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Msg  22826 of 23590  at  1/27/2023 4:45:37 PM  by

lumpygravy


Eaton Vance Fundsí Control Share By-Law Provisions

 
Certain Eaton Vance Closed-End Funds Announce Board’s Decision To Exempt Certain
Transactions from the Application of the Funds’ Control Share By-Law Provisions
BOSTON, MA, January 26, 2023 – The above-referenced Eaton Vance-sponsored closed-end
funds (each, a “Fund” and collectively, the “Funds”) today announced that their Boards of
Trustees (the “Board”) have voted to exempt on a going forward basis all prior and new
purchases of Fund shares that might otherwise be deemed “Control Share Acquisitions” under
the Funds’ control share by-law provisions (“Control Share By-Law”) until further notice.
 
Each Fund’s Control Share By-Law provides that a shareholder who obtains beneficial
ownership of common shares of a Fund in a Control Share Acquisition (as defined in the By-
Laws) may exercise voting rights with respect to such shares only to the extent the authorization
of such voting rights is approved by other shareholders of the Fund or the transaction is declared
to be exempt from the Control Share By-Law by the Board. The Control Share By-Law, which
was adopted by the Board in August 2020 after careful consideration and with the advice of
counsel, is intended to ensure that transformative and potentially harmful changes to the Funds
sought by “activist” investors pursuing an arbitrage strategy could only be made with the support
of a broad cross-section of the Funds’ shareholders.
 
On January 23, 2023, the Massachusetts Superior Court issued a ruling on cross-motions for
partial summary judgment in litigation initiated in 2020 to adjudicate Saba Capital Master Fund,
Ltd.’s challenges to certain Funds’ By-Law amendments, including the Control Share By-Law.1
Each party’s motion for summary judgment was allowed in part and denied in part. Among
other actions, the Court granted the Funds’ and the Board’s motion for summary judgment on
Saba’s claim that the Board breached its fiduciary duty, finding that “the record reflects that the
Trustees had a legitimate business reason for their action” and that “the purpose of the Bylaw
Amendments was to protect the Funds’ retail shareholders from the harm they perceived that
activist hedge funds like Saba could cause....” As part of its ruling, the Court held that the
Control Share By-Law violates Section 18(i) of the Investment Company Act of 1940, as
amended, and granted summary judgment with respect to Saba’s claim for rescission of the
Control Share By-Law. The litigation is ongoing in the Massachusetts Superior Court. Any
decisions regarding appeal will be made after the remaining issues have been fully litigated.
Following careful review of the ruling, on January 26, 2023, the Board voted to exempt on a
going forward basis all prior and new purchases of Fund shares that might otherwise be deemed
“Control Share Acquisitions” under the Funds’ Control Share By-Laws until further notice. The
Board will continue to carefully monitor legal developments with bearing on control share by-
laws, and may take additional actions as it deems appropriate in the future.
 
 


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