As filed with the Securities and Exchange Commission on November 18, 2004
1940 Act File No. 811-21650
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
AMENDMENT NO. 1 TO THE
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
OF
ASA (BERMUDA) LIMITED
(Exact Name of Company as Specified in Charter)
4th Floor
11 Summer Street
Buffalo, NY 14209
(Address of Principal Executive Offices)
Company's Telephone Number, including Area Code: (716) 883-2428
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(Name and Address of Agent for Service)
JPMorgan Chase Bank
3 Chase Metrotech Center
Brooklyn, NY 11245
ASA (BERMUDA) LIMITED
Contents of Registration Statement
This registration statement of ASA (Bermuda) Limited contains the following
documents:
Facing Sheet
Contents of Registration Statement
Part A
Part B
Part C
Signature Page
Exhibits
2
PART A
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ASA (BERMUDA) LIMITED
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FUND EXPENSES
-------------
The following tables are intended to assist investors in understanding the
various costs and expenses that an investor will bear directly or indirectly as
a result of purchasing shares of ASA (Bermuda) Limited (the "Company"). See
"Management - Expenses" and "Dividend Reinvestment Plan".
SHAREHOLDER TRANSACTION EXPENSES
--------------------------------
Dividend Reinvestment and Cash Purchase Plan Fee* 5% of total funds
invested ($2.50
per transaction
maximum). $10 fee
for sales.
* Does not include brokerage commissions.
ANNUAL EXPENSES (AS A PERCENTAGE OF NET ASSETS)
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Management Fees(1)..........................................................None
Other Expenses(2)..........................................................0.73%
Total Annual Expenses......................................................0.73%
(1) The Company does not have an outside investment adviser.
(2) The figure provided under "Other Expenses" is based upon estimated
amounts for the Company's initial fiscal year and includes expenses such as
directors' fees, employee salaries and benefits, administrative fees, legal
fees, auditing fees and insurance expenses.
The Example set forth below assumes reinvestment of all dividends at net
asset value. The Example also assumes that the ratio set forth above for Total
Annual Expenses remains the same each year. THE EXAMPLE SHOULD NOT BE CONSIDERED
A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RATES OF RETURN. ACTUAL
EXPENSES AND ANNUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE ASSUMED FOR
PURPOSES OF THE EXAMPLE. In addition, while the Example assumes reinvestment of
all dividends at net asset value, participants in the Company's Dividend
Reinvestment Plan may receive shares purchased at a price different from net
asset value. See "Dividend Reinvestment Plan."
3
EXAMPLE:
1 3 5 10
Year Years Years Years
---- ----- ----- -----
An investor would pay the following
expenses on a $1,000 investment, assuming a $7 $23 $41 $95
5% annual return:
GENERAL DESCRIPTION OF THE COMPANY
----------------------------------
The Company is a diversified, closed-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), and organized as an exempted limited liability company under the laws of
Bermuda on April 29, 2003. On September 20, 2004, the Company obtained an order
under Section 7(d) of the 1940 Act from the Securities and Exchange Commission
(the "SEC") allowing it to register under the 1940 Act. The Company intends to
acquire the assets, and assume the liabilities, of ASA Limited, a South African
public limited liability company, which is also a diversified closed-end
management investment company registered with the SEC pursuant to an order under
Section 7(d) of the 1940 Act. The Company has no operating history and will have
only nominal assets until it acquires the assets of ASA Limited. The Company's
investment policies are the same as those of ASA Limited.
INVESTMENT OBJECTIVES AND POLICIES
----------------------------------
(a) GENERAL. It is the policy of the Company to invest over 50% of the
value of its total assets in the common shares or securities convertible into
common shares of companies conducting, as the major portion of their business,
gold mining and related activities in the Republic of South Africa. It is
expected that most of such companies will have reached the production stage. The
balance of the Company's total assets, other than small amounts that may be held
in cash, may be (i) invested in common shares or securities convertible into
common shares of companies engaged in other businesses of varied types in South
Africa, (ii) held in the form of gold bullion or certificates of deposit
therefor to be purchased, directly or indirectly, with South African rand
(provided that the Company's holdings in the form of gold bullion or
certificates of deposit therefore may not exceed 25% of the value of the
Company's total assets) and/or (iii) invested in common shares or securities
convertible into common shares of companies primarily engaged outside of South
Africa in extractive or related industries or in the holding or development of
real estate (provided that the Company's investment in such companies may not
exceed 20% of the value of the Company's total assets).
If investment opportunities deemed by the Company to be attractive are not
available in the types of securities referred to in the preceding paragraph, the
Company may deviate from the investment objectives and strategies outlined in
the preceding paragraph and make temporary investments of unlimited amounts in
securities issued or guaranteed by the Government of South Africa or any
instrumentality thereof, or it may liquidate its investments and temporarily
retain the proceeds in South African rand. Such proceeds may also be temporarily
retained in United States dollars.
4
The investment objectives and policies set forth above may not be changed
without shareholder approval.
(b) FUNDAMENTAL POLICIES. The following are fundamental investment
policies of the Company that may not be changed without shareholder approval:
(1) ISSUANCE OF SENIOR SECURITIES. It is the policy of the Company not to
issue any class of senior securities (debt obligations or preferred stock),
except that the Company may issue senior securities representing indebtedness
payable in money of any currency, in any amount and on any terms that the Board
of Directors (the "Board") may deem advisable, provided that no such senior
securities shall (a) result in the Company's total indebtedness for borrowed
money immediately after such issue having an asset coverage of less than 300%
(securities listed on the JSE Securities Exchange South Africa to be valued for
this purpose at their then current market value on such exchange) or (b) be
secured by the pledge, mortgage or hypothecation of any of the Company's assets.
(2) SHORT SALES, PURCHASES ON MARGIN AND PUT AND CALL OPTIONS. It is the
policy of the Company not to purchase any securities on margin or sell any
securities short.
(3) BORROWING. It is the policy of the Company to borrow money of any
currency, in any amount and on any terms that the Board may deem advisable,
PROVIDED that no such borrowing shall (a) result in the Company's total
indebtedness for borrowed money immediately after such borrowing having an asset
coverage of less than 300% (securities listed on the JSE Securities Exchange
South Africa to be valued for this purpose at their then current market value on
such exchange) or (b) be secured by the pledge, mortgage or hypothecation of any
of the Company's assets.
(4) UNDERWRITING SECURITIES OF OTHER ISSUERS. It is the policy of the
Company not to make any commitment in respect of any underwriting of securities,
or in any participation in any such underwriting, that could or would, through
joint obligations or by reason of defaults on the part of other participants,
involve the assets of the Company to an extent over and above prescribed and
specific amounts intended or permitted to be acquired as an addition to
portfolio holdings. Furthermore, the Company may not participate as an
underwriter of securities in any underwriting that could result in the Company's
holding securities or amounts of securities not permitted by its investment
restrictions.
(5) CONCENTRATION OF INVESTMENTS IN A PARTICULAR INDUSTRY OR GROUP OF
INDUSTRIES. It is the policy of the Company to invest over 50% of the value of
its total assets in the common shares or securities convertible to common shares
of companies conducting, as the major portion of their business, gold mining and
related activities in the Republic of South Africa. It is expected that most of
such companies will have reached the production stage.
(6) PURCHASE OR SALE OF REAL ESTATE AND REAL ESTATE MORTGAGE LOANS. It is
the policy of the Company not to purchase or sell real estate except (a) to the
extent necessary to provide it with an office for the transaction of its
business and (b) that the Company may invest up to 20% of the value of its total
assets in common shares or securities convertible into common shares of
companies primarily engaged outside of South Africa in extractive or related
industries or in the holding or development of real estate. The Company may not
pledge, mortgage or hypothecate any of its assets.
5
(7) PURCHASE OR SALE OF COMMODITIES OR COMMODITY CONTRACTS. It is the
policy of the Company not to purchase or sell commodities or commodity
contracts, except that the Company may hold up to 25% of the value of its total
assets in the form of gold bullion or certificates of deposit therefor. The
Company does not intend to deal in gold bullion.
(8) LOANS. It is the policy of the Company not to lend its funds or other
assets to any person, other than through the purchase, in accordance with its
investment policies, of securities.
(9) PERCENTAGE OF ASSETS THAT THE COMPANY MAY INVEST IN THE SECURITIES OF
ANY ONE ISSUER. It is the policy of the Company not to purchase the securities
of any issuer if, immediately after and as a result of such purchase, the market
value of such securities and all other securities of the same issuer owned by
the Company exceeds 20% of the value of the Company's total assets, determined
in such manner as may be approved by the Board and applied on a consistent basis
(subject to the limitations of Section 2(a)(41) of the 1940 Act), except
securities issued or guaranteed by the Government of the Republic of South
Africa or any instrumentality thereof; PROVIDED, HOWEVER, that the Company may
not purchase the securities of any issuer if, immediately after and as a result
of such purchase, the market value of such securities and all other securities
of the same issuer owned by the Company exceeds 10% of the value of the
Company's total assets, so determined, if either (a) such purchase will result
in more than 40% of the value of those assets consisting of investments in
companies each of which investments exceeds 10% of the value of those assets or
(b) such 40% limitation is already exceeded.
(10) PERCENTAGE OF VOTING SECURITIES OF ANY ONE ISSUER THAT THE COMPANY MAY
ACQUIRE. It is the policy of the Company not to purchase securities of any
issuer if, immediately after and as a result of such purchase, the Company owns
more than 10% of any class of outstanding securities of such issuer, except
securities issued or guaranteed by the Government of South Africa or any
instrumentality thereof.
(11) INVESTMENT IN SECURITIES OF OTHER INVESTMENT COMPANIES. It is the
policy of the Company that it may purchase securities issued by another
investment company otherwise than in the open market, but only within the
limitations imposed by the 1940 Act.
(12) INVESTMENTS OF CASH. It is the policy of the Company to invest its
cash in certificates of deposit issued by U.S. banks. The Company may also
invest its funds in South African rand denominated accounts, which may be
interest bearing, with an Eligible Foreign Custodian or an overseas branch of a
Qualified U.S. Bank (as such terms are defined in the 1940 Act) located in South
Africa, in an aggregate amount not exceeding 5% of the value of the Company's
total assets.
(13) PURCHASES OF SECURITIES OF NEW ISSUERS. It is the policy of the
Company not to purchase the securities of any issuers that have a record of less
than three years' continuous operation (such period to include the period of
operation of any predecessor, if the issuer whose securities are proposed as an
investment has come into existence as a result of a merger, consolidation,
6
reorganization or the purchase of substantially all of the assets of such
predecessor) if such purchase at the time thereof would cause more than 10% of
the value of the Company's total assets to be invested in the securities of such
issuers.
(14) PURCHASE OF SECURITIES ISSUED BY BROKERS, DEALERS, UNDERWRITERS,
INVESTMENT ADVISERS, INSURANCE COMPANIES. It is the policy of the Company not to
purchase or otherwise acquire any securities issued by brokers, dealers,
underwriters or investment advisers or, except within the limitations imposed by
the 1940 Act, any securities issued by insurance companies.
(15) PURCHASE OF SECURITIES OF CERTAIN RELATED ENTITIES. It is the policy
of the Company not to purchase or hold securities of any issuer any of whose
officers, directors, trustees or security holders are also officers or directors
of the Company if any one or more of such persons own beneficially more than 1/2
of 1% of the securities of that issuer and the persons owning more than 1/2 of
1% of such securities together own beneficially more than 5% of the securities
of such securities of such issuer.
(16) PLEDGE OR MORTGAGE OF ASSETS. It is the policy of the Company not to
pledge, mortgage or hypothecate any of its assets.
(17) PARTICIPATION IN TRADING ACCOUNT. It is the policy of the Company not
to participate on a joint, or a joint and several, basis in any trading account
in securities, except in connection with an underwriting in which the Company is
a participant.
RISK FACTORS
------------
Although there is some degree of risk in all investments, there are special
risks inherent in the Company's investment policies, including its policy of
investing in equity securities of companies conducting, as the major portion of
their business, gold mining and related activities in South Africa. These risks
include the following:
INDUSTRY CONCENTRATION
Because of its concentration in the securities of companies involved in
gold mining and related activities, the Company's portfolio may experience
greater volatility than that of a broader-based investment company. The
profitability of companies involved in gold mining and related activities is
significantly affected by changes in the market price of gold (for further
details, see "Fluctuations in the Price of Gold" below). Gold mining companies
also face risks related to their operations that may affect overall
profitability. These risks include the uncertainty and cost of mineral
exploration and acquisitions and the uncertainties and unexpected problems and
delays in developing mines. In addition, the business of gold mining is subject
to numerous risks that could adversely impact a gold mining company. These risks
include environmental hazards, industrial accidents, underground fires, labor
disputes, unexpected geological formations, availability of appropriately
skilled persons, unanticipated ground and water conditions, fall of ground
accidents, legal and regulatory restrictions and seismic activity.
DIVERSIFICATION
The Company is classified as a diversified investment company. However, due
to consolidation in the gold mining industry, the Company may be invested in a
limited number of securities and hold large positions in certain securities. As
7
a result, a change in value in one or more of these securities could
significantly affect the Company's net asset value.
FLUCTUATIONS IN THE PRICE OF GOLD
The price of gold has been subject to dramatic downward and upward price
movements over short periods of time and may be affected by unpredictable
international monetary and political policies, such as currency devaluations or
revaluations, economic conditions within an individual country, trade
imbalances, or trade or currency restrictions between countries, world inflation
rates or expectations regarding inflation rates, interest rates and currency
exchange rates. The price of gold also is influenced by the actual or expected
purchases and sales of gold reserves by central banks or other large gold
bullion holders or dealers, the demand for gold for industrial uses and for use
in jewelry, gold sales by gold producers in forward transactions, and the cost
of gold production in major gold-producing nations such as South Africa. The
price of gold, in turn, is likely to affect the market prices of securities of
companies mining or processing gold, and accordingly, the value of the Company's
investments in such securities may also be affected.
INVESTMENTS IN GOLD BULLION
The Company may hold up to 25% of the value of its total assets in the form
of gold bullion or certificates of deposit therefor. Unlike certain more
traditional investment vehicles such as savings deposits and stocks and bonds,
which may produce interest or divided income, gold bullion earns no income
return. Appreciation in the market price of gold is the sole manner in which the
Company will be able to realize gains on its investment in gold bullion.
Furthermore, the Company may encounter storage and transaction costs in
connection with its ownership of gold bullion that may be higher than those
attendant to the purchase, holding and disposition of more traditional types of
investments.
CURRENCY FLUCTUATION
The U.S. dollar value of the Company's non-U.S. investments may be
significantly affected by changes in the exchange rates between the dollar and
the currencies, particularly the South African rand, in which those investments
are traded. Under normal circumstances, over 50% of the value of the Company's
total assets will be invested in common shares or securities convertible into
common shares of companies conducting, as a major portion of their business,
gold mining and related activities in South Africa. Generally, these
investments, and the dividends earned on these investments will be denominated
in South African rand. Consequently, a change in the value of the rand against
the U.S. dollar will result in a corresponding change in the U.S. dollar value
of the Company's assets and dividend income denominated in that currency.
Furthermore, mineral commodities such as gold are sold throughout the world
principally in U.S. dollars, but the South African mining companies in which the
Company may be invested incur their operating costs principally in South African
rand. Therefore, any appreciation in the value of the South African rand
relative to the U.S. dollar will adversely affect the profits of these South
African mining companies and also, indirectly, the value of the Company's
8
investments in them. The rand has experienced significant appreciation against
the U.S. dollar since reaching an all-time low against that currency late in
2001.
RISKS RELATING TO SOUTH AFRICA
Under normal circumstances, over 50% of the Company's total assets will be
invested in common shares or securities convertible into common shares of
companies conducting, as a major portion of their business, gold mining and
related activities in the Republic of South Africa. As a result, the Funds are
subject to risks relating to South Africa.
While highly developed, sophisticated business sectors and infrastructure
form the core of South Africa's economy, large parts of the population do not
have access to adequate education, health care, housing and other services,
including water and electricity. South Africa also has high levels of crime,
poverty and unemployment in comparison with developed countries. These problems
have been among the factors that have hampered investment into South Africa,
prompted emigration of skilled workers and have affected South Africa's economic
growth rate negatively.
The South African government committed itself to creating a stable,
democratic free market economy. However, it is difficult to predict the future
political, social and economic direction of South Africa or how the government
will try to address South Africa's challenges. It is also difficult to predict
the affect of these challenges on the Company's investments.
Further, there has been political and economic instability in neighboring
countries north of South Africa. Any resulting political or economic instability
in South Africa could have a negative impact on the Company's South African
investments.
A substantial portion of the South African gold mining industry is
unionized, and companies within the industry are at risk of having their
production halted for indefinite periods due to strikes and other labor
disputes. In addition, since 1995 various labor laws have been enacted in South
Africa that enhance the rights of employees and have imposed additional costs on
the gold mining industry.
South Africa's exchange control regulations restrict transactions between
residents of the Common Monetary Area (which consists of South Africa, the
Republic of Namibia and the Kingdoms of Lesotho and Swaziland) and non-residents
of the Common Monetary Area. These restrictions hinder the ability of South
African companies, including companies in which the Company invests, to make
foreign investments and procure foreign denominated financing. While exchange
controls have been relaxed in recent years, it is difficult to predict whether
or how the South African Government will further relax the remaining exchange
control regulations in the future.
Significant labor disputes and work stoppages in the gold mining industry
may adversely affect the price of gold, the rand/dollar exchange rate and the
operations and financial condition of companies within the gold mining industry.
In addition, the cost of compliance with labor laws may reduce the net profit of
such companies. Accordingly, the Company's investment in such companies may be
affected.
The incidence of HIV/AIDS in South Africa could pose a risk to companies in
which the Company invests. The exact impact of HIV/AIDS on the cost of
conducting business in South Africa and the potential growth of the South
African economy is unclear at this time. However, the incidence of HIV/AIDS
infections and HIV/AIDS related diseases is expected to reduce productivity and
increase employee related costs in South Africa, which adversely impact on the
operations of companies in which the Company invests.
FOREIGN REGULATORY ENVIRONMENT
Companies in South Africa are subject to accounting, auditing and financial
standards and requirements that closely follow those prescribed by United
Kingdom authorities. Although these standards are rigorous, they differ from
those applicable to U.S. companies, and therefore the assets, liabilities and
profits of South African companies, as reported in their financial statements,
may not be the same as would be reflected if the statements had been prepared in
accordance with U.S. generally accepted accounting principles.
9
It may be said that in South Africa there is less government supervision
and regulation of South African securities exchanges, underwriters, brokers,
dealers and listed companies than exists in the United States. The JSE
Securities Exchange South Africa, on which most of the securities in the
Company's portfolio are listed, is governed by a statute that regulates the
operation not only of the Exchange but also of its members and individual
stockbrokers. The regulatory powers contained in this statute are enforceable in
the South African courts.
There is less publicly available information about South African registered
companies than about U.S. companies. As a result, the successful management of
the Company's portfolio may be more dependent upon the skills and expertise of
its portfolio manager than is the case for investment companies that invest
primarily in U.S. companies because the comparative lack of information requires
greater diligence by the portfolio manager in original research and careful
evaluation of available information.
The mining legislation to which South African mining companies are subject
has been replaced by the South African Mineral and Petroleum Resources
Development Act No. 28 of 2002 ("MDA"), which came into effect on May 1, 2004.
The broad objectives of the MDA and the Mining Charter issued pursuant to the
MDA are to facilitate participation of historically disadvantaged South Africans
in the mining industry and to ensure that unexploited minerals are profitably
mined. To give effect to these objectives, the right to prospect and mine for
minerals, which was previously based on a system of private ownership, will now
vest in the South African government, which will grant prospecting and mining
rights to applicants who are able to comply with various stipulated criteria,
which include criteria relating to black economic empowerment and social and
economic improvement. The principles contained in the Mining Charter relate to
the transfer of 26% of South African mining assets to historically disadvantaged
South Africans over a ten-year period.
The transitional provisions of the MDA facilitate the conversion of current
prospecting and mining rights to the new form of rights contemplated by the MDA.
Conversion applicants will also have to demonstrate how they intend complying
with the MDA's empowerment criteria within a maximum period of five years from
May 1, 2004. If the South African companies in which the Company will invest
fail to comply with the conversion criteria stipulated in the MDA, then these
companies will forfeit their right to mine in South Africa.
The MDA also makes provision for prospecting fees and mining royalties that
will become payable to the South African government in return for the new form
of prospecting or mining right. The details of these royalty payments will be
set out in further legislation to be known as the Mineral and Petroleum Royalty
Act. A draft bill of this legislation was earlier released for public comment
and is in the process of being redrafted by the South African National Treasury
Department. The exact effect of this legislation is unknown at this time.
The compliance costs incurred in acquiring or converting prospecting and
mining rights in South Africa and the additional costs that may be incurred in
paying the proposed mining royalties could adversely affect the profitability of
the Company's South African investments.
South African companies in which the Company invests are subject to
extensive environmental regulation and may incur significant costs in complying
with current and new legislation, which could effect their profitability and
financial condition.
ENFORCEMENT OF LIABILITIES
Due to differences in legal systems and difficulties in obtaining
jurisdiction over non-U.S. residents, an investor may have more difficulty
enforcing the civil liabilities provisions of the U.S. securities laws against
10
non-U.S. companies and their non-U.S. resident directors. However, these risks
of enforcement difficulties are significantly reduced in relation to the
Company, which is a foreign investment company permitted to register under the
1940 Act pursuant to an order of the SEC. As a condition to obtaining such
order, the Company undertook certain measures to make it legally and practically
feasible for its shareholders to enforce liabilities against the Company and its
non-U.S. directors and officers. See "Management - Board of Directors and
Management Custodians".
CLOSED-END FUND
The Company is a closed-end investment company registered under the 1940
Act the shares of which are or will be listed on the New York Stock Exchange
("NYSE"). Shares of closed-end investment companies frequently trade at a
discount from net asset value. This characteristic of shares of a closed-end
investment company is a risk separate and distinct from the risk that the
company's net asset value will decrease.
SHARE PRICE DATA (UNAUDITED)
----------------------------
Because the Company is newly organized, its shares have no history of
public trading. Shares of ASA Limited, the investment company the assets and
liabilities of which the Company intends to acquire and assume, trade on the
NYSE. For the fiscal year ended November 30, 2003, trading in ASA Limited's
shares fluctuated between 5.4% above net asset value and 9.5% below net asset
value. On November 11, 2004, the net asset value per share was $49.02 and the
market price per share was $42.32. The following is a summary of public trading
of ASA Limited's shares:
PER SHARE
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PREMIUM
(DISCOUNT) TO
QUARTER ENDED NET ASSET VALUE MARKET PRICE NET ASSET VALUE
------------- --------------- ------------ ---------------
HIGH LOW HIGH LOW HIGH LOW
8/31/02 41.16 29.94 40.44 24.72 (15.0) (6.5)
11/30/02 38.28 31.58 35.01 27.50 (14.3) (9.3)
2/28/03 42.45 36.31 42.85 29.31 1.5 (9.5)
5/31/03 37.48 32.61 38.92 31.76 5.4 (6.1)
8/31/03 44.56 36.25 44.13 35.20 3.0 (3.6)
11/30/03 51.54 44.57 48.00 40.13 (11.6) (3.2)
2/29/04 52.15 46.34 47.85 41.00 (14.0) (8.7)
5/31/04 50.48 38.28 43.68 33.47 (14.2) (9.1)
8/31/04 45.22 38.94 39.38 33.15 (15.3) (9.9)
MANAGEMENT
----------
The management of the business and control of the Company is vested in the
Board, which has the power to make all decisions and to exercise or delegate all
powers of the Company, pursuant to, and in compliance with, the Bermuda
11
Companies Act of 1981, as amended (the "Bermuda Act") and the Memorandum of
Association and Bye-Laws of the Company.
DIRECTORS
---------
Ronald L. McCarthy, James G. Inglis and A. Michael Rosholt are all
directors of the Company resident in South Africa and with most of their assets
located in South Africa. The Company is permitted to register under the 1940 Act
by an order of the SEC. As a condition of such order, a majority of the
Company's Board of Directors and officers must be U.S. citizens and residents,
and each Director and officer must enter into an agreement that provides, among
other things, that such Director or officer consents to the jurisdiction of a
United States or Bermuda court to enable the Company's shareholders to maintain
actions against its directors and officers for violations of the Company's
Memorandum of Association or Bye-Laws, the 1940 Act and the rules and
regulations thereunder and the agreements and undertakings contained in the
Company's SEC order.
In addition, each non-U.S. director and officer must irrevocably designate
the Company's U.S. custodian as an agent in the United States to accept service
of process. See "Management - Custodians." The Company and its officers and
directors have also consented that full faith and credit be given by courts of
Bermuda to any final judgment or decree of a U. S. court in such enforcement
proceedings.
PORTFOLIO MANAGEMENT
--------------------
The Company does not have an outside investment adviser. Robert J.A. Irwin,
Chairman, Chief Executive Officer, President, Treasurer and a director of the
Company, will be primarily responsible for the day-to-day management of the
Company's portfolio. Mr. Irwin currently is primarily responsible for the
day-to-day management of ASA Limited's portfolio. Mr. Irwin has been a director
of ASA Limited since 1987, Chairman of the Board of ASA Limited since 1993 and
the treasurer of ASA Limited since 1999.
ADMINISTRATION
--------------
Kaufman, Rossin & Co. PA, 2699 South Bayshore Drive, Suite 500, Miami,
Florida, 33133-5486, will provide accounting services for the Company. The
duties of Kaufman Rossin include the daily maintenance of the Company's
accounting records, the drafting of the monthly financial data for submission to
the management of the Company and the compilation of the Company's budgets and
cash flow projections. For its services to the Company, Kaufman, Rossin & Co. PA
will receive an annual fee of $95,000.
LGN Associates, P.O. Box 269, Florham Park, New Jersey 07932, will provide
shareholder services for the Company. In this capacity, LGN Associates will
prepare and distribute the interim and annual reports to shareholders and
provide weekly net asset value information to various financial services. LGN
Associates will also perform required administrative services and will respond
to inquiries from shareholders and other parties regarding the Company. For its
services to the Company, LGN Associates will receive an annual fee of $500,000.
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Appleby Corporate Services (Bermuda) Ltd., ("Appleby") Canon's Court, 22
Victoria Street, Hamilton HM12, Bermuda, acts as the Registered Representative
of ASAB in Bermuda. The duties of Appleby include discharging the duties set out
in the Bermuda Companies Act, including acting as agent for the service of
process in Bermuda. For its services to ASAB, Appleby will receive an annual fee
of $4,500.
CUSTODIANS AND TRANSFER AGENT
-----------------------------
JPMorgan Chase Bank, 3 Chase Metrotech Center, Brooklyn, New York, 11245,
will serve as the Company's custodian. In addition, the Company is authorized to
utilize subcustodians in South Africa, the United Kingdom, Australia, Japan,
Switzerland and Canada under certain circumstances. As of the date of this
Prospectus, the Company has not approved subcustodians in the United Kingdom,
Australia, Japan, Switzerland or Canada.
The Standard Bank of South Africa Limited, 5 Simmonds Street, Johannesburg,
South Africa, will serve as the Company's South African subcustodian.
EquiServe Trust Company, N.A., 525 Washington Boulevard, Jersey City, New
Jersey 07310, will serve as the Company's transfer agent and dividend disbursing
agent.
EXPENSES
--------
The principal types of expenses for which the Company will be responsible
are directors' fees and expenses, salaries, administrative expenses, custodian
fees, transfer agency fees, professional fees and expenses, insurance and
shareholders' reports and proxy expenses.
CONTROL PERSONS
---------------
Until the Company issues shares in connection with the transfer of assets
and liabilities of ASA Limited to the Company, Robert J.A. Irwin, as the sole
shareholder of the Company, will be a control person of the Company.
AUTHORIZED CAPITAL
------------------
The authorized capital of the Company consists solely of ordinary shares
("common shares"). Each share entitles the holder to one vote for the election
of directors and on all other matters. Each share has an equal right to
participate in any dividend declared and, in the event of liquidation, in the
assets of the Company after payment of its debts. Shares are fully paid and
non-assessable. Shareholders have no preemptive rights or conversion privileges.
(1) (2) (3) (4)
Amount Held Amount Outstanding
Title of Amount by Company Exclusive of Amount
Class Authorized for its Account Shown Under (3)
----- ---------- --------------- ---------------
Ordinary Shares - Par
Value U.S. $1.00 30,000,000 0 0
13
TAXES
-----
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The Company is organized as an exempted limited liability company under the
laws of Bermuda; it will be classified for U.S. federal tax purposes as a
corporation and will not elect to be classified otherwise. As a non-U.S.
corporation, the Company cannot qualify as a regulated investment company under
the U.S. Internal Revenue Code of 1986, as amended ("Code"). Accordingly, any
dividends the Company pays will be taxable to its U.S. shareholders
("Shareholders") as ordinary income and, for corporate Shareholders, will not
qualify for the dividends-received deduction. In addition, as described below,
the Company is a "passive foreign investment company" for U.S. federal income
tax purposes (a "PFIC"). As a result, any dividends the Company pays to
individual Shareholders will not qualify for the 15% maximum federal income tax
rate on "qualified dividend income" received by individuals (enacted under the
Jobs and Growth Tax Relief Reconciliation Act of 2003).
For its taxable years December 1, 1963 through November 30, 1987, ASA
Limited was a "foreign investment company" for U.S. federal income tax
purposes.* As a result, a Shareholder who held ASA Limited shares during any
part of those years will be subject to tax at ordinary income rates on any
profit on a sale of those shares to the extent of the Shareholder's "ratable
share" of ASA Limited's earnings and profits accumulated for the period in those
years during which the Shareholder held those shares ("Share of E&P"). If such a
Shareholder's profit on the sale of shares exceeds his Share of E&P, then,
subject to the discussion below regarding ASA Limited's taxable years beginning
after November 30, 1987, the Shareholder will be subject to tax on the excess at
long-term capital gain rates (generally, 15% for individual Shareholders for
sales of shares through taxable years beginning before 2009).
ASA Limited became a PFIC on December 1, 1987. Shareholders of a PFIC are
subject to highly complex tax rules with respect to gains on the disposition of
PFIC stock, PFIC distributions and undistributed PFIC income. The manner in
which these rules apply to a Shareholder depends on whether the Shareholder (1)
elects to treat the PFIC as a "qualified electing fund" (a "QEF") with respect
to his Company shares, (2) for the Shareholder's taxable years beginning after
December 31, 1997, elects to "mark-to-market" his Company shares as of the close
of each taxable year or (3) makes neither election.
In general, if a Shareholder does not make either election, any gain
realized on the direct or indirect disposition of his Company shares would be
treated as ordinary income. In addition, the Shareholder would be subject to an
"interest charge" on part of his tax liability with respect to that gain, as
well as with respect to certain "excess distributions" the Company makes.
Furthermore, a Shareholder's shares may be denied the benefit of any otherwise
applicable increase in tax basis at death. Under proposed regulations, a
"disposition" would include a U.S. taxpayer's becoming a nonresident alien.
--------------------
* Pursuant to the Company's acquisition of the assets, and assumption of the
liabilities, of ASA Limited (see, e.g., Item 8), the Company will succeed to the
latter's tax attributes for U.S. federal income tax purposes. Accordingly, all
references in this section to the "Company" include ASA Limited where the
context permits or requires.
14
An "excess distribution" on Company shares is a distribution by the Company
for a taxable year that is more than 125% of the average amount it distributed
for the three preceding taxable years.** If the Company makes an excess
distribution in a taxable year, a Shareholder who has not made a QEF or
mark-to-market election would be required to allocate the excess amount ratably
over the entire holding period for his shares. That allocation would result in
tax being payable at the highest applicable rate in the prior years to which the
distribution is allocated and interest charges being imposed on the resulting
"underpayment" of taxes made in those years. In contrast, a distribution that is
not an excess distribution would be taxable to a Shareholder as a normal
dividend (see above), with no interest charge.
If a Shareholder elects to treat the Company as a QEF with respect to his
interest therein for the first year he holds his shares during which the Company
is a PFIC (or who later makes a QEF election and also elects to treat his shares
generally as if they were sold for their fair market value on the first day of
the first Company taxable year for which the QEF election is effective), the
rules described in the preceding paragraphs generally would not apply. Instead,
the electing Shareholder would include annually in his gross income his pro rata
share of the Company's ordinary earnings and net capital gain (his "QEF"
inclusion), regardless of whether that income or gain was actually distributed.
A Shareholder who makes a valid QEF election will recognize capital gain on any
profit from the actual sale of his Company shares held as capital assets, except
to the extent of his Share of E&P.
Alternatively, if a Shareholder makes a mark-to-market election with
respect to Company shares for taxable years beginning on or after January 1,
1998, the Shareholder would be required annually to report any unrealized gain
with respect to those shares as ordinary income, and any unrealized loss would
be permitted as an ordinary loss, but only to the extent of previous inclusions
of ordinary income. Any gain the electing Shareholder subsequently realizes on a
disposition of his Company shares also would be treated as ordinary income, but
the Shareholder would not be subject to an interest charge on his resulting tax
liability. Special rules apply to a Shareholder that held his Company shares
prior to the first taxable year for which a mark-to-market election was
effective.
A Shareholder with a valid QEF election in effect will not be taxed on any
distributions the Company makes to the extent of any QEF inclusions, but any
distributions out of accumulated earnings and profits in excess thereof will be
treated as taxable dividends. A Shareholder would increase the tax basis in his
Company shares by the amount of any QEF inclusions and reduce that basis by any
distributions to him that are not taxable as described in the preceding
sentence. Special rules apply to Shareholders who make a QEF election and wish
to defer the payment of tax on their annual QEF inclusions.
Each Shareholder who desires QEF treatment must individually elect that
treatment. A QEF election must be made for the Shareholder's taxable year in
which or with which the Company's taxable year ends and must be made by the due
date, with extensions, of the Shareholder's U.S. federal income tax return for
--------------------
** For example, ASA Limited made annual distributions of $.80 per share during
each of the taxable years ended November 30, 2003, 2002 and 2001. Accordingly,
any distribution for the taxable year ending November 30, 2004, in excess of
$1.00 per share (125% of $.80) would be treated as an excess distribution. (All
amounts in U.S. currency.)
15
the taxable year for which the election is to apply. A QEF election is effective
for the Shareholder's taxable year for which it is made and all subsequent
taxable years and may not be revoked without the consent of the Internal Revenue
Service. Under U.S. Treasury Department regulations, a QEF election is made on
Internal Revenue Service Form 8621, which must be completed and attached to a
timely filed income tax return in which the Shareholder reports his QEF
inclusion for the year to which the election applies. To allow Shareholders to
make QEF elections and to comply with the applicable annual reporting
requirements, the Company annually will provide to them a "PFIC Annual
Information Statement" containing certain information required by those
regulations.
Special rules apply to U.S. persons who hold Company shares through
intermediate entities or persons and to Shareholders who directly or indirectly
pledge their shares, including those in a margin account.
Ordinarily, the tax basis that is obtained by a transferee of property on
the death of the property's owner is adjusted to the property's fair market
value on the date of death (or alternate valuation date). If a Shareholder dies
owning Company shares with respect to which he did not elect QEF treatment (or
elected such treatment after the first year in which he owned Company shares in
which it was a PFIC and did not elect to recognize gain as described above), the
transferee of those shares will not be entitled to adjust the tax basis therein.
In that case, the transferee generally will take a basis in the shares equal to
the Shareholder's basis therein immediately before his death. If a Shareholder
dies owning Company shares for which a valid QEF election was in effect for all
taxable years in the Shareholder's holding period during which the Company was a
PFIC (or the shareholder elected to treat the shares as if sold on the first day
of the Company's first taxable year for which the QEF election was effective),
then the basis increase generally will be available unless the holding period
for his shares began on or before November 30, 1987. In the latter case, any
otherwise applicable basis increase generally will be reduced to the extent of
the Shareholder's Share of E&P.
DUE TO THE COMPLEXITY OF THE APPLICABLE TAX RULES, SHAREHOLDERS ARE
STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISERS CONCERNING THE IMPACT OF THESE
RULES ON THEIR INVESTMENT IN THE COMPANY AND ON THEIR INDIVIDUAL SITUATIONS.
BERMUDA TAX CONSIDERATIONS
At the date of this disclosure, there is no Bermuda income, corporation or
profits tax, withholding tax, capital gains tax, capital transfer tax, estate
duty or inheritance tax payable by the Company or its shareholders, other than
any shareholders ordinarily resident in Bermuda. The Company is not subject to
stamp duty on the issue, transfer or redemption of its shares.
The Company has applied for and received an undertaking from the Minister
of Finance of Bermuda dated May 5, 2003, under the Exempted Undertakings Tax
Protection Act, 1966, as amended, that if there is enacted in Bermuda any
legislation imposing any (i) tax computed on profits or income, (ii) tax
computed on any capital assets, gain or appreciation or (iii) tax in the nature
of estate duty or inheritance tax, such tax shall not until March 28, 2016, be
applicable to the Company or to any of its operations, shares, debentures or
other obligations except insofar as such tax applies to persons ordinarily
16
resident in Bermuda and holding such shares, debentures or other obligations of
the Company or any land leased or let to the Company.
As an exempted company, the Company is liable to pay the Bermuda Government
an annual registration fee based on its authorized share capital, which is
currently US$1,780.
PROSPECTIVE PURCHASERS SHOULD CONSULT LEGAL ADVISERS IN THE COUNTRIES OF
THEIR CITIZENSHIP, RESIDENCE AND DOMICILE TO DETERMINE THE POSSIBLE TAX OR OTHER
CONSEQUENCES OF PURCHASING, HOLDING AND REDEEMING COMPANY SHARES UNDER THE LAWS
OF THOSE COUNTRIES.
SOUTH AFRICAN TAX CONSIDERATIONS
If the reorganization is completed by November 30, 2004, the deferred tax
liability for South African capital gains tax ("CGT") will be eliminated and the
deferred tax liability will be reversed which will result in an increase to
unrealized appreciation on investments in the financial statements. As of August
31, 2004, the financial statements reflected a CGT liability of $6,830,581.
DIVIDEND REINVESTMENT PLAN
EquiServe Trust Company, N.A. ("EquiServe") will be engaged to offer a
dividend reinvestment plan to the Company's shareholders ("Plan"). Shareholders
must elect to participate in the Plan by signing an authorization. The
authorization appoints EquiServe as agent to apply to the purchase of the
Company's shares in the open market (i) all cash dividends (after deduction of
the service charge described below) that become payable to such participant on
the Company's shares (including shares registered in his name and shares
accumulated under the Plan) and (ii) any voluntary cash payments ($50 minimum,
$3,000 maximum per dividend period) received from such participant within 30
days prior to the then-current dividend's payment date.
For the purpose of making purchases, EquiServe will commingle each
participant's funds with those of all other participants in the Plan. The price
per share of shares purchased for each participant's account shall be the
average price (including brokerage commissions and any other costs of purchase)
of all shares purchased in the open market with the funds available from that
dividend and any voluntary cash payments being concurrently invested. Any stock
dividends or split shares distributed on shares held in the Plan will be
credited to the participant's account.
For each participant, a service charge of 5% of the combined amount of the
participant's dividend and any voluntary cash payment being concurrently
invested, up to a maximum charge of $2.50 per participant, will be deducted (and
paid to EquiServe) prior to purchase of shares. Participant sales of shares held
by EquiServe in the Plan are subject to a fee of $10.00 plus applicable
brokerage commissions deducted from the proceeds of the sale. Additional nominal
fees are charged by EquiServe for specific Plan participant requests such as
requests for information regarding share cost basis detail in excess of two
prior years and for replacement Form 1099 reports older than three years.
Participation in the Plan may be terminated by a participant at any time by
written instructions to EquiServe. Upon termination, a participant will receive
(1) a certificate for the full shares credited to his or her account, unless he
or she requests the sale of all or part of such shares, and (2) an amount equal
to the current market value for any fractional shares then credited to the
account.
Dividends a participant reinvests under the Plan will generally be treated
for U.S. federal income tax purposes in the same manner as dividends paid to the
participant in cash. The amount of the service charge is deductible for U.S.
17
federal income tax purposes, subject to limitations. See "Taxes - U.S. Federal
Income Tax Considerations" for more information regarding U.S. federal income
tax consequences to Shareholders of an investment in Company shares, including
the effect of its status as a PFIC.
A shareholder participating in the Plan may not hold his or her shares in a
"street name" brokerage account.
Additional information regarding the Plan may be obtained from EquiServe
Dividend Reinvestment Plan, 150 Royall Street, Canton, MA 02021. Information may
also be obtained by calling EquiServe's Shareholder Contact Center at (781)
575-2723 between 8:30 a.m. and 7 p.m., Eastern Time, Monday through Friday.
PART B
------
Part B of this Registration Statement should be read in conjunction with
Part A. Capitalized terms used in this Part B and not otherwise defined have the
meanings given them in Part A of this Registration Statement.
INVESTMENT OBJECTIVES AND POLICIES
----------------------------------
In addition to the policies described in Part A, the Company has adopted
the following additional investment policies, which may be changed by the Board
without shareholder approval in compliance with applicable law, regulation or
regulatory policy.
(1) INVESTING FOR CONTROL OF MANAGEMENT. The Company will not invest in
companies for the purpose of exercising control of management.
(2) PORTFOLIO TURNOVER POLICY. The Company will purchase and sell
securities from time to time as it considers advisable to be in the best
interest of its shareholders and not for trading purposes.
MANAGEMENT
----------
The name, address, positions held with the Company and principal
occupations during the past five years of the Company's officers and directors
are set forth below. The Company consists of a single portfolio, which is
overseen by the Board of Directors.
18
POSITION HELD, TERM OF PRINCIPAL OCCUPATION
NAME, ADDRESS(1) OFFICE (2) AND LENGTH DURING THE
AND AGE OF TIME SERVED PAST FIVE YEARS OTHER DIRECTORSHIPS
------ -------------- --------------- -------------------
INTERESTED DIRECTORS*:
Robert J.A. Irwin, 77 Chairman of the Board, Chairman of the Board of Director of ASA Limited;
Treasurer and Director ASA Limited since 1993, Former director,
since 2003; President Treasurer since 1999; President and Chief
and Chief Executive Director since 1987 Executive Officer of
Officer since 2004 Niagara Share Corporation
Chester A. Crocker, 63 Director since 2004; James R. Schlesinger Director of: ASA
Assistant Secretary Professor of Strategic Limited; Universal
since 2004 Studies, School of Corporation, First
Foreign Service, Africa Holdings Ltd. and
Georgetown University, Modern Africa Growth &
President of Crocker Income Fund (private
Group (consultants) equity fund); Good
Governance Group, Ltd.,
Chairman and Director of
United States Institute
of Peace
Ronald L. McCarthy, 71 Director since 2004; Director and Managing Director of ASA Limited
Assistant Treasurer Director of ASA Limited
since 2004 since 1988; South
African Secretary of ASA
Limited since 2001
INDEPENDENT DIRECTORS**:
Henry R. Breck, 67 Director since 2004 Chairman and director of Director of ASA Limited
Ark Asset Management and Butler Capital Corp.
Co., Inc. (registered
investment adviser)
Harry M. Conger, 74 Director since 2004 Chairman and CEO Director of ASA Limited
Emeritus of Homestake and Apex Silver Mines
Mining Company (silver mining company).
Joseph C. Farrell, 69 Director since 2004 Former Chairman, Director of ASA Limited,
President and CEO of The Universal Corporation
Pittston Company and Skyline Airways, Inc.
James G. Inglis, 60 Director since 2004 Chairman of Melville Director of ASA Limited
Douglas Investment and Harding
Management (pty) Ltd. International Investments
19
POSITION HELD, TERM OF PRINCIPAL OCCUPATION
NAME, ADDRESS(1) OFFICE (2) AND LENGTH DURING THE
AND AGE OF TIME SERVED PAST FIVE YEARS OTHER DIRECTORSHIPS
------ -------------- --------------- -------------------
Malcolm W. MacNaught, 68 Director since 2004 Former Vice President Director of ASA Limited
and Portfolio Manager at and Meridian Gold
Fidelity Investments Corporation
Robert A. Pilkington, 59 Director since 2004 Investment banker and Director of ASA Limited
Managing Director of UBS and Avocet Mining PLC
Securities, LLC or
predecessor companies
since 1985
A. Michael Rosholt, 84 Director since 2004 Chairman of the National Director of ASA Limited;
Business Initiative Former Chairman of
(South Africa), a Barlow Rand Limited
non-profit organization (financial, industrial
and mining corporation)
OTHER OFFICER
Paul K. Wustrack, Jr., 61 Secretary and Chief Assistant U.S. Secretary
Compliance Officer of ASA Limited
since 2004 since 2002, Chief
Compliance Officer since
2004; prior thereto
Special Counsel,
Phillips, Lytle,
Hitchcock, Blaine &
Huber LLP
-------------------
(1) The address for each director is c/o LGN Associates, PO Box 269, Florham Park, NJ 07932.
(2) Each director of the Company serves as such until the next annual general meeting of shareholders.
* An "interested person" of the Company, as such term is defined in the 1940 Act, by reason of being an
officer of the Company.
** A director that is not an "interested person" of the Company.
Messers. McCarthy, Inglis and Rosholt are residents of South Africa. As
required by the SEC, each of these non-U.S. resident directors has appointed
JPMorgan Chase Bank, 3 Chase Metrotech Center, Brooklyn, NY, to accept service
of process.
The Board has an Audit Committee, a Compensation Committee, an Ethics
Committee and a Nominating Committee. The Audit Committee acts pursuant to a
written charter and is responsible for overseeing the Company's accounting and
financial reporting policies, practices and internal controls. The Audit
Committee currently consists of Messrs. MacNaught (Chairman), Pilkington and
Rosholt. The responsibilities of the Audit Committee include overseeing (a) the
Company's accounting and financial reporting policies and practices, (b) the
Company's internal controls and procedures and (c) the integrity, quality and
objectivity of the Company's financial statements and the audit thereof. The
Audit Committee is directly responsible for the selection (subject to
ratification by a majority of the independent directors and by the
20
shareholders), compensation, oversight and, when appropriate, termination of the
Company's independent registered public accounting firm.
The current members of the Compensation Committee are Messrs. Conger
(Chairman), Inglis and Pilkington. The function of the Compensation Committee is
to make recommendations regarding the compensation of officers and the fees of
directors of the Company. The current members of the Ethics Committee are
Messrs. Farrell (Chairman), Breck and Crocker. The function of the Ethics
Committee is to ensure compliance by the directors, officers and other access
persons with the Company's Code of Ethics and Rule 17j-l under the 1940 Act. The
current members of the Nominating Committee are Messrs. Pilkington (Chairman),
Conger and Rosholt. The Nominating Committee is responsible for identifying
qualified candidates for the Board.
COMPENSATION
Each non-South African director receives an annual fee of $20,000 for his
services as a director and $1,000 for each Board and Committee meeting (whether
in person or by telephone) that he attends. Each South African director receives
the rand equivalent of $20,000 as an annual fee for his services as a director
and the rand equivalent of $2,000 for each Board meeting that he attends, if
held outside South Africa. In addition, directors receive a meeting fee of
$1,000 for each committee meeting attended (whether in person or by telephone)
during the year. The Chairman of the Audit Committee receives $3,000 for
attendance at each Audit Committee meeting that he attends. The Company pays to
any retired director who served as a director of the Company or its predecessor,
ASA Limited, for at least twelve years an annual retainer equal to 75% of the
annual directors' fee from time to time in effect. Directors retiring after
attaining the age of 70 are entitled to such retainer for life; directors
retiring prior to attaining such age are entitled to such retainer for the
lesser of life or the number of years they served as a director.
Because the Company has not completed its first fiscal year, compensation
is estimated.
PENSION OR RETIREMENT ESTIMATED TOTAL
AGGREGATE BENEFITS ACCRUED AS ANNUAL BENEFIT COMPENSATION
NAME OF PERSON COMPENSATION PART OF COMPANY UPON FROM COMPANY
& POSITION FROM COMPANY EXPENSES RETIREMENT(1) PAID TO DIRECTOR
---------- ------------ ----------- ------------- ----------------
INTERESTED DIRECTORS:
Robert J.A. Irwin, Chairman, $325,000 (2) $15,000(3) $25,000
Chief Executive Officer,
President, Treasurer and
Director
Chester A. Crocker, $28,000 -- $15,000 $28,000
Assistant Secretary and
Director
Ronald L. McCarthy, $100,000 -- $15,000 $28,000
Assistant Treasurer and
Director
21
PENSION OR RETIREMENT ESTIMATED TOTAL
AGGREGATE BENEFITS ACCRUED AS ANNUAL BENEFIT COMPENSATION
NAME OF PERSON COMPENSATION PART OF COMPANY UPON FROM COMPANY
& POSITION FROM COMPANY EXPENSES(1) RETIREMENT(2) PAID TO DIRECTOR
---------- ------------ ----------- ------------- ----------------
INDEPENDENT DIRECTORS:
Henry R. Breck, $29,000 -- $15,000 $29,000
Director
Harry M. Conger, $25,000 -- $15,000 $25,000
Director
Joseph C. Farrell, $29,000 -- $15,000 $29,000
Director
James G. Inglis, $29,000 -- $15,000 $29,000
Director
Malcolm W. MacNaught $35,000 -- $15,000 $35,000
Director
Robert A. Pilkington $30,000 -- $15,000 $30,000
Director
A. Michael Rosholt $32,000 -- $15,000 $32,000
Director
Paul K. Wustrack, Jr. $80,000(4)
Chief Compliance Officer
and Secretary
--------------------
(1) All directors qualify to receive retirement benefits if they have served
ASAB or its predecessor, ASA, for at least twelve years prior to
retirement. The amount shown for each director is the total benefits, which
are, or would be payable to such person assuming such director had served
twelve years as of November 30, 2003.
(2) In 1994, the Company entered into a supplemental non-qualified pension
agreement with its Chairman. Under the terms of the agreement, the Company
agreed to credit $25,000 per year for five years, beginning December 1,
1993, to a Supplemental Pension Account with interest credited at an annual
rate of 3.5%. The Board of Directors approved increases in the amount of
the annual credit as follows: $28,125 in May 1990; $31,250 in February
2002; $45,000 in March 2003 and $55,000 in February 2004. As a result, the
Company recorded an expense amount of $41,562 for the year ended November
30, 2003. The Company has also recorded an asset in the amount of $145,000
related to the retirement obligation liability of $315,900 at November 30,
2003.
(3) The amount shown for Mr. Irwin includes only the retirement benefits
payable to him as a director and not the amounts payable to him under the
supplemental pension agreement for his benefit by the Company.
(4) The amount shown for Mr. Wustrack's compensation does not include any bonus
compensation.
Until the Company issues shares in connection with the transfer of assets
and liabilities of ASA Limited to the Company, Robert J.A. Irwin, as the sole
shareholder of the Company, will be a control person of the Company.
CUSTODIANS AND TRANSFER AGENT
-----------------------------
JPMorgan Chase Bank, 3 Chase Metrotech Center, Brooklyn, New York 11245,
will serve as the Company's custodian. The Standard Bank of South Africa
Limited, 5 Simmonds Street, Johannesburg, South Africa, will serve as the
Company's South African subcustodian.
EquiServe Trust Company, N.A., 525 Washington Boulevard, Jersey City, New
Jersey 07310, will serve as the Company's transfer agent as well as agent for
the Plan relating to its shares.
22
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
---------------------------------------------
Ernst & Young LLP, 5 Times Square, New York, New York, 10036, will serve as
the Company's independent registered public accounting firm. Ernst & Young
provides audit and tax related services, and assistance and consultation in
connection with the review of the Company's filings with the SEC.
BROKERAGE PRACTICES
-------------------
The Company has not commenced operations and has not paid any brokerage
commissions.
In effecting securities transactions, the Company will generally seek to
obtain the best price and execution of orders. Commission rates, being a
component of price, are considered along with other relevant factors. In
selecting brokers, the Company will consider the quality and reliability of
brokerage services, including execution capability, performance, and financial
responsibility, and may consider research and other investment information
provided by those brokers.
TAX STATUS
----------
See Part A.
FINANCIAL STATEMENTS
--------------------
The Company has no operating history and only nominal assets. The Company
intends to acquire all the assets and assume all the liabilities of ASA Limited.
The tables below represent the audited financial statements of ASA Limited for
its fiscal year ended November 30, 2003 and for the six-month period ended May
31, 2004.
FISCAL YEAR ENDED NOVEMBER 30, 2003
SCHEDULE OF INVESTMENTS
(NOTE 1)
November 30, 2003
-------------------------------------------------------------------------------------------------------------------------
Number of Percent of Net
Name of Company Shares Market Value Assets
-------------------------------------------------------------------------------------------------------------------------
ORDINARY SHARES OF GOLD MINING COMPANIES
AUSTRALIAN GOLD MINES
Newcrest Mining Limited -ADRs 3,000,000 $28,500,000 5.8%
-------------------------------------------------------------------------------------------------------------------------
28,500,000 5.8
-------------------------------------------------------------------------------------------------------------------------
UNITED STATES GOLD MINES
Newmont Mining Corporation 520,368 25,050,516 5.1
-------------------------------------------------------------------------------------------------------------------------
25,050,516 5.1
-------------------------------------------------------------------------------------------------------------------------
SOUTH AFRICAN GOLD MINES
Anglogold Limited 2,389,894 114,544,340 23.2
Avgold Limited 2,671,230 4,178,605 .8
Gold Fields Limited 10,344,977 142,407,297 28.8
-------------------------------------------------------------------------------------------------------------------------
23
-------------------------------------------------------------------------------------------------------------------------
Harmony Gold Mining Company Limited 1,336 21,150 --
Harmony Gold Mining Company Limited - ADRs 2,166,400 34,294,112 6.8
-------------------------------------------------------------------------------------------------------------------------
295,445,504 59.6
-------------------------------------------------------------------------------------------------------------------------
CANADIAN GOLD MINES
Barrick Gold Corporation 730,000 16,308,200 3.3
Placer Dome Incorporated 1,065,312 19,335,413 3.9
-------------------------------------------------------------------------------------------------------------------------
35,643,613 7.2
-------------------------------------------------------------------------------------------------------------------------
SOUTH AMERICAN GOLD MINES
Compania de Minas Buenaventura - ADRs 900,000 26,199,000 5.3
-------------------------------------------------------------------------------------------------------------------------
410,838,633 83.0
-------------------------------------------------------------------------------------------------------------------------
ORDINARY SHARES OF OTHER COMPANIES
SOUTH AFRICAN MINING
Anglo American PLC 1,280,000 27,281,392 5.5
Anglo American Platinum Corporation Limited 820,500 35,168,123 7.1
Impala Platinum Holdings Limited 262,700 24,656,497 5.0
-------------------------------------------------------------------------------------------------------------------------
87,106,012 17.6
-------------------------------------------------------------------------------------------------------------------------
Total investments 497,944,645 100.6
-------------------------------------------------------------------------------------------------------------------------
CASH AND OTHER ASSETS LESS LIABILITIES (3,160,556) (.6)
-------------------------------------------------------------------------------------------------------------------------
Net assets $494,784,089 100.0%
---------------------------------------------------------- -------------------- -----------------------------------------
There is no assurance that the valuations at which the Company's investments are carried could be realized upon sale.
The notes to the financial statements form an integral part of these statements.
24
STATEMENTS OF ASSETS AND LIABILITIES
---------------------------------------------------------------------------------------------------------------------
November 30, 2003 November 30, 2002
ASSETS
---------------------------------------------------------------------------------------------------------------------
Investments, at market value (Note I)
Gold mining companies -
Cost $125,445,039 in 2003
$120,148,921 in 2002 $410,838,633 $253,534,199
Other companies -
Cost $26,678,003 in 2003 and 2002 87,106,012 63,462,990
---------------------------------------------------------------------------------------------------------------------
497,944,645 316,997,189
---------------------------------------------------------------------------------------------------------------------
Cash 6,864,615 8,225,357
Dividends and interest receivable 175,216 138,999
Other assets 177,852 31,885
---------------------------------------------------------------------------------------------------------------------
Total assets 505,162,328 325,393,430
---------------------------------------------------------------------------------------------------------------------
LIABILITIES
---------------------------------------------------------------------------------------------------------------------
Accounts payable and accrued liabilities 612,977 289,074
Payable for securities purchased 1,027,362 --
Current year South African tax liability 121,313 219,954
Deferred South African tax liability 8,616,587 3,461,175
---------------------------------------------------------------------------------------------------------------------
Total liabilities 10,378,239 3,970,203
---------------------------------------------------------------------------------------------------------------------
NET ASSETS (SHAREHOLDERS' INVESTMENT) 494,784,089 321,423,227
---------------------------------------------------------------------------------------------------------------------
Ordinary (common) shares R 0.25 nominal (par) value
Authorized: 24,000,000 shares
Issued and Outstanding: 9,600,000 shares 3,360,000 3,360,000
Share premium (capital surplus) 27,489,156 27,489,156
Undistributed net investment income 59,083,301 58,663,135
Undistributed net realized (loss) from foreign currency (48,181,979) (51,220,869)
transactions 115,112,525 115,112,525
Undistributed net realized gain from investments 337,205,016 166,709,091
Net unrealized appreciation on investments
Net unrealized appreciation on translation of assets 716,070 1,310,189
and liabilities in foreign currency
---------------------------------------------------------------------------------------------------------------------
Net assets $494,784,089 $321,423,227
---------------------------------------------------------------------------------------------------------------------
Net assets per share $51.54 $33.48
---------------------------------------------------------------------------------------------------------------------
The closing price of the Company's shares on the New York Stock Exchange was $47.16 and $30.06 on November 30, 2003
and 2002, respectively.
The notes to the financial statements form an integral part of these statements.
25
STATEMENTS OF OPERATIONS
Years ended November 30, 2003 and 2002
---------------------------------------------------------------------------------------------------------------------
2003 2002
---------------------------------------------------------------------------------------------------------------------
Investment income
Dividend income $10,947,308 $10,423,088
Interest income 704,772 499,036
---------------------------------------------------------------------------------------------------------------------
Total investment income 11,652,080 10,922,124
---------------------------------------------------------------------------------------------------------------------
Expenses
Shareholders' report and proxy expenses 112,387 103,129
Directors' fees and expenses 462,872 538,420
Salaries and benefits 468,678 297,796
Other administrative expenses 442,500 373,250
Transfer agent, registrar and custodian 127,291 107,433
Professional fees and expenses 1,023,897 511,274
Insurance 144,417 104,595
Contributions 117,619 80,793
Other 347,267 311,444
---------------------------------------------------------------------------------------------------------------------
Total expenses 3,256,928 2,428,134
---------------------------------------------------------------------------------------------------------------------
Net investment income before South African tax 8,395,152 8,493,990
South African tax (294,986) (376,213)
---------------------------------------------------------------------------------------------------------------------
Net investment income 8,100,166 8,117,777
---------------------------------------------------------------------------------------------------------------------
Net realized gain from investments
Proceeds from sales -- 13,409,630
Cost of securities sold -- (8,399,743)
South African tax -- (71,956)
---------------------------------------------------------------------------------------------------------------------
Net realized gain from investments -- 4,937,931
---------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from foreign currency transactions
Investments -- (9,832,299)
Foreign currency 1,399,249 505,300
South African tax refund (tax) 1,639,641 (1,515,713)
---------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from foreign currency transactions 3,038,890 (10,842,712)
---------------------------------------------------------------------------------------------------------------------
Net increase in unrealized appreciation on investments
Balance, beginning of year 170,170,266 53,028,160
Balance, end of year 345,821,603 170,170,266
---------------------------------------------------------------------------------------------------------------------
Increase 175,651,337 117,142,106
Deferred South African tax (5,155,412) (3,461,175)
---------------------------------------------------------------------------------------------------------------------
Net increase in unrealized appreciation from investments 170,495,925 113,680,931
---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in unrealized appreciation on translation of
assets and liabilities in foreign currency (594,119) 743,200
South African tax benefit -- 1,521,577
---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in unrealized appreciation on translation of
assets and liabilities in foreign currency (594,119) 2,264,777
---------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain from investments and foreign
currency transactions 172,940,696 110,040,927
---------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $181,040,862 $118,158,704
---------------------------------------------------------------------------------------------------------------------
The notes to the financial statements form an integral part of these statements.
26
STATEMENTS OF SURPLUS AND STATEMENTS OF CHANGES IN NET ASSETS
Years ended November 30. 2003 and 2002
---------------------------------------------------------------------------------------------------------------------
STATEMENTS OF SURPLUS November 30, November 30,
2003 2002
---------------------------------------------------------------------------------------------------------------------
Share premium (capital surplus)
Balance, beginning and end of year $27,489,156 $27,489,156
---------------------------------------------------------------------------------------------------------------------
Undistributed net investment income
Balance, beginning of year $58,663,135 $58,225,358
Net investment income for the year 8,100,166 8,117,777
Dividends paid (7,680,000) (7,680,000)
---------------------------------------------------------------------------------------------------------------------
Balance, end of year $59,083,301 $58,663,135
---------------------------------------------------------------------------------------------------------------------
Undistributed net realized (loss) from
foreign currency transactions
Balance, beginning of year $(51,220,869) $(40,378,157)
Net realized gain (loss) for the year 3,038,890 (10,842,712)
---------------------------------------------------------------------------------------------------------------------
Balance, end of year $(48,181,979) $(51,220,869)
---------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain from investments
(Computed on identified cost basis)
Balance, beginning of year $115,112,525 $110,174,594
Net realized gain for the year -- 4,937,931
---------------------------------------------------------------------------------------------------------------------
Balance, end of year $115,112,525 $115,112,525
---------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments
Balance, beginning of year $166,709,091 $53,028,160
Net increase for the year 170,495,925 113,680,931
---------------------------------------------------------------------------------------------------------------------
Balance, end of year $337,205,016 $166,709,091
---------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on
translation of assets and liabilities in foreign currency
Balance, beginning of year $1,310,189 $(954,588)
Net unrealized appreciation (depreciation)
for the year (594,119) 2,264,777
---------------------------------------------------------------------------------------------------------------------
Balance, end of year $716,070 $1,310,189
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 2003 2002
---------------------------------------------------------------------------------------------------------------------
Net investment income $8,100,166 $8,117,777
Net realized gain from investments -- 4,937,931
Net realized gain (loss) from foreign currency
transactions 3,038,890 (10,842,712)
Net increase in unrealized appreciation on investments 170,495,925 113,680,931
Net unrealized appreciation (depreciation) on translation of assets
and liabilities in foreign currency (594,119) 2,264,777
---------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 181,040,862 118,158,704
Dividends paid (7,680,000) (7,680,000)
---------------------------------------------------------------------------------------------------------------------
Net increase in net assets 173,360,862 110,478,704
Net assets, beginning of year 321,423,227 210,944,523
---------------------------------------------------------------------------------------------------------------------
Net assets, end of year $494,784,089 $321,423,227
---------------------------------------------------------------------------------------------------------------------
The notes to the financial statements form an integral part of these statements.
27
NOTES TO FINANCIAL STATEMENTS
Years ended November 30, 2003 and 2002
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. The following is a summary of
the Company's significant accounting policies:
A. INVESTMENTS
Security transactions are recorded on the respective trade dates. Securities
owned are reflected in the accompanying financial statements at quoted market
value. The difference between cost and current market value is reflected
separately as net unrealized appreciation from investments. The net realized
gain or loss from the sale of securities is determined on the identified cost
basis.
Quoted market value of those shares traded represents the last recorded
sales price on the financial statement date, or the mean between the closing bid
and asked prices of those securities not traded on that date. In the event than
a mean price cannot be computed due to the absence of either a bid or an asked
price, then the bid price plus 1% or the ask price less 1%, as applicable, is
used.
There is no assurance that the valuation at which the Company's investments
are carried could be realized upon sale.
B. EXCHANGE GAINS AND LOSSES
The Company records exchange gains and losses in accordance with the provisions
of the American Institute of Certified Public Accountants Statement of Position
93-4, Foreign Currency Accounting and Financial Statement Presentation for
Investment Companies ("SOP"). The SOP requires separate disclosure in the
accompanying financial statements of net realized gain (loss) from foreign
currency transactions, and inclusion of unrealized gain (loss) on the
translation of currency as pan of net unrealized appreciation (depreciation) on
translation of assets and liabilities in foreign currency.
C. SECURITY TRANSACTIONS AND INVESTMENT INCOME
During the year ended November 30, 2003 there were no sales of securities and
purchases of securities amounted to $5,296,118. During the year ended November
30, 2002 sales of securities amounted to $ 13,409,639 and purchases of
securities amounted to $19,129,051. Dividend income is recorded on the
ex-dividend date (the date on which the securities would be sold ex-dividend)
net of withholding taxes, if any. Interest income is recognized on the accrual
basis.
D. DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders are recorded on the ex-dividend date.
E. USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses for the period. Actual results could differ from those estimates.
2 TAX STATUS OF THE COMPANY. Pursuant to the South African Income Tax Act, as
amended, the Company is subject to tax on dividends received from sources other
than South Africa. In addition, in terms of the residence based system of
taxation, beginning with the fiscal year ended November 30, 2002, the Company is
subject to tax on interest earned on cash deposits. A provision for South
African taxes of $294,986 and $376,213 for these items has been included in the
28
accompanying financial statements for the fiscal years ended November 30, 2003
and November 30, 2002, respectively.
In addition, the Company had previously provided for and paid taxes on
foreign exchange gains. However, the Company was assessed by the South African
Revenue Service ("SARS") on the basis that it is exempt from tax on foreign
exchange gains and in November 2003, after the completion of a refund audit
performed by SARS, the Company received a refund in respect of the overpayment
of tax in the amount of $1,639,641, plus interest.
A tax provision of -0- and $71,956 has been included in the accompanying
financial statements for realized capital gains during the fiscal years ended
November 30, 2003 and November 30, 2002, respectively. Also, a deferred tax
liability of $8,616,587 and $3,461,175 has been included for the tax on
unrealized capital gains on securities for the fiscal years ended November 30,
2003 and November 30, 2002. respectively.
SARS has held that, effective October 1, 2001, the Company became subject
to a tax on capital gains realized since that date on the disposal of South
African and foreign securities. However, after numerous representations with
SARS as well as the Treasury Department, the Company has been successful in
negotiating relief from this tax. On December 17, 2003, the South African Income
Tax Act of 1962 was amended by the Revenue Laws Amendment Bill 71 of 2003 and
signed into law by the President of South Africa. This amendment provides the
Company with an exemption from the Capital Gains Tax until November 30, 2004.
The Company has commenced actions necessary to relocate its place of
business to Bermuda before the expiration of its exemption. (Sec Note 5.) While
it is management's intention to complete this relocation before the November 30,
2004 expiration date, no assurance can be given that all conditions will be
satisfied. Therefore, the Company will continue to provide deferred South
African tax on unrealized capital gains on securities subsequent to November 30,
2003.
The reporting for financial statement purposes of distributions made during
the fiscal year from net investment income or net realized gains may differ from
their ultimate reporting for U.S. federal income tax purposes. The differences
are caused primarily by the separate line items reporting for financial
statement purposes of foreign exchange gains or losses. See the annual report
additional tax information for United States shareholders.
3 CURRENCY EXCHANGE. There are exchange control regulations restricting the
transfer of funds from South Africa. In 1958 the South African Reserve Bank, in
the exercise of its powers under such regulations, advised the Company that the
exchange control authorities would permit the Company to transfer to the United
States in dollars both the Company's capital and its gross income, whether
received as dividends or as profits on the sale of investments, at the current
official exchange rate prevailing from time to time. Future implementation of
exchange control policies could be influenced by national monetary
considerations that may prevail at any given time.
4 RETIREMENT PLANS. Effective April 1, 1989, the Company established a
defined contribution plan (the "Plan") to replace its previous pension plan. The
Plan covers all full-time employees. The Company will contribute 15% of each
covered employee's salary to the Plan. The Plan provides for immediate vesting
by the employee without regard to length of service. During the years ended
November 30, 2003 and 2002 there were no covered employees under the plan and,
consequently, no retirement expense was incurred.
In 1994, the Company entered into a supplemental non-qualified pension
agreement with its Chairman, Under the terms of the agreement, the Company
agreed to credit $25,000 per year for five years, beginning December 1, 1993, to
a Supplemental Pension Account with interest credited at an annual rate of 3.5%.
The Board of Directors approved increases in the amount of the annual
credit as follows: $28,125 in May 1999; $31,250 in February 2002 and $45,000 in
March 2003. As a result, the Company has recorded expense amounts of $41,562 and
$29,688 for the years ended November 30, 2003 and November 30, 2002,
respectively.
The Company has an asset in the amount of $145,000 related to the
retirement obligation liability of $315,900 as of November 30, 2003.
29
5 COMPANY REORGANIZATION. The Company announced earlier this year that, in
view of its tax situation, it had filed an application for an exemptive order
with the Securities and Exchange Commission to permit the Company to move from
the Republic of South Africa to the Commonwealth of Bermuda by reorganizing
itself into a newly formed company incorporated in Bermuda. The move would not
involve any material change in the Company's investment policies. The relocation
to Bermuda is subject to a number of conditions, including (1) receiving the
requested relief from the Securities and Exchange Commission; (2) receiving
approval to list the shares of the new Bermuda company on the New York Stock
Exchange and (3) satisfying shareholder approval requirements. No assurance can
be given that these conditions will be satisfied.
In connection with the reorganization, the Company has incurred
approximately $575,000 in legal and other professional fees as of November 30,
2003.
6 COMMITMENTS. The Company's lease for office space in Johannesburg expired
in February 2003. The Company has renewed the lease for a two year period at an
annual cost of approximately $55,000.
30
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and the Board of
Directors of ASA Limited:
We have audited the accompanying statements of assets and liabilities of
ASA Limited (incorporated in the Republic of South Africa) as of November 30,
2003 and 2002, including the schedule of investments as of November 30, 2003,
and the related statements of operations, surplus and changes in net assets,
financial highlights and supplementary information for each of the two years in
the period ended November 30, 2003. These financial statements, financial
highlights and supplementary information are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements, financial highlights and supplementary information based on our
audits. The financial highlights for years presented prior to November 30, 2002
were audited by other auditors who have ceased operations and whose report dated
December 18, 2001 expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial
statements, financial highlights and supplementary information are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, financial
highlights and supplementary information. Our procedures included the
confirmation of securities owned as of November 30, 2003 and 2002, by
correspondence with the custodians and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements, financial highlights and
supplementary information referred to above present fairly, in all material
respects, the financial position of ASA Limited as of November 30, 2003 and
2002, the results of its operations, the surplus and changes in its net assets,
financial highlights and supplementary information for each of the two years in
the period then ended, in conformity with accounting principles generally
accepted in the United States.
Ernst & Young LLP
New York, N.Y., U.S.A.
31
Ernst & Young
Johannesburg, SA
December 23, 2003
FINANCIAL STATEMENTS (CONTINUED)
SEMI-ANNUAL PERIOD ENDED MAY 31, 2004
SCHEDULE OF INVESTMENTS
(NOTE 1)
May 31, 2004
Number of Market Value Percent of
Name of Company Shares Net Assets
---------------------------------------------------------------------------------------------------------------
ORDINARY SHARES OF GOLD MINING COMPANIES
---------------------------------------------------------------------------------------------------------------
AUSTRALIAN GOLD MINES
Newcrest Mining Limited -ADRs 3,000,000 $27,630,000 6.7%
---------------------------------------------------------------------------------------------------------------
UNITED STATES GOLD MINES
Newmont Mining Corporation 520,368 20,663,813 5.0
---------------------------------------------------------------------------------------------------------------
SOUTH AFRICAN GOLD MINES
Anglogold Limited 2,389,894 83,636,131 20.3
Gold Fields Limited 9,704,977 114,834,568 27.7
Harmony Gold Mining Company Limited 292 459 3,523,828 .9
Harmony Gold Mining Company Limited - ADRs 2,166,400 25,953,472 6.3
---------------------------------------------------------------------------------------------------------------
227,947,999 55.2
---------------------------------------------------------------------------------------------------------------
CANADIAN COLD MINES
Barrick Gold Corporation 730,000 15,089,100 3.7
Placer Dome 1,065,312 16,608,214 4.0
Incorporated
---------------------------------------------------------------------------------------------------------------
31,697,314 7.7
---------------------------------------------------------------------------------------------------------------
SOUTH AMERICAN GOLD MINES
Compania de Minas Buenaventura - ADRs 900,000 21,087,000 5.1
---------------------------------------------------------------------------------------------------------------
329,026,126 79.7
---------------------------------------------------------------------------------------------------------------
ORDINARY SHARES OF OTHER COMPANIES
---------------------------------------------------------------------------------------------------------------
SOUTH AFRICAN MINING
Anglo American PLC 1,280,000 27,110,509 6.6
Anglo American Platinum Corporation 820,500 30,552,691 7.4
Limited 262,700 19,354,072 4.7
Impala Platinum Holdings Limited 1,950,000 6,285,416 1.5
Mvelaphanda Resources Limited
---------------------------------------------------------------------------------------------------------------
83,302,688 20.2
---------------------------------------------------------------------------------------------------------------
Total investments (Cost - $151,159,299) 412,328,814 99.9
---------------------------------------------------------------------------------------------------------------
CASH AND OTHER ASSETS LESS LIABILITIES 46,838 .1
---------------------------------------------------------------------------------------------------------------
Net assets $412,375,652 100.0%
There is no assurance that the valuations at which the Company's investments are carried could be realized upon sale.
The notes to the financial statements form an integral part of these statements.
32
STATEMENTS OF ASSETS AND LIABILITIES
----------------------------------------------------------------------------------------------------------------------
ASSETS May 31, 2004 May 31, 2003
----------------------------------------------------------------------------------------------------------------------
Investments, at market value (Note I)
Gold mining companies -
Cost $117,577,016 in 2004
$121,354,720 in 2003 $329,026,126 $278,511,105
Other companies -
Cost $33,582,283 in 2004
$26,678,003 in 2003 83,302,688 63,406,199
----------------------------------------------------------------------------------------------------------------------
412,328,814 341,917,304
----------------------------------------------------------------------------------------------------------------------
Cash (Includes foreign cash of $4,633,317 and $497,790) 5,653,497 9,537,910
Dividends and interest receivable 139,910 146,103
Other assets 260,760 86,588
----------------------------------------------------------------------------------------------------------------------
Total assets 418,382,981 351,687,905
----------------------------------------------------------------------------------------------------------------------
LIABILITIES
----------------------------------------------------------------------------------------------------------------------
Accounts payable and accrued liabilities 493,205 403,136
Current South African tax liability (benefit) (16,817) 76,576
Deferred South African tax liability 5,530,941 3,453,238
----------------------------------------------------------------------------------------------------------------------
Total liabilities 6,007,329 3,932,950
----------------------------------------------------------------------------------------------------------------------
NET ASSETS (SHAREHOLDERS' INVESTMENT) $412,375,652 $347,754,955
Ordinary (common) shares R0.25 nominal (par) value
Authorized: 24,000,000 shares
Issued and Outstanding: 9 600 000 shares $ 3,360,000 $ 3,360,000
Shore premium 1 (capital surplus) 27,489,156 27,489,156
Undistributed net investment income 58,153,100 60,737,729
Undistributed net realized (loss) from foreign currency transactions (55,009,385) (49,874,418)
Undistributed net realized gains from investments 122,131,967 115,112,525
Net unrealized appreciation on investments 255,638,574 190,431,343
Net unrealized appreciation on translation of assets
and liabilities in foreign currency 612,240 498,620
----------------------------------------------------------------------------------------------------------------------
Net assets $412,375,652 $347,754,955
----------------------------------------------------------------------------------------------------------------------
Net assets per share $42.96 $36.22
----------------------------------------------------------------------------------------------------------------------
The closing price of the Company's shares on the New York Stock Exchange was $37.64 and $35.90 on May 31, 2004 and 2003,
respectively.
The notes to the financial statements form an integral part of these statements.
33
STATEMENTS OF OPERATIONS
Six months ended
----------------------------------------------------------------------------------------------------------------------
May 31, 2004 May 31, 2003
----------------------------------------------------------------------------------------------------------------------
Investment income
Dividend income $ 3,369,822 $ 6,133,508
Interest income 97,578 337,327
----------------------------------------------------------------------------------------------------------------------
Total investment income 3,467,400 6,470,835
----------------------------------------------------------------------------------------------------------------------
Expenses
Shareholders' report and proxy expenses 87,540 111,199
Directors' fees and expenses 317,613 281,447
Salaries and benefits 300,850 246,871
Other administrative expenses 373,454 331,500
Transfer agent, registrar and custodian 58,335 75,118
Professional fees and expenses 216,796 205,679
Insurance 72,081 76,127
Other 171,564 188,300
----------------------------------------------------------------------------------------------------------------------
Total expenses 1,598,233 1,516,241
----------------------------------------------------------------------------------------------------------------------
Net investment income before South African tax benefit 1,869,167 4,954,594
South African tax benefit 80,632 ----
----------------------------------------------------------------------------------------------------------------------
Net investment income 1,949,799 4,954,594
----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) from investments
and foreign currency transactions
Net realized gain from investments
Proceeds from sales 8,403,634 ----
Cost of securities sold 1,384,192 ----
----------------------------------------------------------------------------------------------------------------------
Net realized gain from investments 7,019,442 ----
----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from foreign currency transactions
Investments (6,872,264) ----
Foreign currency transactions 44,858 1,346,451
----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from foreign currency transactions (6,827,406) 1,346,451
----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in unrealized appreciation on investments
Balance, beginning of year 345,821,603 170,170,266
Balance, end of year 261,169,515 193,884,581
----------------------------------------------------------------------------------------------------------------------
Increase (Decrease) (84,652,088) 23,714,315
Change in Deferred South African tax liability 3,085,646 7,937
----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in unrealized appreciation from (81,566,442) 23,722,252
investments
----------------------------------------------------------------------------------------------------------------------
Net (decrease) in unrealized appreciation
on translation of assets and liabilities in foreign currency (103,830) (811,569)
----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) from investments and
foreign (81,478,236) 24,257,134
and foreign currency transactions
----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(79,528,437) $ 29,211,728
----------------------------------------------------------------------------------------------------------------------
The notes to the financial statements form an integral part of these statements.
34
STATEMENTS OF SURPLUS AND STATEMENTS OF CHANGES IN NET ASSETS
Six months ended
----------------------------------------------------------------------------------------------------------------------
STATEMENTS OF SURPLUS May 31, 2004 May 31, 2003
----------------------------------------------------------------------------------------------------------------------
Share premium (capital surplus)
Balance, beginning and end of year $27,489,156 $27,489,156
----------------------------------------------------------------------------------------------------------------------
Undistributed net investment income
Balance, beginning of year $59,083,301 $58,663,135
Net investment income for the year 1,949,799 4,954,594
Dividends paid (2,880,000) (2,880,000)
----------------------------------------------------------------------------------------------------------------------
Balance, end of year $55,153,100 $60,737,729
----------------------------------------------------------------------------------------------------------------------
Undistributed net realized (loss) from foreign currency transactions
Balance, beginning of year $(48,181,979) $(51,220,869)
Net realized gain (loss) for the year (6,827,406) 1,346,451
----------------------------------------------------------------------------------------------------------------------
Balance, end of year $(58,009,385) $(49,874,418)
----------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain from investments
(Computed on identified cost basis)
Balance, beginning of year $115,112,525 $115,112,525
Net realized gain for the year 7,019,442 ---
----------------------------------------------------------------------------------------------------------------------
Balance, end of year $122,131,967 $115,112,525
----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on investments
Balance, beginning of year $337,205,016 $166,709,091
Net increase (decrease) for the year (81,566,442) 23,722,252
----------------------------------------------------------------------------------------------------------------------
Balance, end of year $255,638,574 $190,431,343
----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) on
translation of assets and liabilities in foreign currency
Balance, beginning of year $716,070 $1,310,189
Net unrealized (depreciation) for the period (103,830) (811,569)
----------------------------------------------------------------------------------------------------------------------
Balance, end of year $612,240 $498,620
----------------------------------------------------------------------------------------------------------------------
Six months ended
----------------------------------------------------------------------------------------------------------------------
Statements of changes in net assets May 31, 2004 May 31, 2003
----------------------------------------------------------------------------------------------------------------------
Net investment income $1,949,799 $4,954,594
Net realized gain from investments 7,019,442 ---
Net realized gain (loss) from foreign currency transactions (6,827,406) 1,346,451
Net increase (decrease) in unrealized appreciation on investments (81,566,442) 23,722,252
Net (decrease) in unrealized appreciation (depreciation) on (103,830) (811,569)
translation of assets
and liabilities in foreign currency
----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (79,528,437) 29,211,728
Dividends paid (2,880,000) (2,880,000)
----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (82,408,437) 26,331,728
Net assets, beginning of year 494,784,089 321,423,227
----------------------------------------------------------------------------------------------------------------------
Net assets, end of year $412,375,652 $347,754,955
The notes to the financial statements form an integral part of these statements.
35
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED MAY 31, 2004 AND 2003
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. The following is a summary of
the Company's significant accounting policies:
A. INVESTMENTS
Portfolio securities are generally valued at the last reported sales price on
the last trading day of the period, or the mean between the closing bid and
asked prices of those securities not traded on that date. In the event that a
mean price cannot be computed due to the absence of either a bid or an asked
price, then the bid price plus 1% or the ask price less 1%, as applicable, is
used. Securities for which current market quotations are not readily available
are valued at their fair value as determined in good faith by, or in accordance
with procedures adopted by, the Company's Board of Directors.
The difference between cost and current value is reflected separately as
net unrealized appreciation (depreciation) on investments. The net realized gain
or loss from the sale of securities is determined for account purposes on the
identified cost basis.
There is no assurance (that the valuation at which the Company's
investments are carried could be realized upon sale.
B. EXCHANGE GAINS AND LOSSES
The Company records exchange gains and losses in accordance with the provisions
of the American Institute of Certified Public Accountants Statement of Position
93-4, Foreign Currency Accounting and Financial Statement Presentation for
Investment Companies ("SOP"). The SOP requires separate disclosure in the
accompanying financial statements of net realized gain (loss) from foreign
currency transactions, and inclusion of unrealized gain (loss) on the
translation of currency as part of net unrealized appreciation (depreciation) on
translation of assets and liabilities in foreign currency.
C. SECURITY TRANSACTIONS AND INVESTMENT INCOME
During the six months ended May 31, 2004 sales of securities amounted to
$8,403,634 and purchases of securities amounted to $7,292,714. During the six
months ended May 31, 2003 there were no sales of securities and purchases of
securities amounted to $1,205,799.
Dividend income is recorded on the ex-dividend date (the date on which the
securities would be sold ex-dividend) net of withholding taxes, if any. Interest
income is recognized on the accrual basis.
D. DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders arc recorded on the ex-dividend date.
E. USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses for the period. Actual results could differ from those estimates.
F. BASIS OF PRESENTATION
The financial statements are presented in United States dollars.
36
Certain prior year amounts in the accompanying financial statements have been
reclassified to conform with current year presentation.
2 TAX STATUS OF THE COMPANY. Pursuant to the South African Income Tax Act, as
amended, the Company is subject to tax on dividends received from sources other
than South Africa. In addition, beginning with the fiscal year ended November
30, 2002, the Company is subject to tax on interest earned on cash deposits. A
tax benefit for South African taxes of $80,632 and a tax provision of $-0- for
these items have been included in the accompanying financial statements for the
six months ended May 31, 2004 and May 31, 2003, respectively.
The Company had previously provided for and paid taxes on foreign exchange
gains. However, the Company was assessed by the South African Revenue Service
("SARS") on the basis that it is exempt from tax on foreign exchange gains and
in November 2003, after the completion of a refund audit performed by SARS, the
Company received a refund in respect of the overpayment of tax in the amount of
$1,639,641, plus interest.
In addition to the foregoing taxes, ASA currently is exempt from certain
other taxes in South Africa. Such exemption, however, expires on November 30,
2004. Following that date ASA will become subject to the Capital Gains Tax
"CGT") and the Secondary Tax on Companies ("STC") in South Africa.
The CGT is assessed at an effective rate of 15% on most gains realized by a
corporation on the sale of an investment. No provision for the CGT has been
included in the accompanying financial statements for realized capital gains
during the six months ended May 31, 2004 as a result of the Company's current
exemption. A deferred tax liability of $5,530,941 and $3,453,238 has been
included for the CGT on unrealized capital gains on securities for the six
months ended May 31, 2004 and May 31, 2003, respectively.
The STC is assessed at the rate of 12.5% on the amount of dividends
distributed to shareholders, after a deduction for dividends received or accrued
by a corporation from South African companies during the relevant dividend
period or cycle. Effective January 1, 2003, the STC applies to liquidation
distributions to shareholders of capital gains attributable to the period after
October 1, 2001, with an offset for the capital gains tax paid on these gains.
The Company currently is exempt from the STC on the types of dividends discussed
above.
The Company has commenced actions necessary to relocate to Bermuda before
the expiration of its exemption. See Note 5. While it is management's intention
to complete this relocation before the November 30, 2004 expiration date, no
assurance can be given that all conditions will be satisfied by November 30,
2004. If the Company is unable to relocate to Bermuda prior to November 30,
2004, the Company's Board of Directors will decide what action, if any, the
Company should take. The Company could decide to remain in South Africa after
November 30, 2004, in which case the above-described taxes would apply to the
Company in the normal course of conducting its business. Alternatively, the
Company could decide to relocate to Bermuda after November 30, 2004, in which
case the Company would incur a tax liability at the time of the relocation
estimated at approximately $25 million, based on the Company's financial
statements as of May 31, 2004.
The reporting for financial statement purposes of distributions made during
the fiscal year from net investment income or net realized gains may differ from
their ultimate reporting for U.S. federal income tax purposes. The differences
are caused primarily by the separate line items reporting for financial
statement purposes of foreign exchange gains or losses. See the semi-annual
report for additional tax information for United States shareholders.
3 CURRENCY EXCHANGE. There are exchange control regulations restricting the
transfer of funds from South Africa. In 1958 the South African Reserve Bank, in
the exercise of its powers under such regulations, advised the Company that the
exchange control authorities would permit the Company to transfer to the United
States in dollars both the Company's capital and its gross income, whether
received as dividends or as profits on the sale of investments, at the current
official exchange rate prevailing from time to time. Future implementation of
exchange control policies could be influenced by national monetary
considerations that may prevail at any given time.
37
4 RETIREMENT PLANS. Effective April 1, 1989, the Company established a
defined contribution plan (the "Retirement Plan") to replace its previous
pension plan. The Retirement Plan covers all full-time employees. The Company
will contribute 15% of each covered employee's salary to the Retirement Plan.
The Retirement Plan provides for immediate vesting by the employee without
regard to length of service. During the six months ended May 31, 2004 and 2003,
there were no covered employees under the Retirement Plan and consequently, no
retirement expense was incurred.
In 1994, the Company entered into a supplemental non-qualified pension
agreement with its Chairman. Under the terms of the agreement, the Company
agreed to credit $25,000 per year for five years, beginning December 1, 1993, to
a Supplemental Pension Account with interest credited at an annual rate of 3.5%.
The Board of Directors approved increases in the amount of the annual
credit as follows: $28,125 in May 1999; $31,250 in February 2002 and $45,000 in
March 2003 and $55,000 in February 2004. As a result, the Company has recorded
expense amounts of $25,833 and $19,051 for the six months ended May 31, 2004 and
May 31, 2003, respectively.
The Company has an asset in the amount of $150,750 related to the
retirement obligation liability including interest of $349,635 as of May 31,
2004.
5 COMPANY REORGANIZATION. The Company announced in early 2003 that, in view
of its tax situation, it had filed an application for an exemptive order with
the U.S. Securities and Exchange Commission to permit the Company to move from
the Republic of South Africa to the Commonwealth of Bermuda by reorganizing
itself into a newly formed company incorporated in Bermuda. The move would not
involve any material change in the Company's investment policies. The relocation
to Bermuda is subject to a number of conditions, including (1) receiving the
requested relief from the Securities and Exchange Commission; (2) receiving
approval to list the shares of the new Bermuda company on the New York Stock
Exchange and (3) satisfying shareholder approval requirements. No assurance can
be given that these conditions will be satisfied.
In connection with the reorganization, the Company has incurred
approximately $750,000 in legal and other professional fees as of May 31, 2004.
6 CONCENTRATION RISK. Under normal circumstances, over 50% of the Company's
assets will be invested in equity securities of companies conducting, as a major
portion of their business, gold mining and related activities in South Africa.
The Company also invests in securities of companies engaged in other businesses
in South Africa, including the mining of other precious metals. In addition, the
Company invests a portion of its assets in securities of companies operating
outside of South Africa in extractive and related activities, including gold
mining. The Company is, therefore, subject to gold and precious metal related
risks as well as risks related to investing in South Africa including political,
economic, regulatory, currency fluctuation and foreign exchange risks. As a
result of industry consolidation, the Company current is invested in a limited
number of securities and thus holds large positions in certain securities.
Because the Company's investments are concentrated in a limited number of
securities of companies involved in the mining of gold and other precious metals
and related activities, the net asset value of the Company may be subject to
greater volatility than that of a more broadly diversified investment company.
7 COMMITMENTS. The Company's lease for office space in Johannesburg expired
in February 2003. The Company has renewed the lease for a two-year period at an
annual cost of approximately $55,000.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of ASA Limited:
We have audited the accompanying statements of assets and liabilities of
ASA Limited (incorporated in the Republic of South Africa) as of May 31,
2004 and 2003, including the schedule of investments as of May 31, 2004,
38
and the related statements of operations, surplus and changes in net assets
and supplementary information for the six months ended May 31, 2004 and
2003 and the financial highlights for the six months ended may 31, 2004 and
May 31, 2003 and the years ended November 30, 2003 and 2002. These
financial statements, financial highlights and supplementary information
are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements, financial highlights
and supplementary information based on our audits. The financial highlights
for years presented prior to November 30, 2002 were audited by other
auditors who have ceased operations and whose report dated December 18,
2001 expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with the standards of the Public
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
financial highlights and supplementary information. Our procedures included
the confirmation of securities owned as of May 31, 2004 and 2003, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements, financial highlights and
supplementary information referred to above present fairly, in all material
respects, the financial position of ASA Limited as of May 31, 2004 and
2003, the results of its operations, its surplus, the changes in its net
assets, and supplementary information for each of the six month periods
then ended and the financial highlights for the six months ended May 31,
2004 and 2003 and the years ended November 30, 2003 and 2002 in conformity
with U.S. generally accepted accounting principles.
Ernst & Young LLP
New York, N.Y., U.S.A.
Ernst & Young
Johannesburg, SA
July 16, 2004
39
PART C
OTHER INFORMATION
ITEM 25. FINANCIAL STATEMENTS AND EXHIBITS
(1) FINANCIAL STATEMENTS:
The financial statements of ASA Limited and report by Ernst & Young LLP, New
York, New York, independent registered public accounting firm and Ernst & Young,
Johannesburg, South Africa, independent auditors, are included in Part B.
(2) EXHIBITS:
(a) Memorandum of Association - 1/
(b) Bye-Laws - 1/
(c) Voting Trust Agreement -- Not applicable.
(d) Instruments Defining the Rights of Security Holders - See Exhibit
2(b).
(e) Dividend Reinvestment Plan - Filed herewith
(f) Instrument Defining the Rights of Long-Term Debt -- Not applicable.
(g) Investment Advisory Contract -- Not applicable.
(h) Distribution Contract -- Not applicable.
(i)(1) Form of Pension Arrangements-Filed herewith
(i)(2) Form of Pension Agreement Assignment Letter Agreement - Filed herewith
(j)(1) Custodian Contract - Filed herewith
(j)(2) Subcustodian Contract - 1/
(j)(3) Form of Agreement of Custodian Required by SEC Exemptive Order -
Filed herewith
(j)(4) Form of Custodians Consent to Service of Process - Filed herewith
(k)(1) Form of Shareholder Services Contract - 1/
(k)(2) Form of Accounting Services Agreement-1/
(k)(3) Transfer Agency Contract - Filed herewith
C-1
(k)(4) Form of Transfer Agent Letter Agreement - Filed herewith
(k)(5) Form of Administrative Services Agreement-1/
(l) Opinion of Counsel -- Not applicable
(m) Copies of Consent to Service of Process by Non-Resident Directors
-Filed herewith
(n)(1) Consent of Ernst & Young LLP, New York, New York - Filed herewith.
(n)(2) Consent of Ernst & Young, Johannesburg, South Africa - Filed
herewith.
(o) Financial Statements omitted from Items 8.6 or 23 - Not applicable.
(p) Letter of Investment Intent -- Not applicable.
(q) Model Retirement Plan -- Not applicable.
(r) Code of Ethics Pursuant to Rule 17j-1-1/
---------------------------
1/ Incorporated by reference to the Registrant's Registration Statement on
Form N-2, SEC File No. 811-21650, as filed with the Securities and Exchange
Commission on October 5, 2004
ITEM 26. MARKETING ARRANGEMENTS
Not applicable.
ITEM 27. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Reorganization expenses will be paid by ASA Limited until the closing
date (the "Closing Date"), tentatively scheduled for November 19, 2004.
Following the Closing Date, any reorganization expenses that remain
unpaid and all expenses incurred in the winding-up and dissolution of
ASA Limited will be borne by the Registrant.
ITEM 28. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
Not applicable.
ITEM 29. NUMBER OF HOLDERS OF SECURITIES
NUMBER OF RECORD HOLDERS
TITLE OF CLASS AS OF NOVEMBER 15, 2004
Common Shares One
C-2
ITEM 30. INDEMNIFICATION
Reference is hereby made to Sections 103 to 107 and Section 151 of the
Registrant's Bye-Laws, filed as Exhibit 2(b) to this Registration Statement.
The Company's directors and officers will be insured under an errors and
omissions liability insurance policy.
ITEM 31. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
Not applicable.
ITEM 32. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other records required by Rules 31a-1 and 31a-2 under
the Investment Company Act of 1940, as amended, will be maintained and held in
the offices of the Company's custodian, JPMorgan Chase Bank, 3 Chase Metrotech
Center, Brooklyn, NY 11245, the Company's principal place of business, 4th
Floor, 11 Summer Street, Buffalo, New York, 14209 and the offices of LGN
Associates, P.O. Box 269, Florham Park, New Jersey 07932. The Company's
accounting records will be maintained and held at the offices of Kaufman, Rossin
& Company, 2699 South Bayshore Drive, Miami, Florida 33133. The Company's
corporate records (its Memorandum of Association, Bye-Laws, register of members
and directors and minutes of the meetings of its Committees and Board of
Directors, and general meetings of shareholders) will be maintained at the
offices of Appleby Corporate Services (Bermuda) Ltd., Canon's Court, 22 Victoria
Street, Hamilton HM12, Bermuda.
ITEM 33. MANAGEMENT SERVICES
Other than as set forth in Parts A and B of this Registration Statement,
the Company is not a party to any management-related service contract.
ITEM 34. UNDERTAKINGS
Not applicable.
C-3
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, as
amended, the Registrant, ASA (Bermuda) Limited, has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Buffalo and State of New York, on the 17th day
of November, 2004.
ASA (BERMUDA) LIMITED
By: /s/ Robert J.A. Irwin
-------------------------------
Robert J. A. Irwin
Chairman, President, Chief Executive Officer
and Treasurer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ------- ------
/s/ Robert J.A. Irwin
--------------------- - November 17, 2004
Robert J. A. Irwin Chairman of the Board, Director,
President, Chief Executive Officer
and Treasurer
Chester A. Crocker* Assistant Secretary and Director
Ronald L. McCarthy* Assistant Treasurer and Director
Henry R. Breck* Director
Harry M. Conger* Director
Joseph C. Farrell* Director
James G. Inglis* Director
Malcolm W. MacNaught* Director
Robert A. Pilkington* Director
A. Michael Rosholt* Director
* By:/s/ Robert J.A. Irwin
---------------------
Robert J. A. Irwin
Attorney-In-Fact
Date: November 17, 2004
C-4
EXHIBIT INDEX
Exhibit Document Description
------- --------------------
(e) Dividend Reinvestment Plan
(i)(1) Form of Pension Arrangements
(i)(2) Form of Pension Agreement Assignment Letter
(j)(1) Custodian Contract
(j)(3) Form of Agreement of Custodian Required by SEC Exemptive Order
(j)(4) Form of Custodians Consent to Service of Process
(k)(3) Transfer Agency Contract
(k)(4) Form of Transfer Agent Letter Agreement
(m) Copies of Consent to Service of Process by Non-Resident Directors
(n)(1) Consent of Ernst & Young LLP, New York, New York
(n)(2) Consent of Ernst & Young, Johannesburg, South Africa
C-5