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:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-12
THE FIRST AUSTRALIA FUND, INC.
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(Name of Registrant as Specified In Its Charter)
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(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)(1) 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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(4) Date Filed:
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[FIRST AUSTRALIA FUND INC. LOGO APPEARS HERE] Gateway Center 3
100 Mulberry Street
Newark, New Jersey
07102
(800) 451-6788
March 19, 2001
Dear Shareholder:
The Annual Meeting of Shareholders is to be held at 1:00 p.m. (Eastern
time), on Thursday, April 19, 2001 at the offices of Prudential Securities
Incorporated, One Seaport Plaza, 35th Floor, New York, New York. A Proxy
Statement regarding the meeting, a proxy card for your vote at the meeting,
and an envelope postage prepaid in which to return your proxy card are
enclosed.
At the Annual Meeting, the holders of the Fund's common stock will elect the
Fund's Class I Directors for a three-year term. In addition, the shareholders
present will hear a report on the Fund. There will be an opportunity to
discuss matters of interest to you as a shareholder.
Your Directors recommend that you vote in favor of each of the foregoing
matters.
/s/ Hugh Young
--------------
HUGH YOUNG
CHAIRMAN
YOU ARE URGED TO SIGN AND MAIL THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE TO ASSURE A QUORUM AT THE MEETING. THIS IS IMPORTANT REGARDLESS OF
THE SIZE OF YOUR SHAREHOLDING.
Following the acquisition of the Fund's investment manager and investment
adviser by Aberdeen Asset Management, PLC, the name of the investment manager
was changed from EquitiLink International Management Limited to Aberdeen Asset
Managers (C.I.) Limited, and the name of the investment adviser was changed
from EquitiLink Australia Limited to Aberdeen Asset Management Limited.
EFFECTIVE MAY 1, 2001, YOUR FUND WILL HAVE A NEW NAME:
ABERDEEN AUSTRALIA EQUITY FUND, INC.
Stock Exchange Symbol: IAF
THE FIRST AUSTRALIA FUND, INC.
Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 19, 2001
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of The First
Australia Fund, Inc. (the "Fund") will be held at the offices of Prudential
Securities Incorporated, One Seaport Plaza, 35th Floor, New York, New York, on
Thursday, April 19, 2001, at 1:00 p.m. (Eastern time), for the following
purposes:
(1) To elect four Directors to serve as Class I Directors for a three-year
term; and
(2) To transact any other business as may properly come before the meeting
or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 5, 2001 as
the record date for the determination of shareholders entitled to vote at the
meeting or any adjournment or postponement thereof.
In the event that the necessary quorum to transact business or the vote
required to approve or reject any proposal is not obtained at the meeting, the
persons named as proxies may propose one or more adjournments of the meeting,
in accordance with applicable law, to permit further solicitation of proxies.
Any such adjournment will require the affirmative vote of the holders of a
majority of the Fund's shares present in person or by proxy at the meeting.
The persons named as proxies will vote in favor of such adjournment those
proxies which they are entitled to vote in favor of any proposal and will vote
against any such adjournment those proxies to be voted against that proposal.
By Order of the Board of Directors,
Roy M. Randall, Secretary
Newark, New Jersey
March 19, 2001
IMPORTANT: You are cordially invited to attend the meeting. Shareholders who
do not expect to attend the meeting in person are requested to complete, date
and sign the enclosed proxy card and return it promptly in the addressed
envelope which requires no postage and is intended for your convenience. Your
prompt return of the enclosed proxy card may save the Fund the necessity and
expense of further solicitations to assure a quorum at the meeting. The
enclosed proxy is being solicited on behalf of the Board of Directors of the
Fund.
PROXY STATEMENT
THE FIRST AUSTRALIA FUND, INC.
Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102
-------------------
Annual Meeting of Shareholders
April 19, 2001
-------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of The First Australia Fund, Inc.,
a Maryland corporation (the "Fund"), to be voted at the Annual Meeting of
Shareholders of the Fund (the "Meeting") to be held at the offices of
Prudential Securities Incorporated, One Seaport Plaza, 35th Floor, New York,
New York, on Thursday, April 19, 2001, at 1:00 p.m. (Eastern time). The
approximate mailing date for this Proxy Statement is March 19, 2001 or as soon
as practicable thereafter.
All properly executed proxies received prior to the Meeting will be voted at
the Meeting in accordance with the instructions marked on the proxy card.
Unless instructions to the contrary are marked, proxies received will be voted
FOR the proposal to elect Class I Directors. The appointed proxies will vote
in their discretion on any other business as may properly come before the
meeting or any adjournments or postponements thereof. Any proxy may be revoked
at any time prior to its exercise by giving written notice to the Secretary of
the Fund (addressed to the Secretary at the principal executive office of the
Fund, Gateway Center 3, 100 Mulberry Street, Newark, New Jersey 07102).
Shareholders may vote using the enclosed postage pre-paid proxy card.
Shareholders may also vote by telephone or internet. To vote by telephone or
internet, shareholders should follow the instructions contained on their proxy
card.
The presence at the Meeting, in person or by proxy, of the stockholders
entitled to cast a majority of all the votes entitled to be cast at the
Meeting shall be necessary and sufficient to constitute a quorum for the
transaction of business with respect to the Fund. For purposes of determining
the presence of a quorum for transacting business at the Meeting, abstentions
and broker non-votes (that is, proxies from brokers or nominees indicating
that such persons have not received instructions from the beneficial owner or
other persons entitled to vote shares on a particular proposal with respect to
which the brokers or nominees do not have discretionary power) will be treated
as shares that are present.
Approval of the election of Class I Directors to the Board of Directors will
require the affirmative vote of a majority of the shares of common stock
present in person or by proxy at the Meeting. Abstentions are treated as
present and will have the effect of a vote "against" the proposal. Proxies
from brokers or nominees indicating that such persons have not received
instructions from the beneficial owner or other persons entitled to vote
shares on the proposal will be voted "for" the proposal.
In the event that the necessary quorum to transact business at the Meeting
is not obtained or a quorum is present at the Meeting but sufficient votes to
approve the proposals are not received, the proxy holders may propose one or
more adjournments of the Meeting to permit further solicitation of proxies.
Any adjournment will require the affirmative vote of a majority of those
shares present at the Meeting in person or by proxy. If the necessary quorum
is not obtained, the persons named as proxies will vote in favor of the
adjournment. If a quorum is present, the proxy holders will vote those proxies
required to be voted "for" the proposal with respect to which insufficient
votes for approval have been received, in favor of such adjournment, and will
vote those proxies required to be voted "against" the proposal, against
adjournment.
1
The Board of Directors has fixed the close of business on March 5, 2001 as
the record date for the determination of shareholders entitled to notice of
and to vote at the Meeting and at any adjournment or postponement thereof.
Shareholders on the record date will be entitled to one vote for each share
held. As of March 5, 2001, the Fund had 17,189,998 shares of common stock
outstanding, par value $0.01 per share.
The Board of Directors of the Fund knows of no business other than that
mentioned in the Notice of the 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 on the enclosed proxy card to vote in
accordance with their best judgment.
The Fund will furnish, without charge, a copy of the Fund's annual report
for its fiscal year ended October 31, 2000, and any more recent reports, to
any Fund shareholder upon request. To request a copy, please call or write to
Investor Relations, Aberdeen Asset Management, 45 Broadway, 31st floor, New
York, New York 10006, Telephone: 1-800-522-5465.
PROPOSAL TO ELECT CLASS I DIRECTORS
The Fund's By-laws provide that the Board of Directors will be divided into
three classes, as nearly equal in number as possible, each of which, after a
transition period, will serve for three years with one class being elected
each year. Each year the term of office of one class will expire. Anthony E.
Aaronson, Neville J. Miles, Peter D. Sacks, and John T. Sheehy, Directors who
were elected to serve until the Meeting, have been nominated by the Board of
Directors of the Fund, including the Directors who are not interested persons
of the Fund, to serve as Class I Directors for a three-year term to expire at
the Annual Meeting of Shareholders to be held in 2004 and until their
successors are duly elected and qualified. The nominees have indicated an
intention to serve if elected and have consented to be named in this Proxy
Statement.
It is the intention of the persons named on the enclosed proxy card to vote
for the election of the persons listed below under Class I for a three-year
term. The Board of Directors of the Fund knows of no reason why any of these
nominees will be unable to serve, but in the event of any such inability, the
proxies received will be voted for such substituted nominees as the Board of
Directors may recommend.
2
The following table sets forth certain information concerning each of the
Fund's nominees for election as a Director and each Director of the Fund. Each
of the Fund's nominees is currently a Director of the Fund.
Shares
Beneficially
Owned and
% of Total
Outstanding
Principal Occupations and Employment for Past Director on
Name and Address Five Years and Other Directorships Age Since 1/31/01(1)
---------------- --------------------------------------------- --- -------- ------------
Class I
(Current Directors and Nominees for a Term Expiring
at the Annual Meeting to be held in 2004)
Anthony E. Aaronson++ Mr. Aaronson has extensive experience in the 64 1985 1,500
116 South Anita Avenue management of private investments. He served as
Los Angeles, CA 90049 Chairman of the Audit Committee of the Fund from
the inception of the Fund until 2000.
Director, The First Australia Prime Income Fund,
Inc. (since 1986); Anthony Aaronson (textile
agent) (since 1993); Vice President, Textile
Association of Los Angeles (from 1996 to 1998).
Neville J. Mr. Miles has over 20 years of international 54 1996 0
Miles+(degrees) investment banking experience. He was formerly
23 Regent Street head of Corporate Treasury at Westpac Banking
Paddington, N.S.W. 2021 Corporation and Managing Director of Ord Minnett
Australia Securities Limited (stockbrokers). Mr. Miles has
extensive experience in the areas of corporate
acquisitions and equity offerings.
Director, The First Australia Prime Income Fund,
Inc. (since 1996); Director, The First
Commonwealth Fund, Inc. (since December 1999);
Chairman and Director, MTM Funds Management
Limited (property trust) (since 1998); Director,
MaxiLink Limited (investment company); Director,
EquitiLink eLink Limited (investment company);
Executive Director, EL&C Ballieu Limited
(stockbroker) (from 1994 to 1997); Executive
Director, Ord Minnett Securities Limited
(stockbroker) (from 1988 to 1994).
Peter D. Sacks++ Mr. Sacks' career has spanned 20 years in executive 55 1999 250
33 Yonge Street, Suite positions in treasury management with CIBC, Chase
706 Manhattan Bank and Midland Bank. He is currently
Toronto, Ontario M5E 1G4 president and director of Toron Capital Markets,
Canada Inc., a company which he established in 1988 to
design and manage customized hedging solutions for
institutional clients with commodity risks and
currency and interest rate exposures.
Director, The First Australia Prime Income Fund,
Inc. (since 1993); Director, The First
Commonwealth Fund, Inc. (since 1992); Director,
First Australia Prime Income Investment
3
Shares
Beneficially
Owned and
% of Total
Outstanding
Principal Occupations and Employment for Past Director on
Name and Address Five Years and Other Directorships Age Since 1/31/01(1)
---------------- --------------------------------------------- --- -------- ------------
Company Limited (since December 1998); President,
Toron Capital Management Inc. (investment
management) (since 1997); President, Toron Capital
Markets, Inc. (currency and interest rate risk
advice and management) (since 1988); President and
Director, First Horizons Holdings Limited
(Canadian mutual fund distributor).
John T. Mr. Sheehy has over 30 years' experience in 58 1985 5,000
Sheehy++(degrees) investment banking with companies such as J.P.
235 Montgomery Street Morgan & Company and Bear, Stearns & Co. Inc. His
Suite 300 specialty areas include securities valuation,
San Francisco, CA 94104 public offerings and private placements of debt
and equity securities, mergers and acquisitions
and management buyout transactions.
Director, The First Australia Prime Income Fund,
Inc. (since 1986), The First Commonwealth Fund,
Inc. (since 1992) and First Australia Prime Income
Investment Company Limited (since 1986); Managing
Director, The Value Group LLC (investment banking)
(since 1997); Director, Video City, Inc. (video
retail merchandising) (since 1997); Managing
Director, Black & Company (investment banking)
(from 1996 to 1997); Managing Director, Sphere
Capital Partners (investment banking) (from 1987
to 1996); Director, Sandy Corporation (corporate
consulting, communication and training) (from 1986
to January 1996).
Class II
(Term Expiring at the Annual Meeting to be held in 2002)
Chris Fishwick* Mr. Fishwick has been actively involved in the 39 2001 0
One Bow Churchyard investment management and securities industry.
London Since 1991, he has been an investment management
United Kingdom professional with Aberdeen Asset Management PLC
EC4M 9HH (parent company of the Fund's Investment Manager
and Investment Adviser).
Director, Aberdeen Asset Management PLC (since
1995); Director, Aberdeen Asset Managers Jersey
Limited (since 1999); Director, Aberdeen Asset
Managers Limited (since 1991); Director, Aberdeen
Convertible Income Trust PLC (alternate) (since
1997); Director, Aberdeen Graham Asset Management
Limited (since 1999); Director, Aberdeen High
Income Trust PLC (since 1994); Director, Aberdeen
Preferred Income Trust PLC (since 1998); Director,
Aberdeen Preferred
4
Shares
Beneficially
Owned and
% of Total
Outstanding
Principal Occupations and Employment for Past Director on
Name and Address Five Years and Other Directorships Age Since 1/31/01(1)
---------------- --------------------------------------------- --- -------- ------------
Securities PLC (since 1998); Director, Aberdeen
Unit Trust Managers Limited (since 1998);
Director, Chaucer PLC (since 1993); Director,
European Technology and Income Company Limited
(since 2000); Director, Jersey Phoenix Trust
Limited (alternate) (since 2000); Director, The
Enhanced Zero Trust PLC (since 1999); Director,
Leveraged Income Fund (since 1999); Director, The
Media and Income Trust PLC (since 2000); Director,
Phoenix Aberdeen International Advisors LLC (since
1996); Director, The Smaller Companies Investment
Trust PLC (since 1990); Director, The Taverners
Trust PLC (since 1996); Director, The Technology
and Income Trust Limited (since 1999).
Howard A. Knight Mr. Knight has over 30 years of experience in 59 1993 2,500
1266 East Main Street financial markets and has been actively involved
Stamford, Connecticut in the Australian financial markets for more than
06902 25 years. From 1991 to 1994, he served as
President of Investment Banking, Equity
Transactions and Corporate Strategy at Prudential
Securities. Since 1996, Mr. Knight has served as
Vice Chairman, Director and Chief Operating
Officer of SBS Broadcasting SA (television and
radio broadcasting), where he has been actively
involved in investment management and capital
markets.
Director, The First Australia Prime Income Fund,
Inc. (since 1993); Director, Lions Gate
Entertainment Corp. (film production and
distribution) (since 2000).
Sir David Rowe-Ham Sir David Rowe-Ham has been Director and Chairman of 65 2001 0
140 Piccadilly Brewin Dolphin Holdings PLC, a fund manager and
London stockbroker listed on the L.S.E., since 1992.
United Kingdom W1VGFH
Director and Chairman, Roam Investments Ltd. (since
1984); Director and Chairman, Olayan Europe Ltd.
(since 1989); Director and Chairman, Coral
Products PLC (since 1995); Director and Chairman,
BNP Paribas South Asia Investment Co. Ltd. (since
1995); President, The Crown Agents Foundation
(since 1996); Director, St. David's Investment
Trust PLC (since 1996); Director and Chairman,
Aspect Internet Holdings Ltd. (since 2000);
Director, Chubb plc (since 2000).
5
Shares
Beneficially
Owned and
% of Total
Outstanding
Principal Occupations and Employment for Past Director on
Name and Address Five Years and Other Directorships Age Since 1/31/01(1)
---------------- --------------------------------------------- --- -------- ------------
Hugh Young* Mr. Young has been in the financial services 42 2001 0
21 Church Street business since 1979. Mr. Young has been an
#01-01 Capital Square Executive Director of Aberdeen Asset Management
Two PLC (parent company of the Fund's Investment
Singapore 049480 Manager and Investment Adviser), since 1991. He
has also been Managing Director of Aberdeen Asset
Management Asia Limited since 1992 and Managing
Director of Aberdeen International Fund Managers
Limited since 2000. He has been President of the
Fund, of The First Commonwealth Fund, Inc., and of
The First Australia Prime Income Fund, Inc. since
2001.
Director, Aberdeen Asia Total Return (since 1998);
Director, Aberdeen Asset Management PLC (since
1991); Director, Aberdeen Asian Smaller Companies
Investment Trust Limited (since 1995); Director,
Aberdeen Asian Smaller Companies Investment Trust
PLC (since 1995); Director, Aberdeen Emerging Asia
Investment Trust Limited (since 1990); Director,
Aberdeen Asset Management Asia Limited (since
1991); Director, Aberdeen India Fund Limited
(since 1996); Director Aberdeen New Dawn
Investment Trust PLC (since 1989); Director,
Aberdeen New Thai Investment Trust PLC (since
1989); Director, Aberdeen International Fund
Managers Limited (since 1998); Director, Aberdeen
International Management Ireland Limited (since
2000); Director, Apollo Europe Fund Limited (since
1996); Director, Apollo Investment Management
Limited (since 1994); Director, Apollo Hedge Fund
(since 1996); Director, Apollo Japan Fund Limited
(since 1995); Director Apollo Tiger Fund Limited
(since 1994); Director, Apollo Californian Fund
Limited (since 1997); Director, JF Philippine Fund
Ltd (since 1991); Director, MIMB Aberdeen Asset
Management Sdn. Bhd. (since 1998); Director,
Phoenix Aberdeen International Advisors PLC (since
1996); Director, Aberdeen Asian Absolute Return
Fund (since 1998); Director, Apollo Protector Fund
(since 1998); Director, Aberdeen Global (since
1998); Director, Aberdeen Investment Services S.A.
(since 1998); Director, Aberdeen PCC Limited
(since 1999); Director, Aberdeen Guernsey Limited
(since 1999); Director, The London Markets Fund
(since 1999); Director, The London Market Fund PLC
(since 2000).
6
Shares
Beneficially
Owned and
% of Total
Outstanding
Principal Occupations and Employment for Past Director on
Name and Address Five Years and Other Directorships Age Since 1/31/01(1)
---------------- --------------------------------------------- --- -------- ------------
Class III
(Term Expiring at the Annual Meeting to be held in 2003)
David Lindsay Elsum, A.M.+ Mr. Elsum has over 20 years' experience in 63 1985 2,229
9 May Grove investment and insurance markets. He is a member
South Yarra, Victoria 3141 of the Australian Securities and Investment
Australia Commission Takeover Panel and a member of the
Australian Government Administrative Appeals
Tribunal. Previously he was founding Managing
Director of Capel Court Investment Bank and
Chairman, Stodart Investment Pty. Ltd., and
subsequently Chief Executive of major public
companies including The MLC Limited (insurance)
and President of the State of Victoria
Superannuation Fund (pension fund management).
Director, The First Australia Prime Income Fund,
Inc. (since 1986), The First Commonwealth Fund,
Inc. (since 1992) and First Australia Prime Income
Investment Company Limited (since 1986); Director,
MaxiLink Limited (investment company); Chairman,
Audit Victoria; Chairman, Melbourne Wholesale Fish
Market Ltd.; Chairman, Queen Victoria Market;
Director, EquitiLink eLink Limited (investment
company); Director, Financial Planning Association
Limited.
Laurence S. Freedman* Mr. Freedman has over 35 years of experience in 57 1985 4,000
G.P.O. Box 4306 funds management, with a focus on global
Sydney, N.S.W. 2001 investment analysis. Prior to founding EquitiLink
Australia in 1981, he was Director of Investments at BT
Australia Limited. Mr. Freedman's areas of fund
management specialization include investment in
resource and development companies, international
economies and the geo-political impact on
investment markets.
Chairman (from 1995 to 2001) and Vice President
(from 1985 to 2001) of the Fund; Vice President
(from 1986 to 2001), Director (from 1986 to 2000),
and Chairman (from 1995 to 2000), The First
Australia Prime Income Fund, Inc.; Director and
Chairman (since 1992) and President (from 1992 to
2001) of The First Commonwealth Fund, Inc.; Joint
Managing Director, First Australia Prime Income
Investment Company Limited (from 1986 to 2001);
Founder and Joint Managing Director, EquitiLink
Australia Limited (from 1981 to 2000); Director,
EquitiLink Limited (holding company) (from 1986 to
2000), EquitiLink Holdings Limited (holding
company) (since
7
Shares
Beneficially
Owned and
% of Total
Outstanding
Principal Occupations and Employment for Past Director on
Name and Address Five Years and Other Directorships Age Since 1/31/01(1)
---------------- --------------------------------------------- --- -------- ------------
1998) and EquitiLink International Management
Limited (from 1985 to 2000); Chairman (since 1987)
and Joint Managing Director (from 1987 to 2000),
MaxiLink Limited (investment company); Joint
Managing Director (from 1994 to 2000) and Director
(since 1994), EquitiLink eLink Limited (investment
company); Managing Director, Link Enterprises
(International) Pty. Limited (investment
management company) (since 1980); Director, Ten
Group Pty. Limited (since 1994) and Ten Network
Holdings Limited (commercial television operator)
(since 1998).
Peter J. O'Connell Mr. O'Connell is involved in modern technology 47 1999 0
G.P.O.Box 10 developments and has extensive business experience
Sydney, N.S.W. 2001 in the Asian region. Mr. O'connell is also
Australia admitted as a solicitor in Australia.
Director, The First Australia Prime Income Fund,
Inc. (since December 1999); Chief Executive
Officer, Ten Ventures Pty. Ltd. (technology
development and venture capital) (from 1999 to
2000); Consultant, Rogny Pty. Ltd. (technology)
(1999); Director of Operations, Consolidated Press
Holdings Limited (from 1997 to 1999); Chief
Executive Officer, Hargrave Consultants Pty. Ltd.
(technology consulting) (from 1994 to 1997).
William J. Mr. Potter has extensive experience in investment 52 1985 1,000
Potter+(degrees) banking and fund management, including senior
236 West 27th Street positions with Toronto Dominion Bank, Barclays
New York, NY 10001 Bank PLC and Prudential Securities, Inc. as well
as board of director positions with investment
funds involving over $20 billion in assets since
1983. Mr. Potter has been involved in the
Australian capital markets since 1974, including
management and board of director positions with a
noted Australian brokerage house. Mr. Potter is
President of a U.S. investment bank and has
securities licenses in the U.S. and Canada. Mr.
Potter also has extensive securities underwriting
experience in various capital markets with an
emphasis on natural resources.
Director, The First Australia Prime Income Fund,
Inc. (since 1986), First Australia Prime Income
Investment Company Limited (since 1986) and The
First Commonwealth Fund, Inc. (since 1992);
President, Ridgewood Group International Ltd.
(international consulting/investment banking)
(since 1989); President, Ridgewood Capital
Funding, Inc. (NASD) (private placement
securities) (since 1989); Director, International
8
Shares
Beneficially
Owned and
% of Total
Name Outstanding
and Principal Occupations and Employment for Past Director on
Address Five Years and Other Directorships Age Since 1/31/01(1)
------- --------------------------------------------- --- -------- ------------
Panorama Inc.; Director, National Foreign Trade
Counsel; Director, Longevity International Ltd.;
Director, Alexandria Bancorp (banking group in
Cayman Islands); Partner, Sphere Capital Partners
(corporate consulting) (from 1989 to 1997).
-------
* Directors considered by the Fund and its counsel to be persons who are
"interested persons" (which as used in this Proxy Statement is as defined
in the Investment Company Act of 1940, as amended (the "1940 Act")) of the
Fund or of the Fund's Investment Manager or Investment Adviser. Mr.
Freedman is deemed to be an interested person because of his ownership of
securities of Aberdeen Asset Management PLC, the parent company of the
Fund's Investment Manager and Investment Adviser. Messrs. Fishwick and
Young are deemed to be interested persons because of their affiliation with
the Fund's Investment Manager and Investment Adviser. See "Further
Information Regarding Directors and Officers--Relationship of Directors or
Nominees with the Investment Adviser and the Investment Manager."
+ Messrs. Elsum, Miles and Potter are members of the Contract Review
Committee.
++ Messrs. Aaronson, Sacks and Sheehy are members of the Audit Committee.
(degrees) Messrs. Miles, Potter and Sheehy are members of the Nominating
Committee.
(1) The information as to beneficial ownership as of January 31, 2001 is based
on statements furnished to the Fund by the Directors and nominees. All
shares listed in this table were owned with sole voting and investment
power. In the aggregate, all of the shares in the table represented less
than one percent of the total shares of common stock outstanding as of
January 31, 2001. The Directors of the Fund representing the common stock,
as a group, owned less than one percent of the total shares of common
stock outstanding as of January 31, 2001.
Please also see the information contained below under the heading "Further
Information Regarding Directors and Officers."
The Board of Directors recommends that shareholders vote FOR the election of
the Fund's four nominees to the Fund's Board of Directors.
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Fund, upon recommendation of the Audit
Committee, has selected PricewaterhouseCoopers LLP ("PwC"), independent
accountants, to audit the financial statements of the Fund for the fiscal year
ending October 31, 2001.
Audit services performed by PwC during the most recent fiscal year included
the audit of the financial statements of the Fund. During the fiscal year
ended October 31, 2000, the fees for services rendered to the Fund by PwC
were:
Financial Information Systems All
Audit Design and Other
Fees Implementation Fees Fees*
----- ----------------------------- --------
$96,000 $ None $109,000
-------
* This amount includes fees for services rendered by PwC to the Fund, the
Investment Manager and Investment Adviser, and entities controlling,
controlled by, or under common control with, the Investment Manager and
Investment Adviser that provide services to the Fund.
9
At its most recent meeting in December 2000, the Audit Committee of the Fund
reviewed information presented by the Fund's independent accountants that
addressed the matters set forth in Independence Standards Board Standard No.
1, Independence Discussions with Audit Committees. Effective February 5, 2001,
new Securities and Exchange Commission rules generally require the disclosure
in a Fund's proxy statement of whether the Fund's Audit Committee considered
whether the provision of non-audit services to the Fund and of professional
services to the Fund's adviser and to entities controlling, controlled by, and
under common control with, the Fund's adviser that provide services to the
Fund is compatible with maintaining the independence of the Fund's independent
accountants. Because the Fund's Audit Committee has not met since these new
rules became effective, the Audit Committee has not expressly considered
whether the provision by the Fund's independent accountants of such services
is compatible with maintaining the independence of the Fund's accountants.
Nevertheless, the Audit Committee is generally aware of the nature and extent
of the fees earned by the Fund's independent accountants from such non-audit
services.
The Fund knows of no direct or indirect interest of PwC firm in the Fund.
OTHER BUSINESS
The Board of Directors knows of no business to be brought before the Meeting
other than as set forth above. If, however, any other matters properly come
before the Meeting, it is the intention of the persons named on the enclosed
proxy card to vote such proxies on such matters in accordance with their best
judgment.
FURTHER INFORMATION REGARDING DIRECTORS AND OFFICERS
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the Securities Exchange Act of 1934 (the "Exchange Act") and Section 30(h) of
the 1940 Act, as applied to the Fund, require the Fund's officers, Directors,
the Investment Manager and Investment Adviser, affiliates of the Investment
Manager or Investment Adviser, and persons who beneficially own more than 10%
of a registered class of the Fund's outstanding securities ("Reporting
Persons") to file reports of ownership of the Fund's securities and changes in
such ownership with the Securities and Exchange Commission and the American
Stock Exchange. Such persons are required by Securities and Exchange
Commission regulations to furnish the Fund with copies of all such filings.
Based solely on its review of the copies of such forms received by it and
written representations from certain Reporting Persons that no year-end
reports were required for those persons, the Fund believes that during the
fiscal year ended October 31, 2000, its Reporting Persons complied with all
applicable filing requirements.
Committees and Board of Directors Meetings. The Board of Directors has a
standing Audit Committee, composed entirely of Directors who are not
"interested persons" of the Fund or the Fund's Investment Manager or
Investment Adviser, within the meaning of the 1940 Act, and who are
"independent" as defined in the American Stock Exchange listing standards. The
Audit Committee reviews both the audit and non-audit work of the Fund's
independent public accountants, submits recommendations to the Board of
Directors as to the selection of independent public accountants, and review
compliance of the Fund with regulations of the Securities and Exchange
Commission and the Internal Revenue Service, and other related matters.
The Fund adopted an Audit Committee Charter on March 16, 2000, a copy of
which is attached to this Proxy Statement as Exhibit A. The Audit Committee
has received the written disclosures and the letter required by Independence
Standards Board Standard No. 1 from PwC. the Fund's independent auditors, and
has discussed with PwC its independence. The Audit
10
Committee has also reviewed and discussed the audited financial statements
with Fund management and PwC, and discussed certain matters with PwC required
to be discussed by Statements on Auditing Standards No. 61. Based on the
foregoing, the Audit Committee recommended to the Board of Directors that the
Fund's audited financial statements be included in the Fund's Annual Report to
Shareholders for the fiscal year ended October 31, 2000. The members of the
Fund's Audit Committee are Messrs. Anthony E. Aaronson, Peter D. Sacks, and
John T. Sheehy.
The Board of Directors also has a standing Contract Review Committee,
composed entirely of Directors who are not "interested persons" of the Fund or
the Fund's Investment Manager or Investment Adviser within the meaning of the
1940 Act. The Contract Review Committee reviews and makes recommendations to
the Board with respect to entering into, renewal or amendment of the
Management Agreement, the Advisory Agreement, the Administration Agreement,
the Investor Relations Services Agreement and other agreements.
In December 2000, the Fund established an interim Nominating Committee,
composed entirely of Directors who are not "interested persons" of the Fund or
the Fund's Investment Manager or Investment Adviser within the meaning of the
1940 Act. The interim Nominating Committee was actively engaged in the review
of all recent director appointments and nominations. In March 2001, the Fund
established a permanent Nominating Committee. The Nominating Committee will
not consider nominees recommended by security holders.
During the Fund's fiscal year ended October 31, 2000, the Board of Directors
held four regularly scheduled meetings and one special meeting, the Audit
Committee held two meetings, a special Due Diligence Committee, organized in
connection with the acquisition of the Investment Manager and the Investment
Adviser by Aberdeen Asset Management PLC, held three meetings, and the
Contract Review Committee held one meeting. Each of the Directors then in
office (except Michael R. Horsburgh) attended at least 75% of the aggregate
number of meetings of the Board of Directors and of all the Committees of the
Board on which he served.
Officers of the Fund. The officers of the Fund, all of whom serve at the
pleasure of the Board of Directors, are as follows: Hugh Young (age 42),
President (since 2001); David Manor (age 60), Treasurer (since 1987); Ouma
Sananikone (age 42), Vice President (since 2001) and Chief Investment Officer
(since 1995); Michael Karagianis (age 37), Assistant Vice President (since
2001); Barry G. Sechos (age 39), Assistant Treasurer (since 1995); Jack
Benintende (age 36), Assistant Treasurer (since 2000); Roy M. Randall (age
64), Secretary (since inception); Allan S. Mostoff (age 68), Assistant
Secretary (since inception); Sander M. Bieber (age 51), Assistant Secretary
(since 1999); and Margaret A. Bancroft (age 62), Assistant Secretary (since
1989).
The respective principal occupations and employment during the past five
years of the Fund's officers are as follows: Hugh Young, as set forth above
under "Proposal to Elect Class I Directors;" David Manor, Managing Director
(since 1998) of the Fund's Investment Manager, Executive Director (from 1985
to 1998) of the Fund's Investment Adviser, Treasurer (since inception) of The
First Commonwealth Fund, Inc., Treasurer (since 1987) of The First Australia
Fund, Inc., Treasurer (since 1987) of The First Australia Prime Income Fund,
Inc.; Ouma Sananikone, Chief Executive Officer (since 1997), Investment
Director and a Director (since 1994) of the Fund's Investment Adviser,
Director (since 2000) of the Fund's Investment Manager, Vice President (since
2001), Assistant Vice President (1995-2001), and Chief Investment Officer
(since 1995) of The First Commonwealth Fund, Inc., The First Australia Fund,
Inc., and The First Australia Prime Income Fund, Inc.; Barry G. Sechos,
General Counsel (since 1993) and a Director (since 1994) of the Fund's
Investment Adviser, Director (since 2000) of the Fund's Investment Manager;
Director (since 1998) of EquitiLink Holdings Limited; Michael Karagianis,
Assistant Vice President (since 2001) of The First Commonwealth Fund, Inc.,
The First Australia Fund, Inc. and The First Australia Prime Income Fund,
Inc., Director of Economics and Investment Strategy (since 1999) of the Fund's
Investment Adviser, Director of Portfolio Investment (1995-1999) of County
Investment Management; Jack Benintende, Vice President (since 2000) of
Prudential Investments, the Fund's Administrator, Senior Manager (1998-2000)
and Manager (1995-1998),
11
PricewaterhouseCoopers; Roy M. Randall, Partner (since 1997) of Stikeman,
Elliott (law firm) and Partner (1981-1996) of Freehill Hollingdale & Page (law
firm); Allan S. Mostoff, Sander M. Bieber and Margaret A. Bancroft, Partners
of Dechert (law firm).
Mr. Hugh Young, Ms. Ouma Sananikone, Mr. David Manor, Mr. Michael
Karagianis, and Mr. Barry G. Sechos serve as executive officers of the Fund.
As of January 31, 2001, the executive officers of the Fund owned no shares of
the Fund.
Relationship of Directors or Nominees with the Investment Adviser and the
Investment Manager. Aberdeen Asset Managers (C.I.) Limited (formerly known as
EquitiLink International Management Limited) (the "Investment Manager") serves
as investment manager to the Fund and Aberdeen Asset Management Limited
(formerly known as EquitiLink Australia Limited) (the "Investment Adviser")
serves as investment adviser to the Fund pursuant to a management agreement
dated December 22, 2000 and an advisory agreement dated December 22, 2000.
The Investment Manager is a Jersey, Channel Islands corporation organized in
October 1985 with its registered office located at 17 Bond Street, St. Helier,
Jersey, Channel Islands. The Investment Adviser is a wholly-owned subsidiary
of Aberdeen Asset Management Holdings Limited (formerly known as EquitiLink
Limited) ("AAMHL:"), an Australian corporation. The registered offices of the
Investment Adviser and AAMHL are located at Level 3, 190 George Street,
Sydney, N.S.W., Australia. Both the Investment Manager and AAMHL are wholly-
owned subsidiaries of Aberdeen Asset Management PLC, a United Kingdom
corporation. The registered offices of Aberdeen Asset Management PLC are
located at One Albyn Place, Aberdeen, Scotland AB10 1YG
On December 22, 2000, all of the shares of EquitiLink International
Management Limited (the Investment Manager), of EquitiLink Limited ("EL",
parent of EquitiLink Australia Limited, the Investment Adviser), and of
EquitiLink International (Channel Islands) Limited ("EICIL") were transferred
to Aberdeen Asset Management PLC ("Aberdeen") (the "Aberdeen Transaction"),
pursuant to a Share Sale Agreement between Aberdeen on the one side and
EquitiLink Holdings Limited ("EHL", parent of EL), EIML Australia Pty Limited
(parent of the Investment Manager) and the shareholders of EICIL on the other
side. Total consideration for the sale was US $80 million, subject to certain
adjustments. The consideration was paid in a combination of cash and
preference shares issued by Aberdeen. At the time of the execution of the
Share Sale Agreement, Messrs. Laurence S. Freedman and Brian M. Sherman were
directors and principal shareholders of the Investment Manager, and Mr. David
Manor was the Managing Director of the Investment Manager. Messrs. Freedman
and Sherman then also served as, respectively, Joint Managing Director, and
Joint Managing Director and Chairman of the Investment Adviser. In connection
with the Aberdeen Transaction, Messrs. Freedman and Sherman resigned as Joint
Managing Directors of the Investment Adviser and as directors of the
Investment Manager. Messrs. Freedman and Sherman are the principal
shareholders of EquitiLink Holdings Limited and of EIML Australia Pty Limited,
of both of which Mr. Manor is also a shareholder.
Mr. Hugh Young, a Director and President of the Fund, also serves as a
director of the Investment Manager and the Investment Adviser, and as an
Executive Director of Aberdeen Asset Management PLC, the parent of the
Investment Manager and the Investment Adviser. Mr. Young is a shareholder of
Aberdeen Asset Management PLC. Mr. Chris Fishwick, a Director of the Fund,
also serves as a director of the Investment Manager and a Director of Aberdeen
Asset Management PLC. Mr. Fishwick is a shareholder of Aberdeen Asset
Management PLC.
Under the terms of an Investor Relations Services Agreement, EquitiLink USA,
Inc. (doing business under the name Aberdeen Asset Management), a wholly-owned
subsidiary of the Investment Manager, provides investor relations services to
the Fund for a monthly retainer of $5,000.
Compensation of Directors and Certain Officers. The following table sets
forth information regarding compensation of Directors by the Fund and by the
fund complex of which the Fund is a part for the fiscal year ended October 31,
2000. Officers of the Fund and Directors who are interested persons of the
Fund do not receive any compensation
12
from the Fund or any other fund in the fund complex. In the column headed
"Total Compensation From Fund and Associated Funds Paid to Directors," the
number in parentheses indicates the total number of boards in the fund complex
on which the Director serves or served at any time during the fiscal year
ended October 31, 2000.
Compensation Table
Fiscal Year Ended 10/31/00
Total
Pension or Estimated Compensation
Retirement Annual From Fund and
Aggregate Benefits Accrued Benefits Associated Funds
Compensation As Part of Fund Upon Paid to
Name of Director From Fund Expenses Retirement Directors
---------------- ------------ ---------------- ---------- ----------------
Anthony E. Aaronson..... $13,500 N/A N/A $33,250(2)
Sir Roden Cutler*....... $ 5,003 N/A N/A $84,556(3)
David Lindsay Elsum..... $10,988 N/A N/A $40,256(3)
Rt. Hon. Malcolm
Fraser**............... $ 7,112 N/A N/A $27,593(3)
Laurence S. Freedman.... 0 N/A N/A 0(3)
Michael R.
Horsburgh***........... $ 9,500 N/A N/A $35,250(3)
Harry A. Jacobs,
Jr.***................. 0 N/A N/A 0(2)
Howard A. Knight........ $10,500 N/A N/A $27,250(2)
Richard H. McCoy***..... $11,400 N/A N/A $11,400(1)
Neville J. Miles........ $11,338 N/A N/A $39,456(3)
Peter O'Connell......... $ 9,638 N/A N/A $25,056(2)
William J. Potter....... $12,000 N/A N/A $43,750(3)
Peter D. Sacks.......... $11,213 N/A N/A $41,969(3)
John T. Sheehy.......... $13,000 N/A N/A $45,250(3)
Brian M. Sherman***..... 0 N/A N/A 0(3)
-------
* Sir Roden Cutler retired from the Board of Directors effective December
1999.
** Rt. Hon. Malcolm Fraser resigned from the Board of Directors effective June
2000.
*** Messrs. Michael R. Horsburgh, Harry A. Jacobs, Jr., Richard H. McCoy, and
Brian M. Sherman resigned from the Board of Directors effective December
2000.
ADDITIONAL INFORMATION
Administrator. The Fund's administrator is Prudential Investments, Gateway
Center 3, 100 Mulberry Street, Newark, NJ 07102.
Expenses. The expense of preparation, printing and mailing of the enclosed
proxy card and accompanying Notice and Proxy Statement will be borne by the
Fund. The Fund will reimburse banks, brokers and others for their reasonable
expenses in forwarding proxy solicitation material to the beneficial owners of
the shares of the Fund. In order to obtain the necessary quorum at the
Meeting, supplementary solicitation may be made by mail, telephone, telegraph
or personal interview. Such solicitation may be conducted by, among others,
officers, Directors and employees of the Fund, the Investment Manager, the
Investment Adviser or State Street Bank and Trust Company, the Transfer Agent
of the Fund. Innisfree M&A ("Innisfree")
13
has been retained to assist in the solicitation of proxies. Innisfree will be
paid approximately $6,000 by the Fund and the Fund will reimburse Innisfree
for its related expenses.
Solicitation and Voting of Proxies. Solicitation of proxies is being made
primarily by the mailing of this Proxy Statement with its enclosures on or
about March 19, 2001. In addition, as the meeting date approaches, certain
shareholders of the Fund may receive a call from a representative of Innisfree
if the Fund has not yet received their vote. Authorization to permit Innisfree
to execute proxies may be obtained by telephonic or electronically transmitted
instructions from shareholders of the Fund. Proxies that are obtained
telephonically will be recorded in accordance with the procedures set forth
below. Management of the Fund believes that these procedures are reasonably
designed to ensure that the identity of the shareholder casting the vote is
accurately determined and that the voting instructions of the shareholder are
accurately determined.
In all cases where a telephonic proxy is solicited, the Innisfree
representative is required to ask the shareholder for such shareholder's full
name, address, social security number or employer identification number, title
(if the person giving the proxy is authorized to act on behalf of an entity,
such as a corporation), the number of shares owned and to confirm that the
shareholder has received the Proxy Statement in the mail. If the information
solicited agrees with the information provided to Innisfree by the Fund, then
the Innisfree representative has the responsibility to explain the process,
read the proposals listed on the proxy card, and ask for the shareholder's
instructions on each proposal. The Innisfree representative, although he or
she is permitted to answer questions about the process, is not permitted to
recommend to the shareholder how to vote, other than to read any
recommendation set forth in the Proxy Statement. Innisfree will record the
shareholder's instructions on the card. Within 72 hours, Innisfree will send
the shareholder a letter or mailgram to confirm the shareholder's vote and
asking the shareholder to call Innisfree immediately if the shareholder's
instructions are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Meeting of shareholders, but
does not wish to give a proxy by telephone, such shareholder may still submit
the proxy card originally sent with the Proxy Statement or attend in person.
Any proxy given by a shareholder, whether in writing, by telephone or via the
internet, is revocable. A shareholder may revoke the accompanying proxy or a
proxy given telephonically or via the internet at any time prior to its use by
filing with the Fund a written revocation or duly executed proxy bearing a
later date. In addition, any shareholder who attends the Meeting in person may
vote by ballot at the Meeting, thereby canceling any proxy previously given.
Beneficial Ownership; Change of Control. To the best of the Fund's
knowledge, based upon filings made with the Securities and Exchange
Commission, as of January 18, 2001, the only beneficial owner of more than
five percent of the voting securities of the Fund is:
Title
of Name and Address of Number of Shares Percent of
Class Beneficial Owner Beneficially Owned Class
----- ------------------- ------------------ ----------
Common Mira, L.P., Zurich Capital Markets, 5,317,461 30.1%
Stock, Inc., its General Partner, One Chase
par Manhattan Plaza, New York, New York
value 10005
$0.01
per
share
On January 18, 2001, Mira L.P. ("Mira") acquired an aggregate of 2,742,461
shares of common stock of the Fund from EquitiLink Holdings Limited,
EquitiLink Limited, EquitiLink International Management Limited and EquitiLink
USA, Inc. (collectively, the "Sellers"), pursuant to the Stock Purchase
Agreement dated as of November 10, 2000 by and between Mira and the Sellers
(the "Mira Agreement"). The aggregate purchase price paid by Mira for these
shares was $16,891,914.28. According to a report on Schedule 13D filed by Mira
with the Securities and Exchange Commission on January 18, 2001, Mira paid the
purchase price for these shares from its working capital. At the time of the
execution of the
14
Mira Agreement, Messrs. Laurence S. Freedman and Brian M. Sherman were the
principal shareholders, directly or indirectly, of each of the Sellers.
As part of the Mira Agreement, and as disclosed to shareholders in a
supplement dated November 16, 2000 to the Fund's proxy statement with respect
to a proposal (the "Proposal") to approve a new investment management
agreement and a new investment advisory agreement at a meeting of shareholders
held on November 30, 2000, Mira agreed to vote all the Fund shares it then
owned in favor of the Proposal. Mira also agreed not to solicit proxies in
opposition to the Proposal or, prior to the stock sale, to attempt to
influence Fund management or policies or to take or support any action
opposing the Proposal. Mira also acknowledged that the shares it acquired
under the Mira Agreement will be subject to certain legal restrictions
regarding their further sale.
Shareholder Proposals. If a shareholder intends to present a proposal at the
Annual Meeting of Shareholders of the Fund to be held in 2002 and desires to
have the proposal included in the Fund's proxy statement and form of proxy for
that meeting, the shareholder must deliver the proposal to the offices of the
Fund by November 19, 2001.
Shareholders wishing to present proposals at the Annual Meeting of
Shareholders of the Fund to be held in 2002 which they do not wish to be
included in the Fund's proxy materials should send written notice to the
Secretary of the Fund of such proposals no sooner than December 20, 2001 and
no later than January 19, 2002 in the form prescribed in the Fund's By-Laws.
By Order of the Board of Directors,
Roy M. Randall, Secretary
Gateway Center 3
100 Mulberry Street
Newark, New Jersey 07102
March 19, 2001
15
EXHIBIT A
THE FIRST AUSTRALIA FUND, INC.
AUDIT COMMITTEE CHARTER
Mission
The mission of the Audit Committee (the "Committee") of The First Australia
Fund, Inc. (the "Fund") is to oversee the Fund's accounting and financial
reporting policies and practices, its internal controls and, as appropriate,
the internal controls of certain service providers, and the quality and
objectivity of the Fund's financial statements. The Committee will also report
to the Board of Directors (the "Board"), if necessary, any relationships
between the auditor and the Fund, or any other relationships, which come to
the Committee's attention that may adversely affect the independence of the
auditor.
The function of the Committee in this capacity is oversight; it is the
responsibility of the Fund and the Manager to maintain appropriate systems for
accounting and internal control, and the responsibility of the Fund's
independent auditors to plan and carry out a proper audit.
The independent auditors are directly accountable to the Committee and to
the Board.
Committee Membership
The Committee shall be composed of at least three independent directors with
the qualifications indicated below. The President of the Fund, although not a
member of the Committee, will nonetheless be expected to play a significant
role in assisting the Committee to discharge its responsibilities, including
ensuring adequate access to, and support from, the staff of the Fund's
investment manager, EquitiLink International Management Limited (the
"Manager"), and the staff of the Fund's investment adviser, EquitiLink
Australia Limited (the "Adviser").
Qualifications of Committee Members
The Committee must have at least three independent directors. A director
with any of the following five relationships will not be considered
independent for this purpose:
(1) employment by the Fund or any of its affiliates for the current year or
any of the past three years;
(2) acceptance of any compensation from the Fund or any of its affiliates
in excess of $60,000 during the previous fiscal year, other than
compensation for board service, benefits under a tax-qualified
retirement plan, or non- discretionary compensation;
(3) member of the immediate family of an individual who is, or has been in
any of the past three years, employed by the Fund or any of its
affiliates as an executive officer. Immediate family includes a
person's spouse, parents, children, siblings, mothers and fathers-in-
law, brothers and sisters-in-law, sons and daughters-in-law, and anyone
who resides in such person's home;
(4) partnership in, or being a controlling shareholder or an executive
officer of, any for-profit business organization to which the Fund
made, or from which the Fund received, payments (other than those
arising solely from investments in the Fund's securities) that exceed
5% of the Fund's gross income for that year, or $200,000, whichever is
more, in any of the past three years; or
(5) employment as an executive of another entity where any of the Fund's
executives serve on that entity's compensation committee.
A-1
One member of the Committee may be a non-independent director, under limited
and exceptional circumstances, if the Board determines that membership on the
Committee by that non-independent director is required by the best interests
of the Fund and its shareholders. To be eligible for this consideration, the
non-independent director may not be a current employee or immediate family
member of an employee of the Fund. If such a determination is made, the Board
must disclose, in the Fund's next annual proxy statement subsequent to making
the determination, the nature of the relationship and the reasons for the
determination.
Each member of the Committee must be able to read and understand basic
financial statements, including the Fund's balance sheet, income statement and
statement of cash flows, or must become able to do so within a reasonable
period of time after his or her appointment to the Committee. At least one
member of the Committee must have past employment experience in finance or
accounting, requisite professional certification in accounting, or any other
comparable experience or background which result in that individual's having
financial sophistication, including, but not limited to, being or having been
a chief executive officer, chief financial officer or other senior officer
with financial oversight responsibilities.
Duties and Powers
To carry out its mission, the Committee shall, to the extent it deems
appropriate, carry out the following functions:
1. to recommend annually to the Board the selection, retention, or
termination of independent auditors and, in connection therewith, to evaluate
the independence of the auditors, including whether the auditors provide any
consulting, auditing, or tax services to the Manager and to receive the
auditors' specific representations as to their independence, delineating all
relationships between the auditor and the Fund, consistent with Independence
Standards Board ("ISB") Standard No. 1./(1)/ This should include information
on whether the independent auditor performs any significant non-auditing
services for the Fund. The Committee is responsible for actively engaging in a
dialogue with the auditor with respect to any disclosed relationships or
services that may impact the objectives and independence of the auditor and
for taking, or recommending that the full Board take, appropriate action to
oversee the independence of the outside auditor;
2. to recommend new independent auditors, should it prove necessary, subject
to ratification by the Board and shareholder approval, if required;
3. to meet with the Fund's independent auditors, including private meetings,
as necessary (i) to review the arrangements for and scope of the annual audit
and any special audits, and the fees proposed to be charged in connection with
such services, (ii) to discuss any matters of concern relating to the Fund's
financial statements, including any adjustments to such statements recommended
by the auditors, or other results of said audit(s), including matters required
to be discussed by the Statements on Auditing Standards ("SAS") No. 61,/(2)/
(iii) to consider the auditors' comments
-------
(1) ISB Standard No. 1 requires the auditor to annually: (1) disclose to the
Committee, in writing, all relationships between the auditor and its
related entities and the Fund and its related entities that in the
auditor's professional judgment may reasonably be thought to bear on
independence; (2) confirm in the letter that, in its professional
judgment, it is independent of the Fund within the meaning of the
Securities Acts administered by the SEC; and (3) discuss the auditor's
independence with the audit committee.
(2) SAS 61 requires independent auditors to communicate certain matters
related to the conduct of an audit to those who have responsibility for
oversight of the financial reporting process, specifically the audit
committee. Among the matters to be communicated to the audit committee
are: (1) methods used to account for significant unusual transactions; (2)
the effect of significant accounting policies in controversial or emerging
areas for which there is a lack of authoritative guidance or consensus;
(3) the process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditor's conclusions regarding
the reasonableness of those estimates; and (4) disagreements with
management over the application of accounting principles, the basis for
management's accounting estimates, and the disclosures in the financial
statements.
A-2
with respect to the Fund's financial policies, procedures and internal
accounting controls and management's responses thereto, (iv) to review the
form of opinion the auditors propose to render to the Board and shareholders,
and (v) to review the performance of the auditor;
4. to consider the effect upon the Fund of any changes in accounting
principles or practices proposed by management or the auditors;
5. to review the fees charged by the auditors for audit and non-audit
services;
6. to confer with the officers of the Fund to the extent necessary in its
review of the internal controls, accounting practices, fiscal structure and
fiscal reporting of the Fund, and as appropriate report to the Board
concerning the business of the Committee;
7. to establish rules and procedures necessary for the Committee to fulfill
its responsibilities and conduct its business;
8. to investigate improprieties or suspected improprieties and Fund
operations, as they are presented to the Committee or brought to the attention
of the Committee;
9. to review the Fund's financial reporting practices, including (i)
accounting policies and practices and significant judgments that may affect
the financial statements of the Fund and the selection made from among
alternative accounting treatments; (ii) effects of changes in accounting
standards that may significantly affect financial reporting practices; (iii)
reasons for major year-to-year variations in financial statements; and (iv)
reports of any significant accounting accruals, reserves, estimates made by
management, and provisions for contingent liabilities;
10. to review the Fund's system of internal controls, including (i) the
security of tangible and intangible Fund assets and the security of computer
systems and facilities; (ii) instances of employee defalcation and violations
of the Code of Ethics and other Fund policies and procedures; and (iii)
reports from Fund legal counsel with respect to compliance with laws and
regulations, significant litigation, and possible impact on financial results;
11. to review the Fund's tax compliance and status, including the status of
the Fund's position relative to tax audits and significant issues disputed by
tax authorities; and
12. to report its activities to the full Board on a regular basis and to
make such recommendations with respect to the above and other matters as the
Committee may deem necessary or appropriate.
Other Powers and Responsibilities
1. The Committee normally shall meet in person twice yearly, in June and
December, prior to the meetings of the full Board, and at such other time or
times as the Committee or Board may determine appropriate or necessary, and is
empowered to hold special meetings as circumstances require.
2. Each December, the Committee shall issue a report indicating whether the
Committee (i) reviewed and discussed the financial statements with management;
(ii) discussed the matters required by SAS 61, as modified or supplemented;
and (iii) received from the auditors the letter and written disclosure
required by ISB Standard No. 1, and discussed with the auditors their
independence. The Committee's report should also indicate whether the audit
committee, based on its review and its discussions with management and the
auditors, recommends to the Board that the financial statements be included in
the Fund's annual report for the last fiscal year.
A-3
3. The Committee shall have the resources and authority appropriate to
discharge its responsibilities, including authority to utilize Fund counsel
and to retain experts or other persons with specific competence at the expense
of the Fund.
4. The Committee shall review this Charter at least annually and recommend
any changes to the full Board of Directors.
March 16, 2000
A-4
PROXY
THE FIRST AUSTRALIA FUND, INC.
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Shareholders - April 19, 2001
The undersigned hereby appoints Beverley Hendry, William J. Potter, and Michael
Karagianis, each of them, the proxies of the undersigned, with power of
substitution to each of them, to vote all shares of the common stock of The
First Australia Fund, Inc. which the undersigned is entitled to vote at the
Annual Meeting of Shareholders of The First Australia Fund, Inc. to be held at
the offices of Prudential Securities Incorporated, One Seaport Plaza, New York,
New York on April 19, 2001 at 1:00 p.m. (Eastern time), and at any adjournment
or postponement thereof. By signing this proxy card on the reverse side, the
undersigned authorizes the appointed proxies to vote in their discretion on any
other business which may properly come before the meeting or any adjournments or
postponements thereof.
--------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
--------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the books of the Fund. Joint
owners should each sign personally. 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 state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
------------------------- -------------------------------
------------------------- -------------------------------
------------------------- -------------------------------
(X) PLEASE MARK VOTES
AS IN THIS EXAMPLE
--------------------------------------------------------------------------------
THE FIRST AUSTRALIA FUND, INC.
--------------------------------------------------------------------------------
COMMON STOCK
Mark box at right if an address change or comment has been noted / /
on the reverse side of this card.
Date -------------
Please be sure to sign and date this Proxy.
--------------------------------------------------------------------------------
Shareholder sign here _______________ Co-owner sign here ________
This proxy, when properly executed, will be voted in the manner directed. If no
direction is made, this proxy will be voted FOR Item 1.
(1) The election of four Directors to serve as
Class I Directors for a three-year term:
For All Nominees Withhold For All Except
Anthony E. Aaronson / / / / / /
Neville J. Miles / / / / / /
Peter D. Sacks / / / / / /
John T. Sheehy / / / / / /
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(S) OF THE
NOMINEE(S). YOUR SHARES WILL BE VOTED FOR THE REMAINING NOMINEE(S).
The appointed proxies will vote in their discretion on any other business as may
properly come before the meeting or any adjournments or postponements thereof.
RECORD DATE SHARES: