Filing Details

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

(Amendment No. 2)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

RULE 13d-2(a)

 

(Name of Issuer)

 

(Title of Class of Securities)

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

(Date of Event Which Requires Filing of This Statement)

 

 

 

1	NAMES OF REPORTING PERSONS
	S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
	City of London Investment Group PLC, (CLIG) a company incorporated under the laws of England and Wales.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP			(a)	☐
				(b)	☐
3	SEC USE ONLY
4	SOURCE OF FUNDS*
	OO
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)				☐
6	CITIZENSHIP OR PLACE OF ORGANIZATION
	England and Wales
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:		7	SOLE VOTING POWER
			0
		8	SHARED VOTING POWER
			3,919,903
		9	SOLE DISPOSITIVE POWER
			0
		10	SHARED DISPOSITIVE POWER
			3,919,903
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
	3,919,903
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES				☐
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	24.9%
14	TYPE OF REPORTING PERSON*
	HC

 

 

 

 

Item 3.                 Source and Amount of Funds or Other Considerations.

Signature

CITY OF LONDON INVESTMENT GROUP PLC

Name: Barry M. Olliff

Title:  Director

CITY OF LONDON INVESTMENT

MANAGEMENT COMPANY LIMITED

Name: Barry M. Olliff

Title:  Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Board of Directors is focused upon self-preservation.  As an example, the Fund has taken full advantage of another Stockholder-unfriendly provision of Maryland law which allows the meeting to occur exactly 120 days after the Record Date. The Fund has effectively disenfranchised the Stockholders who have invested in the Fund subsequent to the beginning of May, presumably because the Board believes these investors are unlikely to support the its selection of Open Door.

Allianz Global Investors U.S. LLC ("Allianz") provides investment advisory services to the Fund through two investment agreements.  In the Funds' Semi-Annual Report dated April 30, 2017, the Board published the results of its findings regarding the investment performance, fees and other services provided by Allianz. The general conclusion was that the "services provided by Allianz were appropriate, that the performance of the Fund had been adequate, and that Allianz could be expected to provide services of high quality."   The Board determined the fees paid to Allianz were determined to be "fair and reasonable."

Despite the Board's conclusion that Allianz delivered "adequate" results, the investment performance was sub-standard, trailing the benchmark index by 2.62% on an annualized basis over the three-year period ended June 30, 2017, according to the Fund's own fact sheet:

The Board is spending Stockholder assets for proxy solicitation services to fight against Stockholder interests. The associated legal fees are also mounting.

The Board continues to pursue its own agenda despite two failed attempts to garner sufficient stockholder support for Open Door. The Stockholders have twice voted against Open Door but the Board has not revealed the vote tallies. The Record Date is stale and does not reflect the current Stockholder base. The Board approved the continuation of the Allianz investment agreements on the same day that it decided to select Open Door to replace Allianz. Fund assets are being employed to find votes in support of Open Door and legal fees are mounting.

For all the reasons discussed above, we believe that the Board has lost all credibility and that this Fund has no future. As we have previously stated, we intend to propose termination of the Fund's investment agreement regardless of the outcome of the vote on Open Door. The current deadline for the submission of a 14a-8 proposal is September 21, 2017. Our draft proposal to terminate the existing contract is attached, which would be amended if Open Door were selected.

We urge the Board to immediately stop using Stockholder resources to attempt to overturn the result of the proxy votes.  The Board should now take steps to begin the process of liquidating the Fund.

Sincerely

Jeremy Bannister

Director, Corporate Governance

Attachment (Stockholder Proposal to The China Fund, Inc.)

 

<<  DRAFT  >>

Stockholder Proposal to The China Fund, Inc.

August 10, 2017

RESOLVED:  All investment advisory and management agreements between The China Fund, Inc. ("the Fund") and Allianz Global Investors U.S. LLC ("Allianz") shall be terminated by the Fund, pursuant to the right of stockholders as embodied in Section 15(a)(3) of the Investment Company Act of 1940 and as required to be included in such agreements, at the earliest date the Fund is legally permitted to do so.

SUPPORTING STATEMENT

The investment results achieved by Allianz, the Fund's investment manager, did not keep pace with the benchmark index over an extended period. As such, Allianz, in its capacity as Manager, delivered unsatisfactory net asset value ("NAV") investment performance. Therefore, all investment advisory and management agreements between the Fund and Allianz should be terminated by the Fund.

As outlined in the Fund's "Semi-Annual Report to Stockholders – April 30, 2017", the Board considered the renewal of the investment management and portfolio management agreements.  The Manager's affiliate assumed its responsibilities effective April 6, 2012, and thus had crossed the five-year threshold at the date of the Semi-Annual Report.

According to the section of the Semi-Annual Report entitled "Board Deliberations Regarding Approval of Investment Advisory Agreements," the Board determined that "the Fund underperformed the MSCI Golden Dragon Index for the one-, three- and five-year periods ended December 31, 2016 and outperformed the Index for the 10-year period ended December 31, 2016." The section went on the state that "The Directors concluded that, despite this general underperformance when compared to the Fund's benchmark, the performance of the Fund was adequate."

The facts are that the NAV performance delivered by Allianz for the rolling periods ending June 30, 2017, according to the Fund's own published investment results, lagged the benchmark index by 4.79% for the 1-year period and 2.62% annualized for the 3-year period, equating to a cumulative underperformance of approximately 7.5%. This is weak investment performance.

The Board deemed Allianz's performance to be "adequate" on March 28, 2017, but later that same day the Board resolved to select Open Door Investment Management Ltd. as successor to Allianz. Clearly, the Board's actions and its words on that day stand in opposition to each other.

For the reasons outlined above, we urge stockholders to exercise their right pursuant to Section 15(a)(3) of the Investment Company Act to vote to terminate all investment advisory and management agreements with Allianz Global Investors U.S. LLC.