours,
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