SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [ X ]
Filed by a Party other than the Registrant [ ] Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
Latin America Smaller Companies Fund, Inc.
(Name of Registrant as Specified In Its Charter)
Coleen Downs Dinneen, Secretary
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] 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>
Latin America Smaller Companies Fund, Inc.
One Exchange Place
Boston, Massachusetts 02109
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
to be held on
December 15, 1998
To the Stockholders:
Notice is hereby given that a Special Meeting of Stockholders of Latin
America Smaller Companies Fund, Inc. (the "Fund") will be held at Marriott World
Trade Center, 3 World Trade Center, Room __, New York, New York 10048 on
Tuesday, December 15, 1998, at 2:00 p.m. Eastern Standard Time, for the purposes
of considering and voting upon whether:
1. To approve a plan of complete liquidation and dissolution of the
Fund (the "Plan"), providing for, among other things, the sale of all of the
assets of the Fund, the distribution in cash of the net proceeds from such sale
of assets to the stockholders in accordance with the Plan in complete
liquidation of their interests in the Fund, and the subsequent dissolution of
the Fund pursuant to Maryland law (Proposal 1); and
2. To consider and act upon any other business that may properly come
before the Meeting or any adjournment thereof.
Only stockholders of record as of the close of business on November 12,
1998 are entitled to notice of and to vote at the Meeting or at any adjournments
thereof.
The Board recommends that the stockholders approve Proposal 1 at this
time. Subject to receipt of the requisite stockholder approval, stockholders of
the Fund will receive cash in liquidation of their interests in the Fund. The
liquidation distribution is expected to occur on or before March 31, 1999, but
in any event within 90 days of the record date for the distribution.
By Order of the Board of Directors,
Coleen Downs Dinneen
Secretary
November 20, 1998
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING ARE REQUESTED TO
COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE, WHICH
NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO AVOID THE
ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING
YOUR PROXY PROMPTLY. INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE SET
FORTH ON THE INSIDE COVER.
<PAGE>
Instructions for Signing Proxy Cards
The following general rules for signing proxy cards may be of
assistance to you and will avoid the time and expense involved in validating
your vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it
appears in the registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the
party signing should conform exactly to a name shown in the registration.
3. All Other Accounts: The capacity of the individual signing
the proxy card should be indicated unless it is reflected in the form of
registration. For example:
Registration Valid Signature
Corporate Accounts
(1) ABC Corp........................................John Doe, Treasurer
(2) ABC Corp........................................John Doe
c/o John Doe, Treasurer
(3) ABC Corp. Profit Sharing Plan...................John Doe, Trustee
Trust Accounts
(1) ABC Trust.......................................Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee Jane B. Doe
u/t/d 12/28/78
Custodial or Estate Accounts
(1) John B. Smith, Cust.............................John B. Smith
f/b/o John B. Smith, UGMA
(2) John B. Smith...................................John B. Smith, Executor
<PAGE>
Latin America Smaller Companies Fund, Inc.
One Exchange Place
Boston, Massachusetts 02109
SPECIAL MEETING OF STOCKHOLDERS
to be held on
December 15, 1998
PROXY STATEMENT
This Proxy Statement is furnished in connection with a solicitation by
the Board of Directors of the Latin America Smaller Companies Fund, Inc. (the
"Fund") of proxies to be used at a Special Meeting of Stockholders of the Fund
to be held on Tuesday, December 15, 1998, at 2:00 p.m. Eastern Standard Time, at
Marriott World Trade Center, 3 World Trade Center, Room __, New York, New York
10048 and at any adjournments thereof for the purposes set forth in the
accompanying Notice of Special Meeting of Stockholders. This Proxy Statement and
the form of Proxy are first being mailed to stockholders on or about November
20, 1998.
Proxy solicitations will be made, beginning on or about November 20,
1998, primarily by mail, by officers of the Fund and officers and regular
employees of First Data Investor Services Group, Inc., the Fund's transfer agent
(the "Transfer Agent"), affiliates of the Transfer Agent or other
representatives of the Fund also may solicit proxies by telephone, telegraph or
in person. In addition, the Fund may hire a solicitor to solicit proxies from
brokers, banks, other institutional holders and individual stockholders. The
costs of proxy solicitation and expenses incurred in connection with preparing
this Proxy Statement and its enclosures will be paid by the Fund. The Fund also
will reimburse brokerage firms and others for their expenses in forwarding
solicitation material to the beneficial owners of Fund shares. Stockholders who
execute proxies retain the right to revoke them by written notice received by
the Secretary of the Fund at any time before they are voted on by attending and
voting at the Meeting. Unrevoked proxies will be voted in accordance with the
specifications thereon and, unless specified to the contrary, will be voted FOR
Proposal 1.
The close of business on November 12, 1998, has been fixed as the
record date for the determination of stockholders entitled to notice of and to
vote at the Meeting. Each stockholder is entitled to one vote for each full
share and an appropriate fraction of a vote for each fractional share held. On
the record date there were ____ shares outstanding and entitled to vote.
In the event that a quorum is not present at the Meeting, or in the
event that a quorum is present but sufficient votes to approve the proposal are
not received, the persons named as proxies may propose one or more adjournments
of the Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those shares represented at
the Meeting in person or by proxy and the persons named as proxies will vote
those proxies which they are entitled to vote FOR or AGAINST any such proposal
in their discretion. Under the By-Laws of the Fund, a quorum is constituted by
the presence in person or by proxy of the holders of record of a majority of the
outstanding shares of common stock of the Fund entitled to vote at the Meeting.
A copy of the Fund's annual report for the fiscal year ended October
31, 1997 and/or the semi-annual report for the period end April 30, 1998 may be
obtained without charge by writing to First Data Investor Services Group, Inc.,
4400 Computer Drive, Westborough, Massachusetts 01581-5120, or calling
1-800-331-1710.
<PAGE>
As of November 12, 1998, the following person owned of record 5% or
more of the outstanding shares of the Fund: [Cede & Co., as nominee to the
Depository Trust Company, Seven Hanover Square, 23rd Floor, New York, New York
10004, with ____ shares (____%).] In addition, to the best knowledge of the
Fund, the following persons or "group" (as the term is used in Section 13(d) of
the Securities Exchange Act of 1934 (the "1934 Act")) owned beneficially 5% or
more of the outstanding shares of the Fund:
Number of Shares Percent of
Name and Address of Beneficial Owner Beneficially Owned Outstanding Shares
City of London Investment 910,030 22.7
Management Company Ltd.
10 Eastcheap
London EC3M 1AJ
United Kingdom
Lazard Freres & Co. LLC 720,500 17.98
30 Rockefeller Plaza
New York, NY 10020
Deep Discount Advisers 404,400 10.1
One West Pack Square
Suite 777
Asheville, NC 28801
together as a group:
President and Fellows of Harvard College
c/o Harvard Management Company Inc.
600 Atlantic Avenue
Boston, MA 02210
And
The Harvard University Master Trust Fund 379,100 9.5
1350 Massachusetts Avenue
Holyoke Center, Room 340
Cambridge, MA 02138
As of November 12, 1998, directors and officers of the Fund, as a
group, beneficially owned less than 1% of the outstanding shares of the Fund.
<PAGE>
Proposal 1: PROPOSAL TO CONSIDER AND ACT UPON A PLAN OF DISSOLUTION,
LIQUIDATION AND TERMINATION OF THE FUND (THE "PLAN")
Background Information Concerning the Fund and its Shares
The Fund is a diversified, closed-end management investment fund
organized as a Maryland corporation. The Fund's investment objective is
long-term capital appreciation, through a broad spectrum of Latin America
industries. The Fund's policy is to invest, under normal market conditions, at
least 80% of its total assets in the equity securities of Latin American issuers
that at the time of purchase have a market capitalization of less than U.S. $500
million. Since December 9, 1994, the Fund's shares have continuously traded at a
discount from their net asset value per share, ranging from 11.48% on January
30, 1998, to 34.72% on September 11, 1998. The average weekly discount during
the period January 1, 1998 to October 23, 1998 was 19.36%. This discount is
volatile and fluctuates with the net asset value per share and the market price
of the Fund's shares.
At each quarterly Board of Directors meeting beginning November 1996,
the Board has discussed the fact that the Fund's common stock has traded at a
discount to net asset value. While noting that the Fund's discount is in the
range experienced by similar closed-end-funds, the Board has considered various
alternatives in an effort to reduce or eliminate the discount. The Board also
retained an independent expert to assist in reviewing the issue.
Terms of the Proposed Liquidation
The Fund proposes to liquidate the assets and dissolve the Fund
pursuant to the provisions of the Plan which was approved by the Board on
November 11, 1998. A copy of the Plan is attached to this Proxy Statement as
Exhibit A. The Board has determined that an orderly liquidation of the Fund's
assets is advisable and has directed that the matter be submitted for
consideration of the stockholders of the Fund. The Plan will be effective upon
approval by the requisite majority of shares (the "Effective Date"). The Plan
provides for the complete liquidation of all of the assets of the Fund, the
payment and discharge of, or other provision for, all liabilities and
obligations of the Fund, the distribution of the remaining net assets to
stockholders of the Fund, and the dissolution of the Fund. As soon as
practicable after the Effective Date, the Fund will send notice of the
liquidation and dissolution to all known creditors and claimants. Additionally,
American Express Asset Management International Inc., the Fund's investment
adviser (the "Adviser"), will undertake to liquidate in an orderly manner the
Fund's assets at market prices and on such terms and conditions as the Adviser,
under the supervision of the Board, shall determine to be reasonable and in the
best interests of the Fund and its stockholders. It is expected that liquidation
of the Fund's assets could take several months.
Approximately eight weeks following the Effective Date, the stock
transfer books of the Fund will be closed permanently (the "Distribution Record
Date"). As soon as practicable thereafter, and in any event no later than 90
days following the Distribution Record Date (the "Liquidation Date"), the Fund
will liquidate and distribute to stockholders of record as of the close of
business on the Distribution Record Date, pro rata in accordance with their
proportionate interests in the Fund, all of the assets of the Fund remaining
after payment and discharge of liabilities and obligations of the Fund, less any
amounts retained or set aside in a reserve fund as referred to below, in
complete cancellation and redemption of the outstanding shares of the Fund (the
"Liquidation Distribution"). Although no assurance can be given, the Fund
anticipates that payment of the Liquidation Distribution will be made by March
31, 1999.
From the proceeds of the liquidation of assets, the Fund may retain,
set aside in a reserve fund or otherwise provide for an amount necessary to
discharge any unpaid liabilities on the Fund's books as of the Liquidation Date
and to pay or otherwise provide for such contingent or unascertained liabilities
as the Board of Directors shall reasonably deem to exist against the assets of
the Fund. The Fund may make one or more subsequent liquidation distributions to
stockholders. Cash or other assets retained or held in a reserve fund for the
payment of contingent or unascertained liabilities in accordance with the Plan
in excess of the amounts ultimately required for the payment or discharge of the
Fund's liabilities and obligations will be distributed to stockholders at the
time and under the conditions established with respect to such reserve fund or
other arrangements providing for such payment (if any, the "Reserve
Distribution").
The Plan authorizes the Board to modify or amend the Plan without
stockholder approval at any time if the Board determines that such action would
be advisable and in the best interests of the Fund's stockholders. However, an
amendment or modification that, in the judgement of the Board, will materially
and adversely affect the interests of stockholders will be submitted for
stockholder approval. All references to the Plan contained in this Proxy
Statement should be treated as summary in nature and are qualified in their
entirety by reference to provisions of the Plan.
In the event the Plan is not approved by the requisite stockholder
vote, the Board will consider alternative courses of action to be taken.
Additionally, should the liquidation vote be defeated, the Fund would be
required to submit at the next Annual Meeting of Stockholders a proposal
received from a stockholder regarding restructuring the Fund's current
management fee.
Reasons for the Liquidation
At a Special Board Meeting held on September 4, 1998, the Board heard a
recommendation from management for an orderly liquidation of the Fund.
Subsequently, at a Special Board Meeting held on September 10, 1998, the Board
determined that the continued operation of the Fund was not in the best
interests of the Fund's Stockholders considering all relevant factors, including
current market conditions for smaller companies in Latin America, the size of
the Fund and the Fund's expense ratio. During the two Special Meetings, the
Board considered various alternatives for the Fund, including the possibility of
(i) finding potential merger partners for the Fund; (ii) converting the Fund to
an open-end investment fund; (iii) liquidating the Fund; (iv) changing the
investment objective of the Fund; and (v) continuing the Fund in its current
form. The Board discussed the various factors affecting the ability to merge the
Fund, including current market conditions for smaller Latin American companies,
the small size of the Fund, the Fund's relatively high expense ratio and the
difficulty (and expense) in retaining a new adviser with comparable experience.
Accordingly, the Board determined that merging the Fund with an investment fund
with a similar investment focus was not a realistic option. The Board similarly
concluded that converting the Fund to an open-end investment fund since the size
of the Fund prevented it from achieving economies of scale that would result in
a competitive expense ratio. Since the Fund seeks growth through investment in
shares of relatively small capitalization Latin American companies, it would be
difficult to buy and sell less liquid securities at efficient prices on short
notice to meet the constant cash flow requirements of an open-end fund. Based on
current market conditions, the Board concluded that if the Fund continued to
operate as a closed-end fund there was little chance the discount would decrease
in the near future.
Based upon the foregoing considerations and other relevant factors, the
Board concluded that a liquidation and the subsequent dissolution of the Fund
were advisable and in the best interests of the Fund and its stockholders. The
Board, including all of the "non-interested" Directors, subsequently adopted
resolutions approving the Plan, declaring the proposed liquidation and
dissolution pursuant to the provisions of the Plan advisable and directing that
it be submitted to the stockholders of the Fund for consideration. The Fund will
bear the costs associated with the liquidation of the Fund which are expected to
total approximately $75,000.
As of October 30, 1998, the net asset value per share of the Fund's
shares was $6.31, whereas the price of the last reported trade of the Fund's
shares on the same date was $5.125. Because the market price of the Fund's
shares is subject to fluctuation, the market price of the Fund's shares may
increase or decrease prior to the distribution of the assets to the Fund's
stockholders. One of the factors affecting the market price relative to the net
asset value is the market's judgement of the likelihood that this Proposal will
be implemented. If the Proposal is not approved, the net asset value discount
can be expected to increase. Stockholders are urged to obtain current market
quotations for the Fund's shares.
Liquidation Value
If the Plan is adopted by the Fund's stockholders at the Meeting,
following the consummation of the sale of all of the Fund's portfolio securities
and the payment of all of the Fund's expenses, charges, liabilities and other
obligations, including those expenses incurred in connection with the
liquidation, each Fund stockholder will receive a Liquidation Distribution in an
amount equal to the net asset value per share, as determined in accordance with
the Fund's current registration statement. The Fund does not anticipate making
any interim distributions prior to the Liquidation Distribution.
<PAGE>
Federal Income Tax Consequences
The following summary provides general information with regard to the
U.S. federal income tax consequences to the Fund, resulting from its liquidation
and dissolution, and the stockholders, resulting from their receipt of the
Liquidation Distribution and Reserve Distribution, if any (collectively the
"Total Distribution"). However, the Fund will not seek a ruling from the
Internal Revenue Service (the "Service") with respect to the liquidation and
dissolution of the Fund. The statements below are, therefore, not binding upon
the Service, and there can be no assurance that the Service will concur with
this summary or that the tax consequences to any stockholder upon receipt of a
Total Distribution will be as set forth below. This summary is based on the tax
laws and regulations in effect on the date of this Proxy Statement, all of which
are subject to change.
The information below is only a summary of some of the U.S. federal tax
consequences generally affecting the Fund and its individual U.S. and foreign
stockholders resulting from the liquidation of the Fund. This summary does not
address the particular federal income tax consequences applicable to
stockholders other than U.S. and foreign individuals nor does it address state,
local or foreign tax consequences. The tax consequences discussed herein may
affect stockholders differently depending on their particular tax situations
unrelated to the Total Distribution, and accordingly, this summary is not a
substitute for careful tax planning on an individual basis. Stockholders are
encouraged to consult their personal tax advisers to determine the federal,
state and other income tax consequences of receiving the Total Distribution
based on their particular tax circumstances.
The Fund currently qualifies, and intends to continue to qualify
through the end of the liquidation period, as a regulated investment company
under the Internal Revenue Code of 1986, as amended (the "Code"), so that it
will be relieved of federal income tax on any of its net income realized from
the sale of its assets and otherwise by reason of the special dividends paid
deduction made available to it by reason of such status. As the result of the
stockholders' adoption of the Plan, the Fund's distribution of the Total
Distribution will qualify for the dividends paid deduction, notwithstanding the
fact that the stockholders' receipt of the distribution will be treated as a
capital transaction, as described below.
For federal income tax purposes, a U.S. stockholder's receipt of the
Total Distribution will be a taxable event and will be treated as a sale of the
stockholder's shares of the Fund in exchange for the Total Distribution. Each
U.S. stockholder will recognize a gain or loss in an amount equal to the
difference between the adjusted tax basis in his or her shares and the Total
Distribution he or she receives from the Fund. If the shares are held as a
capital asset, the gain or loss will generally be characterized as capital gain
or loss. If the shares have been held for more than 12 months, any gain will
constitute a long-term capital gain taxable to individual stockholders at an
amount no greater than 20%, and any loss will constitute a long-term capital
loss.
Otherwise, the gain or loss will constitute a short-term capital gain or loss.
A foreign stockholder's receipt of the Total Distribution will also be
treated as consideration for the sale of such stockholder's shares of the Fund.
As such, unless the shares are held by a foreign individual who has been present
in the United States for at least 183 days during the year of receipt or unless
any gain is effectively connected with a trade or business of the foreign person
in the United States, the receipt of the Total Distribution will not be subject
to income tax withholding or otherwise be subject to tax for U.S. federal income
tax purposes.
If a stockholder has failed to furnish a correct taxpayer
identification number or has failed to provide certain required certifications,
the stockholder may be subject to a 31% backup withholding tax with respect to
any ordinary or capital gains dividends as well as the Total Distribution. An
individual's taxpayer identification number is his or her social security
number. Certain stockholders specified in the Code may be exempt from backup
withholding. The backup withholding tax is not an additional tax and may be
credited against a taxpayer's federal income tax liability.
Stockholders will continue to be notified of their respective shares of
ordinary and capital gains dividends, if any, for the Fund's final fiscal year
in normal tax-reporting fashion and, to the extent dividends are reinvested in
shares of the Fund, the stockholders' adjusted bases in their shares will be
increased for purposes of computing their gain or loss on the receipt of the
Total Distribution. Similarly, stockholders will be notified of amounts received
as Total Distributions.
<PAGE>
Liquidation Distribution
At present, the date on which the Fund will be liquidated and on which
the Fund will pay the Liquidation Distribution to its stockholders is uncertain.
As described above, the Liquidation Date is expected to be on or before March
31, 1999, but in any event no later than 90 days following the Distribution
Record Date. Stockholders holding Fund shares as of the close of business on the
Distribution Record Date will receive their Liquidation Distribution and Reserve
Distribution, if any, without any further action on their part. If a
stockholder's account with the Fund provides for payment of dividends and
capital gain distributions by mailing a check or by crediting a bank, brokerage,
or other nominee account, the stockholder's Total Distribution will be
distributed in accordance with those instructions. If a stockholder's account
with the Fund provides for the reinvestment of dividends and capital gain
distributions in additional shares, the stockholder's Total Distribution will be
distributed by mailing a check directly to such stockholder at the address as
shown on the records of the Fund for his or her account, or by crediting a bank
or brokerage account specified in writing to the Fund by such stockholder no
fewer than 15 days prior to the Liquidation Date.
Stockholders who hold share certificates of the Fund will be required
to return them by mail to the following address prior to receiving their
Liquidation Distribution: First Data Investor Services Group, Inc., P.O. Box
8029, Boston, Massachusetts 02266-8029. In the event that a stockholder cannot
surrender his or her share certificates because they have been lost, destroyed
or stolen, the stockholder must contact First Data Investor Services Group, Inc.
at the address listed above to make alternative arrangements.
Required Vote
The affirmative vote of at least a majority of the outstanding shares
of the Fund is required to approve the Plan. In the event that the stockholders
do not approve the Plan, the Board will continue to search for other
alternatives for the Fund, including reconsidering the other courses of action
previously considered by the Directors before adopting the Plan.
THE DIRECTORS, INCLUDING THE NON-INTERESTED DIRECTORS, UNANIMOUSLY RECOMMEND
THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 1.
SUBMISSION OF STOCKHOLDER PROPOSALS
In the event that the Plan is not approved, it is anticipated that the
Fund will hold its 1999 Annual Meeting of Stockholders in April 1999. An
eligible stockholder who wishes to submit a proposal to be included in the
Fund's proxy statement for the 1999 Annual Meeting of Stockholders must,
pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended
("Rule 14a-8"), submit such proposal so that it is received by the Fund, at the
Fund's principal executive offices, on or before November 30, 1998.
An eligible stockholder who wishes to make a proposal at the 1999
Annual Meeting of Stockholder without complying with the requirements of Rule
14a-8 (and therefore without including such proposal in the Fund's proxy
statement) must notify the Fund, at the Fund's principal executive offices, of
such proposal by January 15, 1999. If a stockholder fails to timely give such
notice, then the persons named as proxies in the proxies solicited by the Board
for the 1999 Annual Meeting of Stockholders, may exercise discretionary voting
power with respect to any such proposal.
ADDITIONAL INFORMATION
Investment Adviser and Administrator
American Express Asset Management International Inc. serves as the Fund's
investment adviser and its business address is 11th Floor, Dashwood House, 69
Old Broad Street, London, EC2M 1QS, United Kingdom. First Data Investor Services
Group, Inc. acts as the administrator to the Fund and is located at One Exchange
Place, Boston, Massachusetts 02109.
<PAGE>
Compliance with the Securities and Exchange Act of 1934
Section 16(a) of the 1934 Act requires the Fund's Directors and
Officers, certain persons affiliated with the Investment Adviser and persons who
own more than 10% of a registered class of the Fund's securities, to file
reports of ownership and changes of ownership with SEC and the New York Stock
Exchange. Directors, Officers and greater-than-10% stockholders are required by
the SEC regulations to furnish the Fund with copies of all Section 16(a) forms
they file. Based solely upon its review of the copies of such forms received by
it and written representations from certain of such persons, the Fund believes
that through the date hereof all such filing requirements applicable to such
persons were complied with.
Broker Non-Votes and Abstentions
A proxy which is properly executed and returned accompanied by
instructions to withhold authority to vote represents a broker "non-vote" (i.e.
shares held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or the persons entitled to vote and (ii) the
broker or nominee does not have discretionary voting power on a particular
matter). Proxies that reflect abstentions or broker non-votes (collectively
"abstentions") will be counted as shares that are present and entitled to vote
on the matter for purposes of determining the presence of a quorum, but will
have the effect of a vote cast against approval of the Plan.
Other Business
The Board of Directors of the Fund does not know of any other matter
that may come before the Meeting. If, however, any other matters are properly
brought before the Meeting, it is the intention of the persons named in the
proxy to vote the proxies in accordance with their judgment on that matter.
Dated: November 20, 1998
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS WHO DO NOT
EXPECT TO ATTEND THE SPECIAL MEETING ARE THEREFORE URGED TO COMPLETE, SIGN, DATE
AND RETURN THE PROXY CARD AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
<PAGE>
PLAN OF DISSOLUTION, LIQUIDATION AND TERMINATION
OF
LATIN AMERICA SMALLER COMPANIES FUND, INC.
Latin America Smaller Companies Fund, Inc., a Maryland
corporation (the "Company"), shall proceed to a complete liquidation of the
Company according to the procedures set forth in this Plan of Dissolution,
Liquidation and Termination (the "Plan"). The Plan has been approved by the
Board of Directors of the Company (the "Board") as being advisable and in the
best interests of the Company's stockholders. The Board has directed that this
Plan be submitted to the holders of the outstanding shares of capital stock of
the Company (each a "Stockholder" and, collectively, the "Stockholders"), for
their adoption or rejection at the Annual Meeting of Stockholders and has
authorized the distribution of a Proxy Statement (the "Proxy Statement") in
connection with the solicitation of proxies for such meeting. Upon Stockholder
approval of the Plan, the Company shall voluntarily dissolve and completely
liquidate in accordance with the requirements of the Investment Company Act of
1940, as amended (the "1940 Act"), the Maryland General Corporation Law (the
"MGCL") and the Internal Revenue Code of 1986, as amended (the "Code"), as
follows:
1. Adoption of Plan. The effective date of the Plan (the "Effective Date") shall
be the date on which the Plan is adopted by the Stockholders.
2. Liquidation and Distribution of Assets. As soon as practicable after the
Effective Date and by March 31, 1999 (the "Liquidation Period"), or as soon
thereafter as practicable depending on market conditions and consistent with the
terms of this Plan, the Company and the Company's investment adviser, American
Express Asset Management International, Inc. ("American Express"), under the
supervision of the Board, shall have the authority to engage in such
transactions as may be appropriate for the Company's liquidation and
dissolution, including, without limitation, the consummation of the transactions
described in the Proxy Statement.
3. Provisions for Liabilities. The Company shall pay or discharge or set aside a
reserve fund for, or otherwise provide for the payment or discharge of, any
liabilities and obligations, including, without limitation, contingent
liabilities.
4. Distribution to Stockholders. As soon as practicable after the Effective
Date, the Company shall liquidate and distribute pro rata, on the date of
liquidation (the "Liquidation Date") to its Stockholders of record as of the
close of business on the date immediately preceding the Liquidation Date all of
the remaining assets of the Company in complete cancellation and redemption of
all the outstanding shares of the Company, except for cash, bank deposits or
cash equivalents in an estimated amount necessary to (i) discharge any unpaid
liabilities and obligations of the Company on the Company's books on the
Liquidation Date, including, but not limited to, income dividends and capital
gains distributions, if any, payable through the Liquidation Date, and (ii) pay
or provide for the payment of such contingent liabilities as the Board shall
reasonably deem to exist against the assets of the Company on the Company's
books. The Company may make one or more additional liquidating distributions to
the Stockholders during the Liquidation Period and prior to the final
liquidating distribution on the Liquidation Date. Such distribution(s) shall be
made as follows:
a. if a Stockholder's account with the Company provides for payment of
dividends and capital gain distributions by mailing a check or by crediting a
bank, brokerage, or other nominee account, the Stockholder's distribution will
be distributed in accordance with those instructions; or
b. if a Stockholder's account with the Company provides for the
reinvestment of dividends and capital gain distributions in additional shares,
the Stockholder's distribution will be distributed by mailing a check directly
to such Stockholder at the address as shown on the records of the Company for
his or her account, or by crediting a bank or brokerage account specified in
writing to the Company by such Stockholder no fewer than 15 days prior to the
Liquidation Date.
Each Stockholder will be required to surrender his or her stock
certificates, if any, by mail to: First Data Investor Services Group, Inc., P.O.
Box 8029, Boston, MA 02266-8029 prior to receiving his or her initial pro rata
liquidating distribution on the Liquidation Date. In the event that a
Stockholder cannot surrender a stock certificate because it has been lost,
apparently destroyed or wrongfully taken, the Stockholder must contact First
Data Investor Services Group, Inc., P.O. Box 8029, Boston, MA 02266-8029 to make
alternative arrangements. Upon evidence satisfactory to the Board that a
certificate has been lost, apparently destroyed or wrongfully taken, and upon
receiving indemnity satisfactory to the Board against loss to the Company, the
Board may authorize the issuance of a new certificate in place thereof.
5. Notice of Liquidation. As soon as practicable after the Effective Date, and
not less than 20 days prior to the filing of Articles of Dissolution with the
Maryland State Department of Assessments and Taxation, the Company shall mail
notice to all of its known creditors, at their addresses as shown on the records
of the Company, and to its employees, if any, either at their home addresses as
shown on the records of the Company, or at their business addresses, that the
Plan has been approved by the Board and the Stockholders and that it will be
liquidating its assets.
6. Filings. As soon as practicable after the Liquidation Date, within the
Liquidation Period, the Company shall prepare and file (i) Articles of
Dissolution under the MGCL, (ii) Form N-8F under the 1940 Act, (iii) within
thirty days after the Effective Date, a United States Treasury Form 966 pursuant
to Section 6043 of the Code and such additional forms and reports with the
Internal Revenue Service as may be appropriate in connection with this Plan and
the carrying out thereof, and (iv) any other documents as are necessary to
effect the dissolution and/or de-registration of the Company in accordance with
the requirements of the Charter of the Company, the MGCL, the Code, the 1940 Act
and any other applicable securities laws, and any rules and regulations of the
Securities and Exchange Commission or any state securities commission,
including, without limitation, withdrawing any qualification to conduct business
in any state in which the Company is so qualified, as well as the preparation
and filing of any federal, state and local tax returns.
7. Amendment or Abandonment of Plan. The Board may modify or amend this Plan at
any time without Stockholder approval if it determines that such action would be
advisable and in the best interests of the Company and its Stockholders. If any
amendment or modification appears necessary and in the judgment of the Board
will materially and adversely affect the interests of the Stockholders, such an
amendment or modification will be submitted to the Stockholders for approval.
8. Powers of Board and Officers. The Board and the officers of the Company are
authorized to approve such changes to the terms of any of the transactions
referred to herein, to interpret any of the provisions of this Plan, and to
make, execute and deliver such other agreements, conveyances, assignments,
transfers, certificates and other documents and take such other action as the
Board and the officers of the Company deem necessary or desirable in order to
carry out the provisions of this Plan and effect the complete liquidation and
dissolution of the Company in accordance with the Code and the MGCL.
9. Termination of Business Operations. As soon as practicable upon adoption of
this Plan, the Company shall cease to conduct business except as shall be
necessary in connection with the effectuation of its liquidation and
dissolution, taking reasonable steps to preserve the value of the Company's
assets, and distributing the Company's assets to the Stockholders in accordance
with the Plan.
10. Expenses. The expenses of carrying out the terms of this Plan shall be borne
by the Company, whether or not the Liquidation contemplated by this Plan is
effected.
IN WITNESS WHEREOF, the Board of Directors of the Company has
caused this Plan to be executed by the Company as of this __ day of , 1999.
LATIN AMERICA SMALLER COMPANIES
FUND, INC.
By:
<PAGE>
LATIN AMERICA SMALLER COMPANIES FUND, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned holder of shares of Common Stock of Latin America
Smaller Companies Fund, Inc., a Maryland corporation (the "Fund"), hereby
appoints Peter Lamaison, James Hirsh and Coleen Downs Dinneen, and each of them,
attorneys and proxies for the undersigned, with full powers of substitution and
revocation, to represent the undersigned and to vote on behalf of the
undersigned all shares of Common Stock which the undersigned is entitled to vote
at a Special Meeting of Shareholders of the Fund to be held at Marriott World
Trade Center, 3 World Trade Center, Room __, New York, New York 10048 at 2:00
p.m., on December 15, 1998, and any adjournments thereof. The undersigned hereby
acknowledges receipt of the Notice of Special Meeting and Proxy Statement and
hereby instructs said attorneys and proxies to vote said shares as indicated
hereon. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting. A majority of the proxies
present and acting at the Meeting in person or by substitute (or, if only one
shall be so present, then that one) shall have and may exercise all of the power
and authority of said proxies hereunder. The undersigned hereby revokes any
proxy previously given.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
X Please mark
vote as in
this example.
This proxy, if properly executed, will be voted in the manner directed by the
undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR"
PROPOSAL 1. The Board of Directors recommends that the shareholders vote "FOR"
approval of a plan of complete liquidation and dissolution of the Fund.
1. TO APPROVE A PLAN OF LIQUIDATION FOR AGAINST ABSTAIN
AND DISSOLUTION OF THE FUND ____ ____ ____
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT ____
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
NOTE: Please sign exactly as your name appears on this Proxy. If joint owners,
EITHER may sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full title.
Signature: Date:
Signature: Date:
