SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or 240.14a-12
THE THAI CAPITAL FUND, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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THE THAI CAPITAL FUND, INC.
C/O DAIWA SECURITIES TRUST COMPANY
ONE EVERTRUST PLAZA
JERSEY CITY, NEW JERSEY 07302
(800) 426-5523
August , 1999
Dear Stockholders:
The Annual Meeting of Stockholders of The Thai Capital Fund, Inc. (the
"Fund") will be held at 9:30 A.M., New York time, on Friday September 17, 1999,
at the offices of Daiwa Securities America Inc., Financial Square, 32 Old Slip,
14th Floor, New York, New York 10005. A Notice and Proxy Statement regarding the
meeting, a proxy card for your vote at the meeting, and a postage prepaid
envelope in which to return your proxy are enclosed.
At the Annual Meeting, the stockholders will (i) elect two Class II
directors and one Class III director; (ii) consider the ratification of the
selection of PricewaterhouseCoopers LLP as independent accountants; (iii)
consider the approval of a new Investment Contract between the Fund and Thai
Farmers Asset Management Co., Ltd.; and (iv) consider the approval of a new
International Investment Advisory Agreement between the Fund and Daiwa SB
Investments (HK) Ltd. In addition, the stockholders who will be present at the
Annual Meeting will hear an investment report on the Fund and will have an
opportunity to discuss matters of interest to them.
If you will not be able to attend the Annual Meeting in person, please take
the time now to review the enclosed materials and vote your shares by proxy.
YOUR VOTE IS IMPORTANT.
The Board recommends that the stockholders vote in favor of each of the
foregoing matters.
Respectfully,
/s/ Masayasu Ohi
Masayasu Ohi
CHAIRMAN OF THE BOARD
STOCKHOLDERS ARE STRONGLY URGED TO PROMPTLY SIGN AND MAIL THE ACCOMPANYING PROXY
IN THE ENCLOSED RETURN ENVELOPE TO ENSURE A QUORUM AT THE MEETING.
YOUR VOTE IS IMPORTANT.
THE THAI CAPITAL FUND, INC.
------------------------
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 17, 1999
------------------------
To the Stockholders of
The Thai Capital Fund, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of The Thai
Capital Fund, Inc. (the "Fund") will be held at the offices of Daiwa Securities
America Inc., Financial Square, 32 Old Slip, 14th Floor, New York, New York
10005, on Friday September 17, 1999, at 9:30 A.M., New York time, for the
following purposes:
1. To elect two Class II directors to serve for a term expiring on the date
on which the Annual Meeting of Stockholders is held in the year 2002 and
one Class III director to serve for a term expiring on the date on which
the Annual Meeting of Stockholders is held in the year 2000.
2. To ratify or reject the selection of PricewaterhouseCoopers LLP as
independent accountants of the Fund for its fiscal year ending December
31, 1999.
3. To approve or reject a new Investment Contract between the Fund and Thai
Farmers Asset Management Co. Ltd., as investment manager of the Fund.
4. To approve or reject a new International Investment Advisory Agreement
between the Fund and Daiwa SB Investments (HK) Ltd., as investment
adviser of the Fund.
5. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on July 16, 1999 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting or any adjournments thereof.
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. You may nevertheless vote in person at the meeting if you choose
to attend. Your vote is important. The enclosed proxy is being solicited by the
Board of Directors of the Fund.
By order of the Board of Directors,
Daniel F. Barry
SECRETARY
August , 1999
THE THAI CAPITAL FUND, INC.
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PROXY STATEMENT
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INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of THE THAI CAPITAL FUND, INC. (the "Fund")
for use at the Annual Meeting of Stockholders, to be held at the offices of
Daiwa Securities America Inc., Financial Square, 32 Old Slip, 14th Floor, New
York, New York 10005, on Friday, September 17, 1999, at 9:30 A.M., New York
time, and at any adjournments thereof.
This Proxy Statement and the form of proxy are being mailed to stockholders
on or about August , 1999. Any stockholder giving a proxy in advance of the
Annual Meeting has the power to revoke it by mail (addressed to the Secretary,
The Thai Capital Fund, Inc., c/o Daiwa Securities Trust Company, One Evertrust
Plaza, 9th Floor, Jersey City, New Jersey 07302) or in person at the meeting, by
executing a superseding proxy or by submitting a notice of revocation to the
Fund. All properly executed proxies received in time for the meeting will be
voted as specified in the proxy or, if no specification is made, for each
proposal referred to in this Proxy Statement. Abstentions and broker non-votes
are each included in the determination of the number of shares present at the
meeting.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT FOR ITS
FISCAL YEAR ENDED DECEMBER 31, 1998 TO ANY STOCKHOLDER REQUESTING SUCH REPORT.
REQUESTS FOR THE ANNUAL REPORT SHOULD BE MADE BY WRITING TO THE THAI CAPITAL
FUND, INC., C/O DAIWA SECURITIES TRUST COMPANY, ONE EVERTRUST PLAZA, 9TH FLOOR,
JERSEY CITY, NEW JERSEY 07302, ATTENTION: SHAREHOLDER RELATIONS, OR BY CALLING
(800) 426-5523 OR (781) 575-2000.
The Board of Directors has fixed the close of business on July 16, 1999 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting and at any adjournments 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 the record date, the Fund had outstanding
6,278,588 shares of common stock. To the knowledge of the Fund's management, no
person owned beneficially more than 5% of the Fund's outstanding shares as of
July 16, 1999.
Management of the Fund knows of no business other than that mentioned in
Items 1 through 4 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF
EACH OF THE MATTERS MENTIONED IN ITEMS 1 THROUGH 4 OF THE NOTICE OF MEETING.
1
(1) ELECTION OF DIRECTORS
Persons named in the accompanying form of proxy intend in the absence of
contrary instructions to vote all proxies for the election of the three nominees
listed below as directors of the Fund:
CLASS II CLASS III
------------------------------ ---------------------
Austin C. Dowling Masayasu Ohi
Virabongsa Ramangkura
to serve for terms expiring on the date of subsequent Annual Meetings of
Stockholders as follows: Class II in the year 2002 and Class III in the year
2000, or until their successors are elected and qualified. If any such nominee
should be unable to serve, an event that is not now anticipated, the proxies
will be voted for such person, if any, as shall be designated by the Board of
Directors to replace any such nominee. The election of each director will
require the affirmative vote of a majority of the votes cast at the meeting. For
this purpose, abstentions and broker non-votes will not be counted as votes cast
at the meeting.
At its September 3, 1998 meeting, the Board of Directors elected Mr.
Masayasu Ohi as a director to fill the vacancy created by Mr. Shuichi Komori,
whose resignation was effective as of September 1998. Mr. Komori had served as a
Class III director, and Mr. Ohi is therefore standing as a Class III director.
Although the term of the Fund's Class III directors does not expire until the
date on which the Annual Meeting of Stockholders is held in the year 2000,
Maryland law and the Fund's By-laws require a director, regardless of Class, who
is elected by the Board of Directors to fill a vacancy to stand for election at
the next Annual Meeting of Stockholders.
INFORMATION CONCERNING NOMINEES AND DIRECTORS
The following table sets forth information concerning each of the nominees
as a director of the Fund, as well as the other current directors of the Fund.
Each of the nominees is now a director of the Fund and has consented to be named
in this Proxy Statement and to serve as a director of the Fund if elected.
PRESENT OFFICE WITH THE
FUND, IF ANY, PRINCIPAL OCCUPATION SHARES
OR EMPLOYMENT DURING PAST BENEFICIALLY
FIVE YEARS AND OWNED PERCENT
NAME (AGE) AND ADDRESS DIRECTORSHIPS IN DIRECTOR JULY 16, OF
OF NOMINEES/DIRECTORS PUBLICLY HELD COMPANIES SINCE 1999(+) CLASS
- ---------------------------------- ------------------------------------------------------------ -------- ------------ -------
NOMINEES
Austin C. Dowling (67) Director, since 1992, The Japan Equity Fund, Inc. 1990 1,250 **
1002E Long Beach Boulevard
North Beach, NJ 08008
* Masayasu Ohi (51) Chairman of the Board of the Fund since 1998; Chairman, 1998 None --
Financial Square since 1998, The Taiwan Equity Fund, Inc.; Chairman, since
32 Old Slip, 14th Floor 1998, The Singapore Fund, Inc.; Chairman and Chief Executive
New York, NY 10005 Officer, Daiwa Securities America Inc., since 1998;
Director, Daiwa Securities Co. Ltd., since 1998; Joint
2
PRESENT OFFICE WITH THE
FUND, IF ANY, PRINCIPAL OCCUPATION SHARES
OR EMPLOYMENT DURING PAST BENEFICIALLY
FIVE YEARS AND OWNED PERCENT
NAME (AGE) AND ADDRESS DIRECTORSHIPS IN DIRECTOR JULY 16, OF
OF NOMINEES/DIRECTORS PUBLICLY HELD COMPANIES SINCE 1999(+) CLASS
- ---------------------------------- ------------------------------------------------------------ -------- ------------ -------
Masayasu Ohi (continued) Chief Executive of Daiwa Europe Limited, from 1997 to 1998;
President of Daiwa Europe Limited, London, from 1994 to
1997.
Virabongsa Ramangkura (55) Member of the Thai Senate; Chairman, Bangkok Expressway 1992 None --
99 Surasak Road Public Co., Ltd., since 1993; Executive Director, Advance
Bangrak, Bangkok Agro Public Co., Ltd., since 1994; Director, Preccha Group
10500, Thailand Public Co., Ltd.; Ex-member, The Thailand Development
Research Institute and The Council of Trustees; Ex-chairman,
Economic Board, National Research Bureau from 1996 to 1997;
Director, from 1996 to 1997, Bangkok Airways Co., Ltd.;
Chairman, from 1993 to 1994, Board of Commissioners of The
State Railway of Thailand; Member, from 1993 to 1994,
National Land Transportation Committee of Thailand. Advisor,
Orach (Thailand); Advisor, GE Capital (Thailand); Director,
Country Property, Plc.; Director, Assets Insurance Co. Ltd.;
Director, Imperial Hotel Family Plc.
OTHER CURRENT DIRECTORS
Robert F. Gurnee (71) Chairman and Chief Executive Officer, since 1990, Financial 1990 1,500 **
102 Santomera Lane Integrity Group Inc. (bank and financial services consulting
Greenville, DE 19807 firm); Director, since 1991, Vestaur Securities Co.;
Director, since 1992, The Japan Equity Fund, Inc.
Alfred C. Morley (72) Financial Consultant, since 1991; Senior Director of Old 1990 4,673 **
119 Falcon Drive Dominion Capital Management, since 1991; Senior Advisor,
Charlottesville, VA 22901 since 1990, Financial Analysts Federation; Advisor, from
1990 to 1998, Institute of Chartered Financial Analysts;
Director, since 1990, The Singapore Fund, Inc.
3
- --------------------------
+ The information as to beneficial ownership is based on statements furnished
to the Fund by the nominees and directors.
* Directors so noted are deemed by the Fund's counsel to be "interested
persons" (as defined in the U.S. Investment Company Act of 1940, as amended
(the "1940 Act")) of the Fund or of the Fund's investment manager or
investment adviser. Mr. Ohi is deemed an interested person because of his
affiliation with Daiwa Securities America Inc., an affiliate of the Fund's
investment adviser, Daiwa SB Investments (HK) Ltd. (the "Investment
Adviser"), or because he is an officer of the Fund, or both.
** Represented less than 1% of the outstanding shares at July 16, 1999.
The Fund's Board of Directors held four regular meetings and three special
meetings during the fiscal year ended December 31, 1998. Dr. Virabongsa attended
fewer than seventy-five percent of the aggregate number of meetings of the Board
of Directors.
The Fund's Board of Directors has an Audit Committee which is responsible
for reviewing financial and accounting matters. The current members of the Audit
Committee are Messrs. Dowling, Gurnee, Morley and Dr. Virabongsa. The Audit
Committee held two regular meetings during the fiscal year ended December 31,
1998. Each incumbent director attended at least seventy five percent of the
aggregate number of meetings of the Audit Committee. The Fund has neither a
compensation nor a nominating committee.
Section 16(a) of the U.S. Securities Exchange Act of 1934, as amended,
requires the Fund's officers and directors, and persons who own more than ten
percent of a registered class of the Fund's equity securities, to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission and the New York Stock Exchange, Inc. The Fund believes that its
officers and directors have complied with all applicable filing requirements.
OFFICERS OF THE FUND
Mr. Ohi (age 51) has been Chairman of the Board of the Fund since September
1998 (see information provided above).
Daniel F. Barry (age 52) has been Acting President of the Fund since August
1998 and Secretary of the Fund since March 1999, was also Vice President of the
Fund from December 1992 to August 1998 and Treasurer of the Fund from September
1991 to September 1994 and has been Director and Senior Vice President of Daiwa
Securities Trust Company ("DSTC"), the Fund's Administrator and Custodian, since
December 1998 and June 1993, respectively. From June 1990 to June 1993, he was
Vice President, Mutual Fund Administration of DSTC.
Sean J. Peters (age 38) has been Treasurer of the Fund since June 1998; Vice
President of DSTC since June 1998; Assistant Controller of Reserve Management
Corporation from 1994 to 1998; Assistant Vice President of Bankers Trust Company
from 1992 to 1994.
John A. Koopman (age 29) has been Assistant Treasurer of the Fund since June
1998; Assistant Vice President of DSTC since June 1998; Assistant Treasurer of
Chase Manhattan Bank NA from 1992 to 1998.
Judy Runrun Tu (age 34) has been Assistant Secretary of the Fund since March
1999; Assistant Vice President of DSTC since March 1998; Financial Analyst of
Canon USA from 1997 to 1998; Marketing Coordinator of TotalTel USA from 1995 to
1997; Assistant Controller of Daniel Caron Ltd. from 1990 to 1995.
Laurence E. Cranch (age 52), Assistant Secretary of the Fund since May 1990;
a partner in the law firm of Rogers & Wells LLP since 1980.
4
TRANSACTIONS WITH AND REMUNERATION OF OFFICERS AND DIRECTORS
The aggregate fee remuneration for directors not affiliated with the
Investment Manager or the Investment Adviser was U.S. $37,102.50 during the
fiscal year ended December 31, 1998. Each such non-affiliated director currently
receives fees, paid by the Fund, of U.S. $750 for each directors' meeting
attended in person or by telephone, U.S. $600 for each audit committee meeting
attended in person or by telephone and an annual fee of U.S. $5,000. The
officers and interested directors of the Fund received no compensation from the
Fund. For the fiscal year ended December 31, 1998 the directors voluntarily
discounted their fees by 15%.
DSTC, which pays the compensation and certain expenses of the officers of
DSTC who serve as officers of the Fund, receives an administration fee and a
custodian fee.
Set forth below is a chart showing the aggregate fee compensation paid by
the Fund (in U.S. dollars) to each of its directors during the fiscal year ended
December 31, 1998, as well as the total fee compensation paid to each director
of the Fund by the Fund and by other investment companies advised by the
Investment Manager, the Investment Adviser or their respective affiliates
(collectively, the "Fund Complex") for their services as directors of such
investment companies during their respective fiscal years:
TOTAL
PENSION OR COMPENSATION
RETIREMENT FROM FUND AND
AGGREGATE BENEFITS ACCRUED FUND COMPLEX
COMPENSATION AS PART OF FUND PAID TO
NAME OF DIRECTOR FROM FUND EXPENSES DIRECTORS
- ---------------------------- ------------- ----------------- --------------
Masayasu Ohi*+ $ 0 None $ 0
Shuichi Komori*+ 0 None 0
Damrongsuk Amatyakul+ 0 None 0
Austin C. Dowling* 8,458 None 17,658
Robert F. Gurnee* 8,458 None 17,658
Alfred C. Morley* 8,458 None 17,658
Virabongsa Ramangkura 7,820 None 7,820
Suvit Yodmani 3,910 None 3,910
- --------------------------
* Also serves as a director of other investment companies for which an
affiliate of Daiwa International Capital Management (H.K.) Limited, the
Fund's investment adviser, serves as investment manager or investment
adviser.
+ Mr. Ohi and his predecessor, Mr. Komori, who are affiliated with the
Investment Adviser, and Mr. Damrongsuk, who was affiliated with the
Investment Manager, are considered "interested persons" of the Fund and did
not receive any fee compensation from the Fund for their services as
directors. Mr. Ohi was elected to the Board of Directors in September 1998
to replace Mr. Komori who resigned. Mr. Damrongsuk resigned as Director and
President of the Fund in July 1998. Dr. Suvit resigned as Director of the
Fund in July 1998.
(2)RATIFICATION OR REJECTION OF SELECTION
OF INDEPENDENT ACCOUNTANTS
At a meeting held on March 4, 1999, the Board of Directors of the Fund,
including a majority of the directors who are not "interested persons" of the
Fund (as defined in the 1940 Act), selected PricewaterhouseCoopers LLP to act as
independent accountants for the Fund for the fiscal year ending
5
December 31, 1999, subject to stockholder approval. The Fund knows of no direct
financial or material indirect financial interest of that firm in the Fund. One
or more representatives of PricewaterhouseCoopers LLP are expected to be present
at the Annual Meeting and will have an opportunity to make a statement if they
so desire. Such representatives are expected to be available to respond to
appropriate questions from stockholders.
This selection of independent accountants is subject to the ratification or
rejection of the Fund's stockholders at the meeting. Ratification of the
selection of the independent accountants will require the affirmative vote of a
majority of the votes cast at the meeting. For this purpose, abstentions and
broker non-votes will not be counted as votes cast at the meeting.
(3) APPROVAL OF A NEW INVESTMENT CONTRACT
TERMINATION OF ORIGINAL INVESTMENT CONTRACT;
APPROVAL OF NEW INVESTMENT CONTRACT
Commencing in the summer of 1998, the Board of Directors of the Fund
conducted a review of the Fund's investment management arrangements. In this
connection, the Board solicited proposals from a number of investment managers
in Thailand. In response, the Board received proposals from four managers,
including Thai Farmers Asset Management Co., Ltd. ("TFAM or the "Proposed
Manager") and The Mutual Fund Public Company ("MFC"). The Board gathered further
information from these investment managers and, in January 1999, members of the
Board met with each of the four investment managers under consideration. The
information reviewed by the Board included information regarding the number and
types of clients advised by the investment managers, including other investment
funds; the amount of assets under management by the investment manager; the
number of persons employed by the investment manager and information regarding
the education and employment experience of the principal investment officers of
the investment manager; the compliance systems and personnel of the investment
manager; the affiliations of the investment manager; the performance of the
investment manager; and the fees proposed to be charged by the investment
manager. Based on its review of this information, at its quarterly meeting held
on March 4, 1999, the Board of Directors of the Fund, including a majority of
the Directors of the Fund who are not officers of the Fund or affiliated with
MFC, TFAM or Daiwa SB Investments (HK) Ltd., the Fund's investment adviser (the
"Disinterested Directors"), voting in person, approved the appointment of TFAM
as the Fund's investment manager to take effect at such time as TFAM registers
under the U.S. Investment Advisers Act of 1940, as amended, and that the
Investment Contract dated May 21, 1990 (the "Original Investment Contract")
between MFC be terminated. By means of a written notice of MFC dated July 16,
1999, the Fund provided MFC with written notice of the termination as investment
manager of the Fund under the Original Investment Contract. It is anticipated
that TFAM will commence serving as investment manager of the Fund sometime
between August 16, 1999 and September 16, 1999.
THE PROPOSED MANAGER
Thai Farmers Asset Management Co., Ltd. is one of the larger investment
managers in Thailand, managing 21 mutual funds with approximately US$1.7 billion
in assets as of June 30, 1999. TFAM manages open-end and closed-end equity
funds, fixed-income funds and balanced funds.
6
TFAM was established as a mutual fund manager in March 1992 pursuant to the
Finance Business, Securities Business and Credit Foncier Business Act of
Thailand. As of June 30, 1999, TFAM's principal shareholders were as follows:
PERCENTAGE
NAME AND ADDRESS OF SHAREHOLDER OWNERSHIP
- ----------------------------------------------------------------------------------- ------------
Thai Farmers Bank Public Company Limited 63.69%
Thai Farmers Lane, Katburana Road, Bangkok 10140, Thailand
Muang Thai Life Assurance Company Limited 16.67%
250 Rachadaphisek Road, Huaykwang, Bangkok 10320, Thailand
Mercury Asset Management Channel Islands Limited 12.14%
Forum House, Green Ville Street, St. Helier, Jersey JE4 8RL,
Channel Islands
Sombat Lansam Company Limited and Swiss Re Insurance Company Limited own 25%
and 24.99% of Muang Thai Life Assurance Company Limited, respectively. Mercury
Asset Management Channel Islands Limited is a wholly-owned subsidiary of Mercury
Holding BV which, in turn is an indirect wholly-owned subsidiary of Merrill
Lynch & Co. Inc.
The principal address of the Proposed Manager is 252/38-41 Muang Thai-Phatra
Office Tower I, 31st Floor, Rachadaphisek Road, Huaykwang, Bangkok 10320.
Certain information regarding the directors and the principal executive
officers of the Manager is set forth below:
PRINCIPAL OCCUPATION
NAME AND ADDRESS AND POSITION WITH THE MANAGER
- ---------------------------------------- -----------------------------------------------------
Dayana Bunnag* Director and President of TFAM
Andrew S. Dalton* Director of TFAM
Sirisopa Matrakul* Director of TFAM
Pakineenard Tiyachate* Executive Vice President, Muang Thai Life
Assurance Co., Ltd.; Director of TFAM
Kraisorn Sudas Na* First Senior Vice President, Muang Thai Life
Assurance Co., Ltd.; Director of TFAM
Charae Chutharatkul* President, Thai Tapioca Development Institute;
Director and Chairman of TFAM
Nualphan Phanchet* Director and First Senior Vice President, Muang
Thai Assurance Co., Ltd.; Director of TFAM
Som Pisansopon* First Vice President, Thai Farmers Bank Plc.;
Director of TFAM
Veerawat Phongsathit* Vice President and Chief Compliance Officer of TFAM
- --------------------------
* Business Address: 252/38-41 Muang Thai-Phatra Office Tower I, 31st Floor,
Rachadaphisek Road, Huaykwang, Bangkok 10320
7
THE INVESTMENT CONTRACT
The terms of the new Investment Contract between the Fund and TFAM (the "New
Investment Contract") is identical to the Fund's Original Investment Contract
(the form of which is attached as Annex A), except for the replacement of MFC as
investment manager with the Proposed Manager. The holders of a majority of the
outstanding voting securities (within the meaning of the 1940 Act) of the Fund
are being asked to approve the New Investment Contract. See "The New Investment
Contract" below.
The following is a summary of the Original Investment Contract and the New
Investment Contract. The description of the New Investment Contract is qualified
by reference to Annex A.
THE ORIGINAL INVESTMENT CONTRACT.
The original Investment Contract, dated as of May 21, 1990, was last
submitted to a vote by the Fund's stockholders at the June 10, 1994 Annual
Meeting of Stockholders to approve the continuance of the Investment Contract.
Under the terms of the Original Investment Contract, MFC made investment
decisions, prepared research and statistical data and supervised the purchase
and sale of securities on behalf of the Fund. MFC also supervised the selection
of brokers and dealers to carry out the transactions, all in accordance with the
Fund's investment objective and policies under the direction and control of the
Fund's Board of Directors. MFC maintained records and furnished or caused to be
furnished all required records or other information for the Fund to the extent
such records, reports and other information were not maintained or furnished by
the Fund's administrator or other agents. MFC or one of its affiliates was
responsible for the compensation and expenses of those of the Fund's Directors,
officers and employees who were Directors, officers or employees of MFC or any
of its affiliates, except that the Fund bore travel expenses or an appropriate
fraction thereof of officers and Directors of the Fund who were directors,
officers or employees of MFC to the extent such expenses related to attendance
at meetings of the Fund's Board of Directors or any committee thereof.
Under the terms of the Original Investment Contract, MFC and its affiliates
were permitted to provide investment advisory services to other clients,
including clients who may invest in securities of Thai companies and, in
providing such services, may use non-confidential information furnished by MFC.
Conversely, information furnished by others to MFC in the course of providing
services to clients other than the Fund may have been useful to, and used by,
MFC in providing services to the Fund.
The Original Investment Contract provided that MFC was not liable for any
act or omission, error of judgment or mistake of law, or for any loss suffered
by the Fund in connection with matters to which the Original Investment Contract
related, except for losses resulting from willful misfeasance, bad faith or
gross negligence on the part of MFC in the performance of its duties, or from
reckless disregard by MFC of its obligations and duties under the Original
Investment Contract.
For its services, MFC received a monthly fee, payable in Thai Baht, at an
annual rate of 0.60% of the Fund's assets held under the Investment Contract.
For the fiscal year ended December 31, 1998, MFC earned a fee for management and
certain administrative services, including expenses, of U.S. $114,290.
THE NEW INVESTMENT CONTRACT.
The Board of Directors of the Fund, including the Disinterested Directors,
approved the succession of MFC by TFAM as the Fund's investment manager on March
4, 1999, subject to TFAM's registration under the U.S. Investment Advisers Act
of 1940 and recommended the New Investment Contract for approval by the
stockholders of the Fund. The New Investment Contract is identical to the
Original Investment Contract. The New Investment Contract will take effect upon
TFAM's commencing to provide services under the contract, which, as described
above, is expected to occur between August 16, 1999 and September 16, 1999.
8
Continuance of the New Investment Contract for a period beyond 120 days from its
effective date is subject to stockholder approval. If so approved, the New
Investment Contract will continue in effect for an initial two-year term and
thereafter for successive annual periods as long as such continuance is approved
in accordance with the 1940 Act.
The investment management fee as a percentage of net assets payable by the
Fund to TFAM will be the same under the New Investment Contract as under the
Original Investment Contract.
In the event that stockholders of the Fund do not approve the New Investment
Contract, the Board will take such action as it deems in the best interest of
the Fund and its stockholders, which may include proposing that stockholders
approve an agreement in lieu of the New Investment Contract.
STOCKHOLDER APPROVAL
To become effective, the New Investment Contract must be approved by a vote
of a majority of the outstanding voting securities of the Fund. The "vote of a
majority of the outstanding voting securities" is defined under the 1940 Act as
the lesser of the vote of (i) 67% or more of the shares of the Fund entitled to
vote thereon present at the Meeting if the holders of more than 50% of such
outstanding shares of the Fund are present in person or represented by proxy, or
(ii) more than 50% of such outstanding shares of the Fund entitled to vote
thereon. The New Investment Contract was unanimously approved by the Board after
consideration of all factors which they determined to be relevant to their
deliberations, including those discussed above. The Board also unanimously
determined to submit the New Investment Contract for consideration by the
stockholders of the Fund.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" APPROVAL
OF THE NEW INVESTMENT CONTRACT.
(4) APPROVAL OF A NEW ADVISORY AGREEMENT
THE ADVISER
Daiwa SB Investments (HK) Ltd. (formerly, Daiwa International Capital
Management (H.K.) Limited) (the "Adviser") acts as the Fund's investment
adviser. It was established in 1988 to provide a direct investment access not
only to the Japanese investors but also worldwide investors in the high growth
Pacific Basin markets, and at the same time, to work as an intermediary for
Asian investors investing in Japan, North America, Europe and other countries.
It has acted as investment adviser to the Fund since the Fund commenced its
investment operations. The Adviser is registered under the U.S. Investment
Advisers Act of 1940, as amended.
The Adviser is a direct subsidiary of Daiwa SB Investments, Ltd. (formerly,
Daiwa International Capital Management Co., Ltd.) ("DSBI") which maintains sole
ownership of investment advisory subsidiaries in the United States, London, Hong
Kong and Singapore to provide investment advisory services to a global
clientele. DSBI is a leading investment management organization in Japan,
managing net assets of US $29 billion worldwide, as of April 1999. DSBI's
clients include European, Asian and North American pension funds, mutual funds
and financial institutions.
The address of the Adviser is Level 30, One Pacific Place, 88 Queensway,
Hong Kong. The principal address of Daiwa SB Investments Ltd. is 7-9 Nihonbashi
2-chome, Chuo-ku, Tokyo 103-0027.
9
Certain information regarding the directors and the principal executive
officers of the Investment Adviser is set forth below:
PRINCIPAL OCCUPATION
AND POSITION WITH THE
NAME AND ADDRESS ADVISER
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Shuunsuke Ichijo*.................................................. Managing Director
Nobumasa Wakabayashi*.............................................. Director
Shunsuke Omae*..................................................... Director
Ambrose, Chang Chung Kwon*......................................... Director and C.I.O.
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* Business Address: Level 30, One Pacific Place, 88 Queensway, Hong Kong
THE MERGER
On April 1, 1999, Daiwa International Capital Management Co., Ltd. merged
with two investment management subsidiaries of The Sumitomo Bank, Limited (the
"Sumitomo Bank"), SB Investment Management Co., Ltd. and SBIM Investment Trust
Management Co., Ltd (the "Merger"). The surviving corporation is named Daiwa SB
Investments Ltd. and is the direct parent company of the Adviser owning 100% of
its outstanding capital stock.
As of [July 30], 1999, the Sumitomo Bank, Daiwa Securities Group Inc. and
TRPH Corporation each held [44.0%], [30.4%] and [10.0%] of the outstanding stock
of Daiwa SB Investments Ltd., respectively. TRPH Corporation is a wholly owned
subsidiary of T. Rowe Price Associates, Inc. The principal address of Sumitomo
Bank is 4-6-5 Kitahama, Chuo-ku, Osaka, Japan 541-0041. The principal address of
Daiwa Institute of Research Ltd. is 15-6, Fuyuki, Kohto-ku, Tokyo, Japan
135-8460. The principal address of TRPH Corporation and T. Rowe Price
Associates, Inc. is 100 East Pratt Street, Baltimore, Maryland 21202.
In connection with the Merger, Sumitomo Bank and Daiwa Securities Group Inc.
have become holders of a controlling block of securities (25% or more) in Daiwa
SB Investments Ltd. thereby possibly resulting in the assignment of The
International Investment Advisory Agreement dated May 21, 1990, between the Fund
and the Adviser (the "Original Advisory Agreement") for purposes of Section 15
(a)(4) of the Investment Company Act of 1940 (the "Investment Company Act").
Pursuant to the requirements of Section 15(a)(4) of the Investment Company Act,
the Original Advisory Agreement automatically terminates upon its assignment.
The Adviser does not anticipate any reduction in the quality of services now
provided to the investment manager and the Adviser and does not expect that the
Merger will result in any material changes in its business or in the manner in
which it renders services to the investment manager and the Fund. In addition,
the Adviser does not anticipate that the Merger or any ancillary transactions
will have any adverse effect on its ability to fulfill its obligations under the
New Advisory Agreement (as defined below) with the Fund or to operate its
business in a manner consistent with past business practice.
THE ADVISORY AGREEMENT
As a result of the termination of the Original Advisory Agreement, a
majority of the Directors of the Fund who are not officers of the Fund or
affiliated with the Adviser, MFC or TFAM (the "Disinterested Directors")
approved, voting in person, a new international investment advisory agreement
(the "New Advisory Agreement") between the Fund and the Advisor. The New
Advisory Agreement is substantially the same as the Original Advisory Agreement,
except for the date of execution and provisions that Daiwa SB Investments (HK)
Ltd. will not be entitled to receive fees for services or reimbursements for
expenses unless and until the payment of fees and expenses are approved by the
stockholders of the Fund. The holders of a majority of the outstanding voting
securities (within the meaning of the 1940 Act) of the Fund are being asked to
approve the
10
New Advisory Agreement, including the payment of fees and expenses of the
Adviser from April 1, 1999 to the date the New Advisory Agreement is approved by
the Fund's stockholders. See "The New Advisory Agreement" below.
The following is a summary of the Original Advisory Agreement and the New
Advisory Agreement. The description of the New Advisory Agreement is qualified
by reference to Annex B.
THE ORIGINAL ADVISORY AGREEMENT.
The original International Investment Advisory Agreement, dated as of May
21, 1990, was last submitted to a vote by the Fund's stockholders at the June
10, 1994 Annual Meeting of Stockholders to approve the continuance of the
International Investment Advisory Agreement.
Under the terms of the Original Advisory Agreement, the Adviser was required
to advise the Fund's investment manager on macro-economic issues as they related
to investment decisions involving the Fund's portfolio, to prepare and make
available research and statistical data and to provide general and specific
advice to the investment manager regarding the Fund's investments. The Fund's
investment manager, however, made the ultimate investment decisions. The
information and investment advice received by the Fund's investment manager from
the Adviser was used for the purpose of managing the Fund's investment portfolio
and was evaluated by the investment manager's staff in light of their own
expertise and information from other sources. The Adviser also was responsible
for monitoring the activities of the Fund's administrator, custodians, transfer
agent, accountants, legal counsel and other persons providing services to the
Fund.
The Adviser or one of its affiliates was responsible for the compensation
and expenses of the Fund's Directors, officers and employees who were directors,
officers or employees of the Adviser or any of its affiliated persons, except
that the Fund bore travel expenses of officers and Directors of the Fund who
were managing directors, officers or employees of the Adviser to the extent such
expenses related to attendance at meetings of the Fund's Board of Directors or
any committee thereof.
The Original Advisory Agreement provided that the Adviser was not liable for
any error of judgment or mistake of law, or for any loss suffered by the Fund in
connection with matters to which the Advisory Agreement related, except for loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Adviser in the performance of its obligations and duties or by reason of its
reckless disregard of its obligations and duties under the Original Advisory
Agreement.
For its services, the Adviser received a monthly fee, payable in U.S.
Dollars, at an annual rate equal to 0.60% of the Fund's average weekly net
assets (including both Thai and U.S. assets). For the fiscal year ended December
31, 1998, the Adviser earned a fee, including expenses, of U.S. $113,679.
Daiwa Securities Trust Company ("DSTC"), an affiliate of the Adviser, acts
as Administrator to the Fund. For its services as Administrator, DSTC received
from the Fund a fee of U.S. $100,000 for the fiscal year ended December 31,
1998, reflecting a waiver of $50,000. DSTC is also the U.S. Custodian. For its
services as U.S. Custodian, DSTC received from the Fund fees and expenses of
U.S. $10,459 for the fiscal year ended December 31, 1998. After the approval of
the New Advisory Agreement, DTSC will continue to act as Administrator and U.S.
Custodian of the Fund.
The Original Advisory Agreement had a provision for termination without
penalty at any time by the Fund or by the Adviser upon 60 days' written notice.
THE NEW ADVISORY AGREEMENT.
The Board of Directors of the Fund (the "Board"), including the
Disinterested Directors, approved the New Advisory Agreement on March 4, 1999,
the form of which is attached as Annex B (the "New Advisory
11
Agreement") and recommended the Agreement for approval by the stockholders of
the Fund. The New Advisory Agreement is substantially the same as the Original
Advisory Agreement. The New Advisory Agreement took effect on April 1, 1999
subject to obtaining of stockholder approval. The New Advisory Agreement will
continue in effect for an initial two-year term and thereafter for successive
annual periods as long as such continuance is approved in accordance with the
Investment Company Act.
The investment advisory fee as a percentage of net assets payable by the
Fund to the Adviser will be the same under the New Advisory Agreement as under
the Original Advisory Agreement.
In evaluating the New Advisory Agreement, the Board took into account that
the Fund's Original Advisory Agreement and the New Advisory Agreement, including
that their terms relating to the services to be provided thereunder by the
Adviser and the fees and expenses payable by the Fund, are identical, except for
the date of execution and the provision relating to the payment of fees and
expenses as described above.
The Board also examined the terms of the Merger and the possible effects of
the Merger upon the Adviser's organization and upon the ability of the Adviser
to provide advisory services to the Fund. The Board also considered the skills
and capabilities of the Adviser.
The Board also weighed the effect on the Fund of the Adviser's becoming an
affiliated person of Sumitomo Bank. Following the Merger, the Investment Company
Act will prohibit or impose certain conditions on the ability of the Fund to
engage in certain transactions with Sumitomo Bank and its affiliates.
After consideration of the above factors and such other factors and
information that the Board deemed relevant, the Directors, and the Disinterested
Directors voting separately, unanimously approved the New Advisory Agreement and
voted to recommend its approval to the stockholders of the Fund.
In the event that stockholders of the Fund do not approve the New Advisory
Agreement, the Board will take such action as it deems in the best interest of
the Fund and its stockholders, which may include proposing that stockholders
approve an agreement in lieu of the New Advisory Agreement.
STOCKHOLDER APPROVAL
To become effective, the New Advisory Agreement must be approved by vote of
a majority of the outstanding voting securities of the Fund. The "vote of a
majority of the outstanding voting securities" is defined under the 1940 Act as
the lesser of the vote of (i) 67% or more of the shares of the Fund entitled to
vote thereon present at the Meeting if the holders of more than 50% of such
outstanding shares of the Fund are present in person or represented by proxy, or
(ii) more than 50% of such outstanding shares of the Fund entitled to vote
thereon. The New Advisory Agreement was approved by the Board after
consideration of all factors which they determined to be relevant to their
deliberations, including those discussed above. The Board also determined to
submit the New Advisory Agreement for consideration by the stockholders of the
Fund.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" APPROVAL
OF THE NEW ADVISORY AGREEMENT INCLUDING THE PAYMENT OF FEES AND EXPENSES OF THE
ADVISER FROM APRIL 1, 1999 TO THE DATE THE NEW ADVISORY AGREEMENT IS APPROVED BY
THE FUND'S STOCKHOLDERS.
MISCELLANEOUS
Proxies will be solicited by mail and may be solicited in person or by
telephone or telegraph by officers of the Fund or personnel of DSTC. The Fund
has retained Corporate Investor Communications, Inc. to assist in the proxy
solicitation. The fee for such services is estimated at U.S. [$ ], plus
reimbursement of expenses. The expenses connected with the solicitation of these
proxies and with any further proxies which may be
12
solicited by the Fund's officers or agents in person, by telephone or by
telegraph will be borne by the Fund. The Fund will reimburse banks, brokers, and
other persons holding the Fund's shares registered in their names or in the
names of their nominees for their expenses incurred in sending proxy material to
and obtaining proxies from the beneficial owners of such shares.
It is important that you promptly submit your vote as a stockholder of the
Fund. In the event that sufficient votes in favor of any proposal set forth in
the Notice of this meeting are not received by September 17, 1999, the persons
named as attorneys in the enclosed proxy may propose one or more adjournments of
the meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of the holders of a majority of the shares present
in person or by proxy at the session of the meeting to be adjourned. The persons
named as attorneys in the enclosed proxy will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of the proposal for which
further solicitation of proxies is to be made. They will vote against any such
adjournment those proxies required to be voted against such proposal. The costs
of any such additional solicitation and of any adjourned session will be borne
by the Fund.
STOCKHOLDER PROPOSALS
Any proposal by a stockholder of the Fund intended to be included in the
proxy materials for the year 2000 meeting of stockholders of the Fund must be
received by the Fund, c/o Daiwa Securities Trust Company, One Evertrust Plaza,
9th Floor, Jersey City, New Jersey 07302, not later than December 10, 1999.
The Fund's By-laws require that any proposal by a stockholder of the Fund
intended to be presented at a meeting of stockholders must be received by the
Fund, c/o Daiwa Securities Trust Company, One Evertrust Plaza, 9th Floor, Jersey
City, New Jersey 07302, not earlier than 90 days prior and not later than 60
days prior to such meeting of stockholders.
By order of the Board of Directors,
Daniel F. Barry
SECRETARY
One Evertrust Plaza
Jersey City, New Jersey 07302
August , 1999
13
ANNEX A
[TO BE PROVIDED]
ANNEX B
INTERNATIONAL INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of April 1, 1999, by and between THE THAI CAPITAL FUND,
INC., a Maryland corporation (the "Fund"), and DAIWA SB INVESTMENTS (HK)
LIMITED., a Hong Kong corporation (the "Adviser").
WHEREAS, the Fund is a closed-end, non-diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Fund's investment objective is long-term capital appreciation
which it seeks through investment primarily in the equity securities of Thai
companies; and
WHEREAS, the Fund makes its investments in Thailand through an investment
plan (the "Investment Plan") created under Thai law pursuant to an Investment
Contract, dated May 21, 1990 (the "Investment Contract"), between the Fund and
The Mutual Fund Public Company Limited (the "Manager"); and
WHEREAS, under the Investment Contract the Fund has retained the Manager to
manage its assets held under the Investment Plan; and
WHEREAS, the Fund desires to retain the Adviser to render investment
advisory services to the Fund with respect to its assets held outside of the
Investment Plan and to provide investment advice to the Manager with respect to
the Fund's assets held through the Investment Plan; and
WHEREAS, the Adviser is willing to render such services.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. APPOINTMENT OF ADVISER. (a) The Fund hereby employs the Adviser for the
period and on the terms and conditions set forth herein, subject at all times to
the supervision of the Board of Directors of the Fund, to:
(i) Act as the investment adviser and to manage the investment and
reinvestment of the assets of the Fund held outside of the Investment Plan
(the "Non-Investment Plan Assets") in accordance with the investment
objectives and policies of the Fund, as set forth in the Fund's Prospectus
(as defined below). In acting as investment adviser for the Fund's
Non-Investment Plan Assets, the adviser shall regularly provide the Fund
with such investment research and advice as the Adviser may from time to
time consider necessary and shall determine from time to time what
securities shall be purchased, sold or exchanged and what portion of the
Fund's Non-Investment Plan Assets shall be held in the various securities in
which it may invest, subject always to the restrictions of the Fund's
Articles of Incorporation and By-Laws, as amended from time to time, the
provisions of the 1940 Act and the Fund's investment objectives, investment
policies and investment limitations, as the same are set forth in the
prospectus (the "Prospectus") of the Fund contained in its registration
statement on Form N-2 filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, and the 1940 Act. Should the
Board of Directors of the Fund at any time make any definite determination
as to investment policy and notify the Adviser thereof, the Adviser shall be
bound by such determination for the period, if any, specified in such notice
or until similarly notified that such determination has been revoked. The
Adviser shall take, on behalf of the Fund, all actions which it deems
necessary to implement the investment policies of the Fund applicable to the
Fund's Non-Investment Plan Assets and with respect to the Fund's
Non-Investment Plan Assets to place all
orders for the purchase or sale of portfolio securities for the Fund with
brokers or dealers selected by it, and in connection therewith, the Adviser
is authorized as agent of the Fund to give instructions to the custodian
from time to time of the Fund's Non-Investment Plan Assets as to deliveries
of securities and payments of cash for the account of the Fund. In
connection with the selection of such brokers or dealers and the placing of
such orders, the Adviser is directed at all times to seek to obtain for the
Fund the most favorable net results as determined by the Board of Directors
and set forth in the Prospectus. Subject to this requirement and the
provisions of the 1940 Act, the Securities Exchange Act of 1934, and any
other applicable provisions of law, nothing shall prohibit the Adviser from
selecting brokers or dealers with which it or the Fund is affiliated;
(ii) Furnish the Manager with factual information, research reports and
investment recommendations relating to securities of Thai companies and the
Fund's investments held through the Investment Plan. The foregoing
information shall include written and oral reports and analyses and
statistical information as market trends and reports and advice concerning
specific industries, specific Thai companies and specific securities. The
foregoing reports, information and advice shall be used by the Manager in
such manner and for such purposes as the Manager deems appropriate for the
purpose of managing the investments of the Fund held through the Investment
Plan. In that regard, it is acknowledged that the Manager may review all
information and advice it receives from the Adviser and decide on the basis
of the Manger's own analysis, and on the basis of any other information and
advice that the Manager may wish to consider, whether, when, and how to
implement any of the investment advice and recommendations received from the
Adviser;
(iii) Assist the Fund in the management and conduct of its business. In
this connection, the Adviser agrees to (A) maintain or cause to be
maintained for the Fund all books and records required under the 1940 Act to
the extent that such books and records are not maintained or furnished by
the administrator, custodians or other agents of the Fund, (B) furnish at
its own expense for the use of the Fund such office space and facilities as
the Fund may require for its reasonable needs to the extent that the same
are not furnished by the Fund's administrator (C) provide to the Fund's
administrator, on a timely basis, such information as may be necessary or
appropriate for the performance by the administrator of its duties, and (D)
provide such other administrative services relating to the operation of the
Fund, as the Fund may reasonably request;
(iv) Advise the Fund as to the operation of the Investment Plan,
including advice as to the extent to which the Fund's assets should be
invested under the Investment Plan and when such investments should be made,
advice regarding the extent to which distributions should be made from the
Investment Plan and when such distributions should be made and advice
regarding termination of the Investment Plan, if at the time appropriate;
and
(v) Advise the Fund regarding services provided by the Fund's
administrator, custodians, transfer agent or dividend disbursing agent, any
administrator for its dividend reinvestment plan, independent auditors,
legal counsel and other persons providing services to the Fund.
(b) The Adviser accepts such employment and agrees during the term of this
Agreement to render such services, to furnish for the Fund such office
facilities, bookkeeping and other administrative services as may be required
hereunder, to permit any of its offices or employees to serve without
compensation as directors or officers of the Fund if elected to such positions
and to assume the
2
obligations herein set forth for the compensation herein provided. The Adviser
shall for all purposes herein provided be deemed to be an independent contractor
and, unless otherwise expressly provided or authorized, shall have no authority
to act for or represent the Fund in any way or otherwise be deemed an agent of
the Fund. All services to be rendered and facilities to be provided by the
Adviser hereunder shall, at all times, be rendered or provided outside of the
Kingdom of Thailand. Consistent with the foregoing and the provisions of Section
1(a)(ii), but without limiting the effect thereof, the Adviser shall in no event
have discretion to invest or reinvest assets of the Fund held through the
Investment Plan, nor to conclude contracts on behalf of the Manager or the Fund,
including contracts for the purchase or sale of securities held or to be held
under the Investment Plan. It is understood and agreed that the Adviser, by
separate agreements with the Fund, may also serve the Fund in other capacities.
2. COMPENSATION. For the services and facilities described in Section 1,
the Fund will pay to the Adviser at the end of each calendar month (as accrued
weekly), an investment advisory fee in U.S. Dollars computed at an annual rate
of 0.60% of the Fund's average weekly net assets (including both Thai and U.S.
assets). For the month and year in which this Agreement becomes effective or
terminates, there shall be an appropriate proration on the basis of the number
of days that the Agreement is in effect during such month and year,
respectively. Notwithstanding anything to the contrary in this Section 2, the
Adviser shall not be entitled to receive fees for services provided pursuant to
this Agreement for the period from the date of this Agreement to the date on
which this Agreement is approved by the stockholders of the Fund unless and
until the payment of fees and expenses under this Agreement are approved by the
stockholders of the Fund.
3. NON-EXCLUSIVITY OF SERVICES. The services of the Adviser to the Fund
under this Agreement are not to be deemed exclusive, and the Adviser shall be
free to render similar services or other services to others so long as its
services hereunder are not impaired thereby.
4. ALLOCATION OF CHARGES AND EXPENSES. (a) The Adviser shall assume and
pay for maintaining its staff and personnel, and shall at its own expense
provide the equipment, office space and facilities, necessary to perform its
obligations under this Agreement, and shall pay all compensation of officers of
the Fund and the fees of all directors of the Fund who are affiliated persons of
the Adviser or its affiliates. Notwithstanding anything to the contrary in this
Section 4(a), the Adviser shall not be entitled to receive reimbursement for its
expenses from the Fund pursuant to this Agreement for the period from the date
of this Agreement to the date on which this Agreement is approved the
stockholders of the Fund unless and until the payment of fees and expenses under
this Agreement are approved by the stockholders of the Fund.
(b) In addition to the fee of the Adviser, the Fund shall assume and pay any
expenses for services rendered by any custodian for the safekeeping of the
Fund's securities or other property (including assets held under the Investment
Plan), for keeping its books of account, for any other charges of any such
custodian, and for calculating the net assets value of the Fund as provided in
the prospectus of the Fund. The Fund shall also assume and pay all other charges
and expenses of its operations, including compensation of the Fund's directors
(other than those affiliated with the Manager or the Adviser), the charges and
expenses of its independent auditors, legal counsel and administrator, any
transfer or dividend disbursing agent, any registrar and any administrator for
its dividend reinvestment plan, the costs of acquiring and disposing of
portfolio securities, interest, if any, on any obligations incurred by the Fund,
the cost of share certificates and of reports, membership dues in the Investment
Company Institute or any similar trade organization, insurance, reports and
notices to
3
shareholders, other like miscellaneous expenses and all taxes and fees payable
to federal, state or other governmental agencies on account of the registration
of securities issued by the Fund, filing of corporate documents or otherwise.
5. POTENTIAL CONFLICTS OF INTEREST. Subject to applicable statutes and
regulations, it is understood that directors, officers or agents of the Fund are
or may be interested in the Adviser as officers, directors, agents, shareholders
or otherwise, and that the officers, directors, shareholders and agents of the
Adviser may be interested in the Fund as a director, officer or agent or
otherwise.
6. STANDARD OF CARE; INDEMNIFICATION. (a) The Adviser will exercise its
best judgment in rendering the services to be provided by it hereunder. The
Adviser shall not be liable for any error of judgment or of law or for any loss
suffered by the Fund in connection with the matters to which this Agreement
relates, except loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Adviser in the performance of its obligations and
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement.
(b) The Fund agrees to indemnify and hold harmless the Adviser for any
losses, costs and expenses incurred or suffered by the Adviser arising from any
action, proceeding or claims which may be brought against the Adviser in
connection with the performance or nonperformance in good faith of its functions
under this Agreement, except losses, costs and expenses resulting from willful
misfeasance, bad faith or gross negligence in the performance if the Adviser's
duties or from reckless disregard on the part of the Adviser of the Adviser's
obligations and duties under this Agreement.
7. DURATION AND TERMINATION. This Agreement shall become effective on the
date hereof and shall remain in full force for a period of two years from the
date hereof, unless sooner terminated as hereinafter provided. This Agreement
shall continue in force from year to year thereafter, but only as long as such
continuance is specifically approved at least annually in the manner required by
the 1940 Act and the rules and regulations thereunder; provided, however, that
if the continuation of this Agreement is not approved, the Adviser may continue
to serve in such capacity in the manner and to the extent permitted by the 1940
Act and the rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its assignment
and may be terminated at any time without the payment of any penalty by the Fund
or by the Adviser on 60 days' written notice to the other party. The Fund may
effect termination by action of the Board of Directors or by vote of the holders
of a majority of the outstanding voting securities of the Fund.
This Agreement may be terminated at any time without the payment of any
penalty by the Board of Directors or by vote of the holders of a majority of the
outstanding voting securities of the Fund in the event that it shall have been
established by a court of competent jurisdiction that the Adviser or any officer
or director of the Adviser has taken any action which results in a breach of the
covenants of the Adviser set forth herein.
The terms "assignment" and "vote of the holders of a majority of the
outstanding voting securities" shall have the meanings set forth in the 1940 Act
and the rules and regulations thereunder.
Termination of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation described in Section
2 earned prior to such termination.
8. SURVIVAL. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder shall not
be thereby affected.
4
9. NOTICES. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
10. GOVERNING LAW. This Agreement shall be construed in accordance with
applicable federal law and the laws of the State of New York.
11. MISCELLANEOUS.
(a) The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect.
(b) Terms not defined herein shall have the meaning set forth in the
Prospectus.
(c) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(d) This Agreement may be amended, changed, modified or altered only by a
written agreement signed by the parties hereto.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to
be executed as of the day and year first above written.
THE THAI CAPITAL FUND, INC.
By:
-------------------------------------------
Name:
Title:
DAIWA SB INVESTMENTS (HK) LIMITED
By:
-------------------------------------------
Shunsuke Omae
Director
5
SKU# TCFCM-PS-98
THE THAI CAPITAL FUND, INC.
c/o Daiwa Securities Trust Company, One Evertrust Plaza, Jersey
City, New Jersey 07302
Proxy Solicited on Behalf of the Board of Directors for the
Annual Meeting of Stockholders on
September 17, 1999
The undersigned stockholder of The Thai Capital Fund, Inc. (the "Fund") hereby
appoints Daniel F. Barry, Sean J. Peters, John A. Koopman and Judy Runrun Tu, or
any of them, proxies of the undersigned, with full power of substitution, to
vote and act for and in the name and stead of the undersigned at the Annual
Meeting of Stockholders of the Fund to be held at the offices of Daiwa
Securities America, Inc., Financial Square, 32 Old Slip, 14th Floor, New York,
New York 10005, on September 17, 1999 at 9:30 a.m., New York time, and at any
and all adjournments thereof, according to the number of votes the undersigned
would be entitled to cast if personally present.
The shares represented by this proxy will be voted in accordance with the
instructions given by the undersigned stockholder, but if no instructions are
given, this proxy will be voted in favor of proposals 1 through 4 as set forth
in this proxy. In addition, this proxy will be voted, in the discretion of such
proxies, upon such other business as may properly come before the meeting or any
adjournments thereof. The undersigned hereby revokes any and all proxies
heretofore given by the undersigned with respect to such shares. The undersigned
acknowledges receipt of the Proxy Statement dated August __, 1999.
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PLEASE VOTE, DATE AND SIGN ON REVERSE AND PROMPTLY RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE.
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Please sign exactly as your name(s) appear(s) on the books of the Fund. Joint
owners should each sign. Trustees and other fiduciaries should indicate the
capacity in which they sign, and where more than one name appears, a majority
must sign. If a corporation, this signature should be that of an authorized
officer who should indicate his or her title.
- -------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- --------------------------------- --------------------------------
- --------------------------------- --------------------------------
- --------------------------------- --------------------------------
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/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
- --------------------------------------------------------------- The Board of Directors recommends a vote FOR Proposals
THE THAI CAPITAL FUND, INC. 1 through 4 below.
- ---------------------------------------------------------------
For All With- For All
1. Election of two Class II Nominees hold Except
directors to serve for / / / / / /
a term expiring on the date
on which the Annual Meeting
of Stockholders is held in
the year 2002, and the
election of one Class III
director to serve for
a term expiring on the
date on which the Annual
Meeting of Stockholders is
held in 2000.
CLASS II: Austin C. Dowling, Virabongsa Ramangkura
CLASS III: Masayasu Ohi
NOTE: If you do not wish your shares voted "For" a
particular nominee, mark the "For All Except" box and strike
a line through the name of the nominee in the list above.
CONTROL NUMBER:
For Against Abstain
2. The ratification of the / / / / / /
selection of
PricewaterhouseCoopers LLP
as independent accountants
of the Fund for its fiscal
year ending December 31, 1999.
3. The approval of the new / / / / / /
Investment Management
Agreement between the Fund
and Thai Farmers Asset
Management Company.
4. The approval of the new / / / / / /
Investment Advisory
Agreement between the Fund
and Daiwa SB Investments
(HK) Limited ("DSBI HK"),
including the payment of fees and
expenses of DSBI HK from
April 1, 1999 to the date the new
Investment Advisory Agreement
-------------- is approved by the Fund's
Please be sure to sign and date this Proxy. Date stockholders.
- ---------------------------------------------------------------
Mark box at right if an address change or / /
comment has been noted on the reverse
side of this card.
- ---------Stockholder sign here------------Co-owner sign here--- RECORD DATE SHARES: