EXHIBIT 12(a)(4)
THE CHINA FUND, INC.
PROXY VOTING POLICY AND PROCEDURES
The Board of Directors of The China Fund, Inc. (the "Fund") hereby adopts the
following policy and procedures with respect to voting proxies relating to Fund
securities managed by Martin Currie Inc. (the "Listed Investment Manager" and
the "Direct Investment Manager", and the "Investment Manager", collectively).
I. POLICY
It is the policy of the Board of Directors of the Fund (the "Board") to delegate
the responsibility for voting proxies relating to securities held by the Fund to
the Investment Managers as a part of the Managers' general management of the
Fund's assets, subject to the Board's continuing oversight. The Board of
Directors of the Fund hereby delegates such responsibility to the Investment
Managers, and directs each Investment Manager to vote proxies relating to Fund
portfolio securities managed by the Investment Manager consistent with the
duties and procedures set forth below. The Investment Managers may retain one or
more vendors to review, monitor and recommend how to vote proxies in a manner
consistent with the duties and procedures set forth below, to ensure such
proxies are voted on a timely basis and to provide reporting and/or record
retention services in connection with proxy voting for the Fund.
II. FIDUCIARY DUTY
The right to vote a proxy with respect to securities held by the Fund is an
asset of the Fund. Each Investment Manager, to which authority to vote on behalf
of the Fund is delegated, acts as a fiduciary of the Fund and must vote proxies
in a manner consistent with the best interest of the Fund and its shareholders.
In discharging this fiduciary duty, each Investment Manager must maintain and
adhere to its policies and procedures for addressing conflicts of interest and
must vote in a manner substantially consistent with its policies, procedures and
guidelines, as presented to the Board.
III. PROCEDURES
The following are the procedures adopted by the Board for the administration of
this policy:
A. Review of Investment Managers' Proxy Voting Procedures. The Investment
Managers shall present to the Board their policies, procedures and other
guidelines for voting proxies at least annually, and must notify the Board
promptly of material changes to any of these documents, including changes
to policies addressing conflicts of interest.
B. Voting Record Reporting. Each Investment Manager shall provide the
voting record information necessary for the completion and filing of
Form-NPX to the Fund at least annually. Such voting record information
shall be in a form acceptable to the Fund and shall be provided at such
time(s) as are required for the timely filing of Form-NPX and at such
additional time(s) as the Fund and the Investment Manager may agree from
time to time. With respect to those proxies that an Investment Manager has
identified as involving a conflict of interest(1), the Investment Manager
shall submit a separate report indicating the nature of the conflict of
interest and how that conflict was resolved with respect to the voting of
the proxy.
- ----------
(1) As it is used in this document, the term "conflict of interest" refers to
a situation in which the Investment Managers or affiliated persons of the
Investment Managers have a financial interest in a matter presented by a
proxy other than the obligation they incur as Investment Managers to the
Fund which could potentially compromise the Investment Managers'
independence of judgment and action with respect to the voting of the
proxy.
1
C. Record Retention. The each Investment Manager shall maintain such
records with respect to the voting of proxies as may be required by the
Investment Advisers Act of 1940 and the rules promulgated thereunder or by
the Investment Company Act of 1940 and the rules promulgated thereunder.
D. Conflicts of Interest. Any actual or potential conflicts of interest
between or an Investment Manager and the Fund's shareholders arising from
the proxy voting process will be addressed by the relevant Investment
Manager and the Investment Manager's application of its proxy voting
procedures pursuant to the delegation of proxy voting responsibilities to
the Investment Manager. In the event that the Investment Manager notifies
the officer(s) of the Fund that a conflict of interest cannot be resolved
under the Investment Manager's Proxy Voting Procedures, such officer(s)
are responsible for notifying the Chairman of the Board of the Fund of the
irreconcilable conflict of interest and assisting the Chairman with any
actions he determines are necessary.
IV. REVOCATION
The delegation by the Board of the authority to vote proxies relating to
securities of the Fund is entirely voluntary and may be revoked by the Board, in
whole or in part, at any time.
V. ANNUAL FILING
The Fund shall file an annual report of each proxy voted with respect to
securities of the Fund during the twelve-month period ended June 30 on Form N-PX
not later than August 31 of each year.(2)
VI. DISCLOSURES
A. The Fund shall include in its annual report filed on Form N-CSR:
1. a description of this policy and of the policies and procedures
used by the Fund and the Investment Managers to determine how to
vote proxies relating to portfolio securities or copies of such
policies and procedures; and
2. a statement disclosing that a description of the policies and
procedures used by or on behalf of the Fund to determine how to vote
proxies relating to securities of the Fund is available without
charge, upon request, by calling the Fund's toll-free telephone
number; through a specified Internet address, if applicable; and on
the SEC's website; and
3. a statement disclosing that information regarding how the Fund
voted proxies relating to Fund securities during the most recent
12-month period ended June 30 is available without charge, upon
request, by calling the Fund's toll-free telephone number; or
through a specified Internet address; or both; and on the SEC's
website.
VII. REVIEW OF POLICY
The Board shall review from time to time this policy to determine its
sufficiency and shall make and approve any changes that it deems necessary from
time to time.
Adopted: September 12, 2003
- ----------
(2) The Fund must file its first report on Form N-PX not later than August 31,
2004, for the twelve-month period beginning July 1, 2003, and ending June
30, 2004.
2
MARTIN CURRIE, INC.
STATEMENT OF POLICIES AND PROCEDURES
PROXY VOTING
Martin Currie, Inc. ("Martin Currie") has adopted a Statement of Policies and
Procedures for Voting Proxies (the "Policies and Procedures") designed to ensure
that it votes proxies in the best interests of its Clients in accordance with
its fiduciary duties, Rule 206(4)-6 under the Investment Advisers Act of 1940
and other applicable law. The Policies and Procedures do not apply to any Client
who has retained authority and discretion to vote its own proxies or delegated
such authority and discretion to a third party.
PROXY VOTING POLICIES
Martin Currie recognizes the importance of good corporate governance in ensuring
that management and boards of directors fulfil their obligations to
shareholders. As part of its investment process, it takes into account the
attitudes of management and boards of directors on corporate governance issues
when deciding whether to invest in a company. As set out in the Policies and
Procedures, it is Martin Currie's general policy to support management of the
companies in which it invests and it will generally cast votes in accordance
with management's proposals. However, it reserves the right to depart from this
policy in order to avoid voting decisions that it believes may be contrary to
its Clients' best interests.
The Policies and Procedures also contain proxy voting policies relating to
specific issues, such as: the election of directors; the appointment of
auditors; changes to a company's charter, articles of incorporation or bylaws;
corporate restructurings, mergers and acquisitions; transparency and
accountability in corporate governance; proposals regarding social, political
and environmental issues; and executive compensation. Martin Currie applies
these proxy-voting policies flexibly and reserves the right to vote contrary to
the policies when it believes they may be contrary to its Clients' best
interests.
Martin Currie is a global investment manager, and it invests significantly in
emerging markets. It should be noted that protection for shareholders may vary
significantly from jurisdiction to jurisdiction, and in some cases may be
substantially less than in the U.S. or developed countries.
PROXY VOTING PROCEDURES
Martin Currie's Market Data Team is responsible for the coordination of proxy
voting and liaises with Product Managers and/or the Proxy Voting Committee. The
Product Managers are responsible for evaluating proxies and determining voting
decisions in accordance with the general principles of the Policies and
Procedures.
The Proxy Voting Committee, which comprises senior investment personnel and
representatives of the Legal & Compliance Department, regularly reviews the
proxy policies and considers specific proxy voting matters in certain
situations.
CONFLICTS OF INTEREST
Martin Currie recognizes that there is a potential conflict of interest when it
votes a proxy solicited by an issuer with whom it has a material business or
personal relationship that may affect how it votes on the issuer's proxy. Martin
Currie believes that oversight by the Committee ensures that proxies are voted
with only its Clients' best interests in mind. In order to avoid any perceived
conflict of interests, procedures have been established for use when proxy votes
are issued by existing Clients or where Martin Currie holds a significant voting
percentage of the company.
PROXIES OF CERTAIN NON-U.S. ISSUERS
Proxy voting in certain countries requires "share blocking." That is,
shareholders wishing to vote their proxies must deposit their shares shortly
before the date of the meeting (usually one week) with a designated depositary.
During this blocking period, shares that will be voted at the meeting cannot be
sold until the meeting has taken place and the shares are returned to the
Clients' custodian banks. Martin Currie may determine that the value of
exercising the vote does not outweigh the detriment of not being able to
transact in the shares during this period. In such cases, Martin Currie may
abstain from voting the affected shares.
1
AVAILABILITY OF POLICIES AND PROCEDURES AND PROXY VOTING RECORD
Clients may obtain a copy of the Policies and Procedures and information on how
Martin Currie voted with respect to their proxies by contacting the Client
Services Team at Martin Currie, Inc., Saltire Court, 20 Castle Terrace,
Edinburgh, Scotland, EH1 2ES, tel. 011-44-131-229-5252, fax 011-44-131-222-2527
or email Clientservices@martincurrie.com.
2