Banking Interpretations

NYSBL 143-b

MEMORANDUM  

To: Deputy Kursky

From: Kathleen A. Scott Legal Division

Date: March 12, 1998

Re: Chancellor LGT Trust Company — Change in Control

This memorandum is in reference to the proposed change of control of Chancellor LGT Trust Company ("Trust Company") by virtue of the voting stock of LGT Holding Luxembourg, S.A., the ultimate parent of the Trust Company, to AMVESCAP, PLC ("AMVESCAP").

AMVESCAP itself will be filing an application pursuant to section 143-b. However, a question has arisen as to whether there is a control party of AMVESCAP. [ ] Associates, Inc. ([ ] Associates'), an investment management firm, appears to own or control 12.7% of AMVESCAP's outstanding voting securities in the aggregate, due to its control of several investment limited partnerships. As you know, control of a company for purposes of determining whether a section 143-b application is required is presumed when, among other things, the purported control party owns, controls or holds with power to vote, ten percent of more of any company that owns a banking institution. Counsel for AMVESCAP has submitted a letter requesting that the Superintendent find that [ ] Associates is not a control party for purposes of section 143-b, in accordance with the last sentence in section 143-b(1), which provides that the Superintendent, upon application, may determine whether or not the ownership, control or holding of such voting stock would constitute control of such banking institution for purposes of this section.

According to counsel's submission, [ ] Associates serves as the investment manager for eleven limited partnerships that own voting stock issued by AMVESCAP. [ ] Associates also serves as the general partner, or the person who controls the general partner, of each of the eleven limited partnerships. No one of the partnerships owns more than five percent of AMVESCAP voting stock, and counsel asserts that, to the best of its knowledge, none of the eleven partnerships was created as a special purpose vehicle for the purpose of holding AMVESCAP securities. The partnerships originally were shareholders of AIM Management, which was merged into what became AMVESCAP; as a result of that merger, AIM Management shareholders became AMVESCAP shareholders. AMVESCAP was aware that the partnerships would hold approximately 12.7% of the shares and according to counsel, in order to ensure that [ ] Associates maintained a passive investment strategy with respect to the AMVESCO stock, each of the partnerships entered into certain contractual limitations on their rights as shareholders. The first is an agreement that the partnerships distribute to their partners at least 50% of the aggregate amount of AMVESCAP voting stock they hold, by September 7, 1998. By August 28, 1999, each of the partnerships must distribute any remaining AMVESCAP shares to its partners, thus leaving [ ] Associates, and the eleven partnerships, with no AMVESCAP shares.

[ ] Associates also is party to a "standstill" agreement, with terms including a prohibition whereby [ ] Associates may not, except under certain limited conditions, acquire additional AMVESCAP voting stock; assist in the solicitation of proxies for any shareholder resolution that has not been proposed by at least two- thirds of the directors of the AMVESCAP board, attempt to control AMVESCAP, or become involved in negotiation of a possible merger involving AMVESCAP.

Finally, [ ] Associates is permitted to have an observer at the AMVESCAP board meetings. The individual, who represented [ ] Associates on the board of AIM prior to its merger into AMVESCAP, may not vote but may only observe and obtain copies of materials distributed to the board of directors.

Counsel states that there are no other agreements whereby [ ] Associates or one of the eleven partnerships receive any special rights regarding shareholding or any veto or similar rights with respect to any action taken by the board of directors of AMVESCAP. Counsel states that [ ] Associates is a passive investor that does not seek to control the companies in which it invests. Counsel also raises the issue of the Trust Company's operations being a small part of LGT Holding Luxembourg and that it is planning to liquidate in the near future.

After review of the letter and attachments, it would appear as if the Department could take the position that the presumption of control has been rebutted and that [ ] Associates is not a control party of AMVESCAP. [ ] Associates runs eleven investment partnerships, with each of the eleven owning far less than 10% of AMVESCAP stock; the largest holding is 4.73%. In addition, the stock holdings will be reduced by 50% by September 7, 1998 and by August 28, 1999, 100% of the stock must be distributed to the individual investors in the partnerships. Moreover, [ ] Associates has entered into an agreement not to attempt to assert control over AMVESCAP. While less persuasive an argument, I do note that the Trust Company's operations are relatively minor compared to those of AMVESCAP and that the Trust Company is supposed to formally enter into voluntary liquidation later this year.

However, it should be noted that a determination that a particular party has overcome the presumption of control is limited to the facts as presented at that time; any change in the facts would require a review of the situation. If you are willing to make a determination that [ ] Associates is not a control party of AMVESCAP, I would recommend that you request a letter from [ ] Associates assuring the Department that it recognizes an obligation to return to the Department for a review of the situation and a new determination on control should the facts as presented in counsel's March 4, 1998 submission change and [ ] Associates forego its passive investment stance and attempt to assert actual control over AMVESCAP.

Thus, I would have no legal objection to your notifying counsel for AMVESCAP that at this time, the Department does not perceive [ ] Associates as being in control of AMVESCAP, provided that [ ] Associates gives us written assurance that it will return to the Department for a review of the situation should there be a change in the facts as currently presented to the Department.

If you have any questions, please advise.

K.A.S.