JAPAN OTC EQUITY FUND INC, DEF 14A, 1996-09-30

JAPAN OTC EQUITY FUND INC
DEF 14A, 1996-09-30

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<PAGE>
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 (Amendment No. )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

JAPAN OTC EQUITY FUND, INC.
....................................................................
(Name of Registrant as Specified In Its Charter)

....................................................................
(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 was 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:

..............................................................

<PAGE>
JAPAN OTC EQUITY FUND, INC.
180 MAIDEN LANE
NEW YORK, NEW YORK 10038

------------------------

NOTICE OF 1996 ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 12, 1996
------------------------

TO THE STOCKHOLDERS OF
JAPAN OTC EQUITY FUND, INC.:

Notice is hereby given that the 1996 Annual Meeting of Stockholders (the
"Meeting") of Japan OTC Equity Fund, Inc. (the "Company") will be held at the
offices of Nomura Capital Management, Inc., 180 Maiden Lane, New York, New York
on Tuesday, November 12, 1996, at 9:30 A.M. for the following purposes:

(1) To elect six Directors to serve for the ensuing year;

(2) To consider and act upon a proposal to ratify the selection of Price
Waterhouse LLP as independent accountants of the Company for its fiscal
year ending February 28, 1997; and

(3) To transact such other business as may properly come before the Meeting
or any adjournment thereof.

The Board of Directors has fixed the close of business on September 20,
1996 as the record date for the determination of stockholders entitled to notice
of and to vote at the meeting or any adjournment thereof.

A complete list of the stockholders of the Company entitled to vote at the
Meeting will be available and open to the examination of any stockholder of the
Company for any purpose germane to the Meeting during ordinary business hours
from and after October 28, 1996, at the offices of the Company, 180 Maiden Lane,
New York, New York.

You are cordially invited to attend the Meeting. Stockholders who do not
expect to attend the Meeting in person are requested to complete, date and sign
the enclosed form of proxy and return it promptly in the envelope provided for
that purpose. The enclosed proxy is being solicited on behalf of the Board of
Directors of the Company.

By Order of the Board of Directors

JOHN F. WALLACE
Secretary

New York, New York
Dated: September 27, 1996

<PAGE>
[This page intentionally left blank.]

<PAGE>
PROXY STATEMENT

JAPAN OTC EQUITY FUND, INC.
180 MAIDEN LANE
NEW YORK, NEW YORK 10038

------------------------

1996 ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 12, 1996
------------------------

INTRODUCTION

This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Japan OTC Equity Fund, Inc., a
Maryland corporation (the "Company"), to be voted at the 1996 Annual Meeting of
Stockholders of the Company (the "Meeting") to be held at the offices of Nomura
Capital Management, Inc., 180 Maiden Lane, New York, New York, on Tuesday,
November 12, 1996, at 9:30 A.M. The approximate mailing date of this Proxy
Statement is September 30, 1996.

All properly executed proxies received prior to the Meeting will be voted
at the Meeting in accordance with the instructions marked thereon or otherwise
as provided therein. Unless instructions to the contrary are marked, proxies
will be voted for the election of six Directors and for the ratification of the
selection of independent accountants. Any proxy may be revoked at any time prior
to the exercise thereof by giving written notice to the Secretary of the Company
at the Company's address indicated above or by voting in person at the Meeting.

The Board of Directors has fixed the close of business on September 20,
1996 as the record date for the determination of stockholders entitled to notice
of and to vote at the Meeting and at any adjournment thereof. Stockholders on
the record date will be entitled to one vote for each share held, with no shares
having cumulative voting rights. As of September 20, 1996, the Company had
outstanding 11,384,000 shares of Common Stock, par value $0.10 per share. To the
knowledge of management of the Company, no person owned beneficially more than
5% of its outstanding shares at such date.

The Board of Directors of the Company knows of no business other than that
mentioned in Items 1 and 2 of the Notice of Meeting which 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.

ELECTION OF DIRECTORS

At the Meeting six Directors will be elected to serve until the next Annual
Meeting of Stockholders and until their successors are elected and qualified. It
is the intention of the persons named in the enclosed proxy to nominate and vote
in favor of the election of the persons listed below.

The Board of Directors of the Company knows of no reason why any of these
nominees will be unable to serve, but in the event of any such unavailability,
the proxies received will be voted for such substitute nominees as the Board of
Directors may recommend.

<PAGE>
Certain information concerning the nominees is set forth as follows:

George H. Chittenden(2) ... Director of Bank Audi (USA). 79 1990 500
155 Buffalo Bay, Neck Road
Madison, Connecticut 06443

Iwao Komatsu(3) ........... President of the Company since 1995; 59 1995 0
180 Maiden Lane President of Nomura Capital
New York, New York 10038 Management, Inc. ("NCM" or the
"Manager") since 1995 and Director
since 1994; Managing Director of
Nomura Investment Management Co.,
Ltd. ("NIMCO" or the "Investment
Adviser") from 1990 to 1996,
Director from 1987 to 1990;
Director of Nomura Capital
Management (U.K.) Limited since
1994 and Managing Director from
1989 to 1993.

Chor Weng Tan(2) .......... Managing Director for Education, The 60 1990 0
345 East 47th Street American Society of Mechanical
New York, New York 10017 Engineering since 1991; Professor,
School of Engineering, The Cooper
Union from 1963 to 1991; Dean,
School of Engineering, The Cooper
Union from 1975 to 1987; Executive
Officer, The Cooper Union Research
Foundation from 1976 to 1987;
Program Director, Presidential
Young Investigator Awards of
National Science Foundation from
1987 to 1989; and Director, Tround
International, Inc.

Arthur R. Taylor(2) ....... President of Muhlenberg College 61 1990 0
2400 Chew Street since 1992; Dean of the Faculty of
Allentown, Pennsylvania Business of Fordham University
18104 from 1985 to 1992; Chairman of
Arthur R. Taylor & Co. (investment
firm); and Director of Pitney
Bowes Inc. and Louisiana Land &
Exploration Company.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
OF THE COMPANY
PRINCIPAL OCCUPATIONS BENEFICIALLY
NAME AND ADDRESS DURING PAST FIVE YEARS DIRECTOR OWNED AT
OF NOMINEE AND PUBLIC DIRECTORSHIPS (1) AGE SINCE SEPTEMBER 20, 1996
- --------------------------- ------------------------------------ --- -------- ------------------
<S> <C> <C> <C> <C>
John F. Wallace(3) ........ Secretary and Treasurer of the 68 1990 500
180 Maiden Lane Company since 1990; Senior Vice
New York, New York 10038 President of NCM since 1981,
Secretary since 1976, Treasurer
since 1984 and Director since
1986; Senior Vice President of
Nomura Securities International,
Inc. ("NSI") since 1978, Secretary
from 1977 to 1991, and Director
from 1983 to 1991.
<FN>
- ---------------
(1) Each of the nominees is also a director of Jakarta Growth Fund, Inc., Korea
Equity Fund, Inc. and Nomura Pacific Basin Fund, Inc., investment companies
for which NCM acts as manager.

(2) Member of Audit Committee and Nominating Committee of the Board of
Directors.

(3) "Interested person," as defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act"), of the Company.
</TABLE>

Committees and Directors' Meetings. The Board of Directors has a standing
Audit Committee and Nominating Committee, each of which consists of the
Directors who are not "interested persons" of the Company within the meaning of
the Investment Company Act. The principal purpose of the Audit Committee is to
review the scope of the annual audit conducted by the Company's independent
accountants and the evaluation by such accountants of the accounting procedures
followed by the Company. The principal purpose of the Nominating Committee is to
select and nominate the Directors who are not "interested persons" of the
Company as defined in the Investment Company Act. The Nominating Committee will
consider nominees recommended by stockholders of the Company. Stockholders
should submit nominees to the Secretary of the Company. The Company has no
standing Compensation Committee.

During the fiscal year ended February 29, 1996, the Board of Directors held
four meetings; the Audit Committee held one meeting; and the Nominating
Committee held one meeting. Each Director attended at least 75% of the meetings
of the Board of Directors, and each Director who is not an "interested person"
of the Company attended at least 75% of the meetings of the Audit and Nominating
Committees held during such period.

Interested Persons. The Company considers two nominees, Messrs. Komatsu and
Wallace, to be "interested persons" of the Company within the meaning of Section
2(a) (19) of the Investment Company Act. Mr. Komatsu is President of the Company
and the President and a director of NCM. Mr. Wallace is Secretary and Treasurer
of the Company, Senior Vice President, Secretary, Treasurer and a director of
NCM and Senior Vice President of NSI, which is an affiliate of NCM.

Compensation of Directors. The Manager pays all compensation of all
Directors of the Company who are affiliated with the Manager or any of its
affiliates. The Company pays to each Director not affiliated with the Manager an
annual fee of $5,000 plus $500 per meeting attended, together with such
Director's actual out-of-pocket expenses relating to attendance at meetings.
Such fees and expenses aggregated $37,103 for the fiscal year ended February 29,
1996. The Company has paid affiliated Directors' out-of-pocket expenses in
connection with attendance at meetings of the Board of Directors; such expenses
aggregated $1,517 for the fiscal year ended February 29, 1996.

<PAGE>
The following table sets forth for the periods indicated compensation paid
by the Company to its Directors and the aggregate compensation paid by all
investment companies managed by NCM or advised by NIMCO to the Directors.

<TABLE>
<CAPTION>
AGGREGATE PENSION OR RETIREMENT TOTAL COMPENSATION FROM
COMPENSATION BENEFITS ACCRUED AS PART OF FUND COMPLEX PAID TO
FROM COMPANY FOR COMPANY EXPENSES FOR ITS DIRECTORS DURING THE
ITS FISCAL YEAR ENDED FISCAL YEAR ENDED CALENDAR YEAR ENDED
NAME OF DIRECTOR FEBRUARY 29, 1996 FEBRUARY 29, 1996 DECEMBER 31, 1995*
- --------------------------- --------------------- ---------------------------- -----------------------
<S> <C> <C> <C>
William G. Barker, Jr...... $ 7,000 None $28,500
George H. Chittenden....... $ 7,000 None $28,500
Iwao Komatsu............... -- None --
Chor Weng Tan.............. $ 7,000 None $28,500
Arthur R. Taylor........... $ 7,000 None $28,500
John F. Wallace............ -- None --

<FN>
- ------------------
* In addition to the Company, the "Fund Complex" included Jakarta Growth Fund,
Inc., Korea Equity Fund, Inc. and Nomura Pacific Basin Fund, Inc.
</TABLE>

Officers of the Company. The following table sets forth information
concerning the officers of the Company. Officers of the Company are elected and
appointed by the Directors and hold office until they resign, are removed or are
otherwise disqualified to serve.

<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
OF THE COMPANY
BENEFICIALLY
NAME AND PRINCIPAL OCCUPATION DURING PAST OFFICER OWNED AT
FIVE YEARS OFFICE AGE SINCE SEPTEMBER 20, 1996
- --------------------------------------------- --------------- ---- ------- ------------------
<S> <C> <C> <C> <C>
Iwao Komatsu ................................ President 59 1995 0
President of NCM since 1995 and Director
since 1994. Managing Director of NIMCO
from 1990 to 1996, Director from 1987 to
1990.

Mitsutoyo Kohno ............................. Vice President 47 1990 0
Senior Vice President of NCM since 1991 and
Director since 1994, Vice President from
1989 to 1991.

John F. Wallace ............................. Secretary and 68 1990 500
Treasurer
Senior Vice President of NCM since 1981,
Secretary since 1976, Treasurer since
1984 and Director since 1986. Senior
Vice President of NSI since 1978,
Secretary from 1977 to 1991, and
Director from 1983 to 1991.
</TABLE>

Stock Ownership. At September 20, 1996, the Directors and officers of the
Company as a group (7 persons) owned an aggregate of 1,000 shares, less than 1%
of the outstanding shares of the Company. Mr. Komatsu, President of the Company,
owns less than 1% of the shares of The Nomura Securities Co., Ltd., an affiliate
of both NCM and NIMCO.

<PAGE>
SELECTION OF INDEPENDENT ACCOUNTANTS

On the recommendation of the Audit Committee, the Board of Directors of the
Company, including a majority of the Directors who are not interested persons of
the Company, has selected the firm of Price Waterhouse LLP ("Price Waterhouse"),
as independent accountants, to audit the financial statements of the Company for
the fiscal year ending February 28, 1997. Price Waterhouse has acted as the
Company's independent accountants since the inception of the Company. The
Company knows of no direct or indirect financial interest of such firm in the
Company. Such appointment is subject to ratification or rejection by the
stockholders of the Company. Unless a contrary specification is made, the
accompanying proxy will be voted in favor of ratifying the selection of such
accountants.

Price Waterhouse also acts as independent accountants for The Nomura
Securities Co., Ltd. and certain of its affiliated entities, including NCM, and
for three other investment companies for which NCM acts as manager. The Board of
Directors of the Company considered the fact that Price Waterhouse has been
retained as the independent accountants for these other entities in its
evaluation of the ability of Price Waterhouse to also function in that capacity
for the Company.

A representative of Price Waterhouse is expected to be present at the
Meeting and will have the opportunity to respond to questions from stockholders
and to make a statement if such person so desires.

ADDITIONAL INFORMATION

The expense of preparation, printing and mailing of the enclosed form of
proxy and accompanying Notice and Proxy Statement will be borne by the Company.
The Company will reimburse banks, brokers and others for their reasonable
expenses in forwarding proxy solicitation material to the beneficial owners of
the shares of the Company. In addition to the solicitation of proxies by mail,
proxies may be solicited in person or by telephone. The Company has retained at
its expense Corporate Investor Communications, Inc., a proxy solicitation firm,
to assist in the solicitation of proxies for the Meeting, for a fee of
approximately $3,500, together with reimbursement of such firm's expenses.

The election of Directors requires a plurality of the votes cast, in person
or by proxy, at a meeting at which a quorum is duly constituted. The holders of
a majority of the shares of stock of the Company entitled to vote at the
Meeting, present in person or by proxy, shall constitute a quorum for the
transaction of business at the Meeting. The Company expects that broker-dealer
firms holding shares of the Company in "street name" for the benefit of their
customers and clients will request the instructions of such customers and
clients on how to vote their shares on each proposal before the Meeting. The
Company understands that, under the rules of the New York Stock Exchange, such
broker-dealers may, without instructions from such customers and clients, grant
authority to the proxies designated by the Company to vote on the items to be
considered at the Meeting if no instructions have been received prior to the
date specified in the broker-dealer firm's request for voting instructions.
Certain broker-dealer firms may exercise discretion over shares held in their
name for which no instructions are received by voting such shares in the same
proportion as they have voted shares for which they have received instructions.

The shares as to which the proxies so designated are granted authority by
broker-dealer firms to vote on the items to be considered at the Meeting, the
shares as to which broker-dealer firms have declined to vote ("broker
non-votes"), as well as the shares as to which proxies are returned by record
shareholders but which are marked "abstain" on any item will be included in the
Company's tabulation of the total number of votes present for purposes of
determining whether the necessary quorum of shareholders exists. However,
abstentions and broker non-votes will not be counted as votes cast. Therefore,
abstentions and broker non-votes will not have an effect on the vote on the
items to be considered at the Meeting.

<PAGE>
The address of NCM is 180 Maiden Lane, New York, New York 10038. The
address of NIMCO is 1-12-11, Nihonbashi, Chuo-ku, Tokyo 103, Japan.

The Company sends quarterly reports to shareholders. The Company will
furnish, without charge, a copy of its most recent annual and semi-annual report
succeeding such annual report, if any, to shareholders upon request to the
Company at 180 Maiden Lane, New York, New York 10038 (or call 1-800-833-0018).

PROPOSALS OF STOCKHOLDERS

Proposals of stockholders intended to be presented at the next annual
meeting of stockholders of the Company must be received by the Company for
inclusion in its proxy statement and form of proxy relating to that meeting by
June 2, 1997.

By Order of the Board of Directors

JOHN F. WALLACE
Secretary

Dated: September 27, 1996

<PAGE>
JAPAN OTC EQUITY FUND, INC.
180 Maiden Lane
New York, New York 10038

This proxy is solicited on behalf of the Board Of Directors.

The undersigned hereby appoints Iwao Komatsu and John F. Wallace as proxies,
each with the power to appoint his substitute and hereby authorizes them to
represent and to vote, as designated on the reverse hereof, all shares of
Common Stock of Japan OTC Equity Fund, Inc. (the "Company"), held of record by
the undersigned on September 20, 1996 at the annual meeting of stockholders of
the Company to be held on November 12, 1996 or any adjournment thereof.

Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.

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PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, or as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
- -------------------------------------------------------------------------------

HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?

- ----------------------------------------- ----------------------------------

<PAGE>

/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE

WITH- FOR ALL
FOR HOLD EXCEPT
1.) ELECTION OF DIRECTORS: / / / / / /

William G. Barker, Jr., George H. Chittenden,
Iwao Komatsu, Chor Weng Tan, Arthur R. Taylor,
and John F. Wallace.

If you do not wish your shares voted "FOR" a particular nominee,
mark the "FOR ALL EXCEPT" box and strike a line through that
nominee's name. Your shares will be voted for the remaining
nominees.

FOR AGAINST ABSTAIN

2.) Proposal to ratify the selection of Price / / / / / /
Waterhouse LLP as the independent
accountants of the Company.

3.) In the discretion of such proxies, upon such other business as may
properly come before the meeting or any adjournments thereof.

This proxy, when properly executed will be voted in the manner
directed herein by the undersigned stockholder. If no direction is
made, the proxy will be voted for Proposals 1 and 2.

Mark box at right if comments or address change has / /
been noted on the reverse side of this card.

RECORD DATE SHARES:

Please be sure to sign and date this Proxy. Date
- -----------------------------------------------------------------------------

- -------------------------------- ----------------------------------------
Stockholder sign here Co-owner sign here