The SEC issued a no-action letter to Franklin Universal Trust (the "Trust") to exclude from its 2008 proxy soliciting materials the following shareholder proposal (the "Proposal") submitted by Andrew Dakos ("Proponent") on behalf of Full Value Partners L.P. ("Full Value Partners"):

RESOLVED: The Franklin Universal Trust is requested to conduct a self-tender offer for all outstanding shares of the Trust at net asset value ("NAV"). If more than 50% of the Trust's outstanding shares are tendered, the tender offer should be cancelled and the Trust should be liquidated.

The incoming letter successfully argued that argue that Rule 14a-8(h) permitted the Trust to exclude the Proposal from its proxy materials for the 2008 shareholders' meeting. Under Rule 14a-8(h), a shareholder who has submitted a proposal to be included in a fund's proxy statement must appear personally at the shareholders' meeting or send a representative to present the proposal, or provide good cause for failing to appear. Failure to appear without good cause permits a fund to exclude any proposals submitted by the shareholder from its proxy materials for any meetings held during the next two calendar years.

The incoming letter stated that the Trust previously included a shareholder proposal (the "2007 Proposal") submitted by Philip Goldstein on behalf of Opportunity Partners, L.P. ("Opportunity Partners") in its 2007 annual meeting proxy statement. The incoming letter further stated that based on filings with the SEC, including Schedule 13D filings for the Fund, Messrs. Goldstein and Dakos, Opportunity Partners and Full Value Partners were all members of the Bulldog Investors shareholder group in 2006, when Opportunity Partners submitted the 2007 Proposal for inclusion in the Trust's 2007 proxy materials, and that they have collectively made numerous other Schedule 13D filings as Bulldog Investors, signifying their practice of voting their shares as a group. The incoming letter stated that neither Opportunity Partners nor any of the other members of Bulldog Investors attended or sent a representative to the Fund's 2007 annual meeting, and they failed to provide any explanation for their absence.

The SEC staff disagreed with Mr. Dakos' argument that while Opportunity Partners and Full Value Partners are funds within the Bulldog Investors group, they are distinct legal entities. He argued that distinct legal entities, Opportunity Partners is not a "nominal proponent" of Full Value Partners and, therefore, Full Value Partners should not be precluded from submitting a shareholder proposal to the Trust.

The SEC staff noted that it had taken the position that the requirements of Rule 14a-8 cannot be circumvented through the use of "nominal proponents." See, MGM Mirage, SEC No-Action Letter (Mar. 19, 2001) and TRW, Inc., SEC No-Action Letter (Jan. 22, 2001). Under Section 13(d)(3) of the 1934 Act, and Rule 13d-5(b) thereunder, a group is formed when two or more persons act together for the purpose of acquiring, holding, or disposing of securities; these provisions do not draw a distinction depending on whether or not the entities comprising the group are distinct legal entities. Accordingly, the SEC staff stated that it would not recommend enforcement action against the Trust if it omits the Proposal from its 2008 proxy materials in reliance upon Rule 14a-8(h) or if it excludes any proposal(s) that Full Value Partners, Mssrs. Dakos and Goldstein, Opportunity Partners, Bulldog Investors, or any other nominal proponents of these parties, may submit for inclusion in the Trust's 2009 proxy materials.

Please click for a copy of the no-action letter.