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Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices
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taken together, require a proxy statement for a shareholder meeting at which the advisory contract will be voted upon to include the rate of compensation of the investment adviser, the aggregate amount of the investment advisers fee, a description of the terms of the contract to be acted upon, and, if a change in the advisory fee is proposed, the existing and proposed fees and the difference between the two fees.
12. Regulation SX sets forth the requirements for financial statements required to be included as part of a registered investment companys registration statement and shareholder reports filed with the Commission.
Sections 6072a, b, and c of Regulation SX require a registered investment company to include in its financial statements information about investment advisory fees.
13. Section 6c of the Act provides that the Commission may exempt any person, security, or transaction or any class or classes of persons, securities, or transactions from any provisions of the Act, or any rule thereunder, if such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Applicants state that the requested relief meets this standard for the reasons discussed below.
IV. Arguments in Support of the Requested Relief 14. Applicants assert that, from the perspective of the shareholder, the role of the Subadvisers is substantially equivalent to the limited role of the individual portfolio managers employed by an investment adviser to a traditional investment company. Applicants also assert that the shareholders expect the Adviser, subject to review and approval of the Board, to select a Subadviser who is in the best position to achieve the Subadvised Funds investment objective. Applicants believe that permitting the Adviser to perform the duties for which the shareholders of the Subadvised Fund are paying the Adviserthe selection, oversight and evaluation of the Subadviserwithout incurring unnecessary delays or expenses of convening special meetings of shareholders is appropriate and in the interest of the Funds shareholders, and will allow such Fund to operate more efficiently. Applicants state that each Investment Advisory Agreement will continue to be fully subject to section 15a of the Act and approved by the relevant Board, including a majority of the Independent Trustees, in the
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manner required by section 15a and 15c of the Act.
15. Applicants submit that the requested relief meets the standards for relief under section 6c of the Act.
Applicants state that the operation of the Subadvised Fund in the manner described in the Application must be approved by shareholders of that Fund before it may rely on the requested relief. Applicants also state that the proposed conditions to the requested relief are designed to address any potential conflicts of interest or economic incentives, and provide that shareholders are informed when new Subadvisers are hired.
16. Applicants contend that, in the circumstances described in the application, a proxy solicitation to approve the appointment of new Subadvisers provides no more meaningful information to shareholders than the proposed Multi-manager Information Statement. Applicants state that, accordingly, they believe the requested relief is necessary or appropriate in the public interest, and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act.
17. With respect to the relief permitting Aggregate Fee Disclosure, Applicants assert that disclosure of the individual fees paid to the Subadvisers does not serve any meaningful purpose.
Applicants contend that the primary reasons for requiring disclosure of individual fees paid to Subadvisers are to inform shareholders of expenses to be charged by a particular Subadvised Fund and to enable shareholders to compare the fees to those of other comparable investment companies.
Applicants believe that the requested relief satisfies these objectives because the Subadvised Funds overall advisory fee will be fully disclosed and, therefore, shareholders will know what the Subadvised Funds fees and expenses are and will be able to compare the advisory fees a Subadvised Fund is charged to those of other investment companies. In addition, Applicants assert that the requested relief would benefit shareholders of the Subadvised Fund because it would improve the Advisers ability to negotiate the fees paid to Subadvisers.
In particular, Applicants state that if the Adviser is not required to disclose the Subadvisers fees to the public, the Adviser may be able to negotiate rates that are below a Subadvisers posted amounts. Applicants assert that the relief will also encourage Subadvisers to negotiate lower subadvisory fees with
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the Adviser if the lower fees are not required to be made public.
V. Relief for Affiliated Subadvisers 18. The Commission has granted the requested relief with respect to WhollyOwned and Non-Affiliated Subadvisers through numerous exemptive orders.
The Commission also has extended the requested relief to Affiliated Subadvisers.13 Applicants state that although the Advisers judgment in recommending a Subadviser can be affected by certain conflicts, they do not warrant denying the extension of the requested relief to Affiliated Subadvisers. Specifically, the Adviser faces those conflicts in allocating fund assets between itself and a Subadviser, and across Subadvisers, as it has an interest in considering the benefit it will receive, directly or indirectly, from the fee the Subadvised Fund pays for the management of those assets. Applicants also state that to the extent the Adviser has a conflict of interest with respect to the selection of an Affiliated Subadviser, the proposed conditions are protective of shareholder interests by ensuring the Boards independence and providing the Board with the appropriate resources and information to monitor and address conflicts.
19. With respect to the relief permitting Aggregate Fee Disclosure, Applicants assert that it is appropriate to disclose only aggregate fees paid to Affiliated Subadvisers for the same reasons that similar relief has been granted previously with respect to Wholly-Owned and Non-Affiliated Subadvisers.
VI. Applicants Conditions Applicants agree that any order granting the requested relief will be subject to the following conditions:
1. Before a Subadvised Fund may rely on the order requested in the Application, the operation of the Subadvised Fund in the manner described in the Application will be, or has been, approved by a majority of the Subadvised Funds outstanding voting securities as defined in the Act, or, in the case of a Subadvised Fund whose public shareholders purchase shares on the basis of a prospectus containing the disclosure contemplated by condition 2
below, by the initial shareholder before such Subadvised Funds shares are offered to the public.
2. The prospectus for each Subadvised Fund will disclose the existence, substance and effect of any 13 See Carillon Series Trust and Carillon Tower Advisers, Inc., Investment Company Act Rel. Nos.
33464 May 2, 2019 notice and 33494 May 29, 2019 order.

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