On February 27, 2013 the staff of Securities and Exchange Commission (the “SEC”) issued a no-action letter granting relief under Section 15(a) of the Investment Company Act to EGA Emerging Global Shares Trust, an open-end investment company offering exchange-traded funds (the “Trust”), and its sub-adviser, Emerging Global Advisors, LLC (“EGA”) to allow amendments to certain provisions of the investment advisory agreement between EGA and the Trust (the “EGA Agreement”) without obtaining shareholder approval. The need for relief arose when the Board considered a proposal to terminate the Trust’s primary investment adviser and change EGA’s role from a sub-adviser to the sole investment adviser to the Trust. EGA and the Trust sought to amend the EGA Agreement to remove all references to the terminated adviser and introduce a “unified fee structure,” pursuant to which EGA would pay from its advisory fee a portion of the Trust’s ordinary operating expenses. According to the no-action request letter, the unified fee structure would not represent an increase in advisory fees to EGA and there would not be any diminution in services provided to the Trust.
Section 15(a) of the Investment Company Act prohibits any person from serving as an investment adviser to a registered investment company except pursuant to a written contract that has been approved by fund shareholders. Under applicable SEC guidance, material changes to an advisory contract trigger the shareholder approval requirement. The no-action relief permitted the proposed amendments without requiring shareholder approval, given that (i) the amendments would not reduce or modify in any way the nature and level of advisory services EGA provided to the Trust and (ii) the total advisory fees paid to EGA under the amended EGA Agreement would not exceed the advisory fees paid under the current agreement.