ASA ASA Gold and Precious Metals Limited

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): November 8, 2024

 

ASA Gold and Precious Metals Limited

(Exact Name of Registrant as Specified in Charter)

 

Bermuda		811-21650		98-6000252
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

	Three Canal Plaza, Suite 600	Portland	Maine	04101
	(Street Address)	(City)	(State)	(Zip Code)

 

Registrant’s telephone number, including area code (207) 347-2000

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class:	Trading symbol(s)	Name of exchange on which registered
Common Shares, par value $1.00 per share	ASA	New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Item 7.01

Regulation FD Disclosure.

 

The Board of Directors (the “Board”) of ASA Gold and Precious Metals Limited, a Bermuda limited liability company (the “Fund”), is comprised of four members. Two directors were initially elected in April 2024 upon the nomination of Fund shareholders (the “New Directors”), and two directors were reelected in April 2024 upon the nomination of the then-constituted Fund Board (the “Legacy Directors”). The members of the Board have retained separate counsel in connection with fund governance issues and have requested reimbursement under the Fund’s bye-laws for their counsel expenses. Information regarding certain governance issues is available in the attached excerpts from an October 14, 2024 letter from counsel to the New Directors to counsel to the Legacy Directors, in the attached November 1, 2024 letter from counsel to the Legacy Directors to counsel to the New Directors and in the attached November 7, 2024 letter from counsel to the New Directors to counsel to the Legacy Directors.

 

The information contained in this Item 7.01 is being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that Section or Sections 11 and 12(a)(2) of the Securities Act. The information contained in this Item 7.01 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act or into any filing or other document pursuant to the Exchange Act, except as otherwise expressly stated in any such filing.

 

Item 9.01

Financial Statements and Exhibits.

 

(d)

Exhibits

 

Exhibit No.		Description
99.1		Excerpts from letter dated October 14, 2024 from counsel to the New Directors to counsel to the Legacy Directors.
99.2		Letter dated November 1, 2024 from counsel to the Legacy Directors to counsel to the New Directors.
99.3		Letter dated November 7, 2024 from counsel to the New Directors to counsel to the Legacy Directors.

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: November 8, 2024

 

	ASA GOLD AND PRECIOUS METALS LIMITED
	By:	/s/ Axel Merk
	Name:	Axel Merk
	Title:	Chief Operating Officer

 

 

 

ASA Gold and Precious Metals Limited 8-K

 

Exhibit 99.1

 

Excerpts from October 14 Letter:

 

 

 

 

EMAIL: LMARKSESTERMAN@OLSHANLAW.COM

DIRECT DIAL: 212.451.2257

 

October 14, 2024

 

BY EMAIL

 

[  ]

 

Re:

ASA Gold & Precious Metals Ltd.

 

[  ]

 

We represent Paul Kazarian and Ketu Desai (the “New Directors”), in their capacities as directors of ASA Gold and Precious Metals Limited (“ASA” or the “Company”), a Bermuda exempted limited liability company and closed-end management investment company registered under Bermuda’s Companies Act 1981, as amended (the “BCA”), and the U.S. Investment Company Act of 1940, as amended (the “ICA”). We write regarding the misconduct of ASA directors Mary Joan Hoene and William Donovan (the “Continuing Directors”)… As detailed below, the Continuing Directors have engaged in an egregious manipulation of the Company’s corporate machinery to entrench and empower themselves, and have used sham committees to exclude the New Directors from what should be Board deliberations, thereby preventing the New Directors from exercising their rights and responsibilities. The Continuing Directors’ conduct blatantly violates their fiduciary duties as directors under the BCA and the most basic corporate governance standards…

 

The Continuing Director’s [  ] conduct has caused and is causing harm to the Company and its shareholders. The New Directors therefore expect that: … (ii) the Board retain non-conflicted counsel to advise on such matters; (iii) the Board, advised by non-conflicted counsel, promptly meet to review the formation, propriety and potential disbandment of the rights plan committee (the “Sham Rights Plan Committee”) and the litigation committee (the “Sham Litigation Committee”, and together with the Sham Rights Plan Committee, the “Sham Committees”); and (iv) the Nominating, Audit and Ethics Committee of the Board (the “Nominating Committee”) resume its proper functioning and promptly review and evaluate all candidates for election as directors received by the Company and make recommendations to the Board concerning the election of directors for the 2025 AGM (as defined below).

 

1.

The Prior Board [ ] Formed the Sham Committees to Entrench Themselves and Exclude the New Directors from Fundamental Board Matters

 

In December 2023,… Saba Capital Management, L.P.’s (together with its affiliates, “Saba”) deliver[ed] [] a requisition to nominate five director candidates for election at the Company’s 2024 annual general meeting of shareholders (the “2024 AGM”) on December 1, 2023…

 

The Company scheduled the 2024 AGM for April 26, 2024. On April 12, 2024, Institutional Shareholder Services Inc. (“ISS”) recommended that shareholders vote for the election of Saba director candidates Messrs. Desai and Kazarian to the Board.

 

By April 26, 2024, it would have become apparent to the Prior Board that the New Directors would be elected. Shortly before the Company commenced the 2024 AGM, the Prior Board [ ] adopted resolutions to create the Sham Committees. The Board’s resolutions governing the formation of these committees (the “April 26 Resolutions”) state that they were formed purportedly in response to the upcoming expiration of the Rights Plan and Saba Litigation.

 

 

October 14, 2024

Page 2

 

The timing of the Sham Committees’ formation alone raises serious question about whether the Prior Board’s conduct was consistent with the directors’ duties under Bermuda law. If such committees were necessary and appropriate, the Prior Board would have formed them months earlier when the Rights Plan was adopted or Saba filed its lawsuit. The only material change in the Prior Board’s circumstances since January 31, 2024, appears to be that earlier on April 26, 2024, the Prior Board would have almost certainly received a final shareholder vote for the 2024 AGM and therefore have known with near certainty that Messrs. Kazarian and Desai would be elected as directors imminently. Seeing the writing on the wall, the Prior Board took preemptive action to entrench the Continuing Directors and perpetuate their will on the reconstituted Board following the 2024 AGM.

 

Indeed, the April 26 Resolutions acknowledge that the Sham Committees were formed for the improper purpose of entrenching the decisions of the Prior Board by conferring exclusive power for the Continuing Directors – i.e., Ms. Hoene and Mr. Donovan – and excluding the New Directors by depriving them of their full rights and ability to carry out their fiduciary duties as directors under Bermuda law. The Resolutions state:

 

“(noting in particular that Saba intends to nominate persons to the Board at the Company’s 2024 Annual General Meeting of Shareholders and that there may be a need for the said committees to obtain independent legal advice and to consider privileged legal advice in respect of the Rights Plan, the Saba Litigation and any course of conduct of new members of the Board that is inconsistent with the best interests of the Company in the view of the Board as currently constituted).”¹

 

Plainly stated, the two directors who lost the election – Bruce Hansen and Alexander Merk – conspired with Ms. Hoene and Mr. Donovan to ignore what shareholders had decided to be in the best interest of the Company. The Prior Board’s actions – setting up a committee system that provides for differential treatment of ASA’s directors, granting exclusive powers related to the Rights Plan and the Saba Litigation to the Sham Committees and seeking to exclude peremptorily the New Directors – are improper uses of Board power under Bermuda law and reflects a fundamental misunderstanding of a Bermuda director’s role, rights and obligations.

 

Section 97 of the BCA imposes a duty of good faith on directors, as well as a duty of skill and care. Bermuda directors also have a common law duty to, among other things, act in the best interests of the company and not for any collateral purpose, including a director’s entrenchment.² Similarly in the United States, courts generally disfavor discriminatory treatment of different subsets of directors.³

 

¹ The April 26 Resolutions (emphasis added). [   ].

² See, e.g., Stena Finance BV and Temple Holdings Ltd v Sea Containers Ltd and Others, [1989] Bda LR 71 (SC) (wherein the Bermuda Supreme Court considered whether a shareholders’ rights plan was implemented for, among other reasons, the improper collateral purpose of “entrenching the existing management”).

³ See, e.g., Carmody v. Toll Brothers, Inc., 723 A.2d 1180, 1192 (Del. Ch. 1998) (striking down a dead hand pill that materially interfered with the ability of directors to manage the corporation because it would limit the right of new directors to vote on whether to redeem the pill, and would improperly “embed structural power-related distinctions between groups of directors.”); KLM v. Checchi, 1997 WL 525861 (Del. Ch. July 23, 1997) (court not convinced that a minority shareholder’s threat to enforce contractual rights justifies cutting that shareholder’s designated directors out of meetings to discuss poison pills).

 

 

October 14, 2024

Page 3

 

Importantly, each Sham Committee was purportedly formed pursuant to bye-law 71 of the Company’s Amended and Restated Bye-Laws (the “Bye-Laws”), which permits the Board to form committees with certain powers, authorities or discretions of the Board to the extent specifically delegated by the Board and permitted under the BCA. But the April 26 Resolutions go well beyond what the BCA permits, as they purport to authorize the Sham Committees to act “exclusively [] on behalf of the Board” and to “make determinations and [] cause the Company to take actions” with respect to the Rights Plan and the Saba Litigation.

 

Bermuda law does not allow a board faction to use delegation to committees in order to exclude certain directors, against their will, from participating in discussions related to the company’s governance.⁴ Directors likewise may not fully delegate fundamental decision-making authority to committees, as all directors of a board have “the duty to supervise the discharge of the delegated functions.”⁵ While the authorities for those legal principles are English decisions, we are advised that the Bermuda courts will also apply these same principles.

 

Moreover, the Prior Board [  ] cannot attempt to justify the formation of the Sham Committees by claiming that the New Directors are conflicted.⁶ First, Ms. Hoene and Mr. Donovan are themselves conflicted, as they are named as defendants in the Saba Litigation, which challenges their decision to approve and renew the Rights Plan. Second, under Bermuda law, a director conflict is not a basis to exclude that director from participating in board deliberations if the conflict is disclosed. It is also legally improper to assume that a director will breach their common law duty to avoid conflicts of interest by potentially disclosing confidential information of the Company, and therefore a director cannot be excluded unless such director agrees it is in best interests of the Company to do so.⁷

  

⁴ Buckley on the Companies Acts (Lexis+ UK), Division P, Companies Act 1985, Tables at A72.4.

⁵ Re Barings plc (No 5), Secretary of State for Trade and Industry v Baker (No 5), [1999] 1 BCLC 433 at p 489 (Ch), aff’d [2000] 1 BCLC 523 (CA) at p 536 (“Whilst directors are entitled (subject to the articles of association of the company) to delegate particular functions to those below them in the management chain, and to trust their competence and integrity to a reasonable extent, the exercise of the power of delegation does not absolve a director from the duty to supervise the discharge of the delegated functions”).

⁶ As discussed below, the New Directors strongly disagree with any claim that the New Directors are conflicted.

⁷ Buckley on the Companies Acts (Lexis+ UK), Division P, Companies Act 1985, Tables at A72.4.

 

 

October 14, 2024

Page 4

 

2.

The Continuing Directors’ Bad Faith Effort to Expand of the Purview of the Sham Litigation Committee, and the Highly Inappropriate Conduct of the Continuing Directors [ ] at the Sept. 24 Meeting

 

On September 19, 2024, Saba submitted to the Company a notice of requisition, pursuant to Section 79 of the BCA (the “2025 Saba Nomination Notice”), to nominate a slate of the following individuals, Ketu Desai, Paul Kazarian, Karen Caldwell and Neal Neilinger (the “Saba Nominees”), for election as directors at the Company’s 2025 annual general meeting of shareholders (the “2025 AGM”).

 

The Board had scheduled a regular meeting for Sept. 24, 2024 (the “Sept. 24 Meeting”). Just before the Sept. 24 Meeting began, the Continuing Directors, purportedly on behalf of the [ ], ambushed the New Directors by delivering a previously unannounced proposal for a resolution of Saba’s Nomination Notice (the “2025 AGM Proposal” or the “Proposal”) to the New Directors. Ms. Hoene, Mr. Donovan … then attempted to negotiate the 2025 AGM Proposal with the New Directors at the Sept. 24 Meeting in an attempt to “settle” the 2025 Saba Nomination Notice – despite Mr. Kazarian attending the Sept. 24 Meeting in his capacity as an ASA director and Mr. Desai having no authority to bind Saba.

 

Our clients were extremely shocked and disappointed in Ms. Hoene and Messrs. Donovan… In particular, Ms. Hoene and Mr. Donovan, claiming the guise of the Litigation Committee [ ], took an adversarial position to the New Directors regarding the election of directors at the 2025 AGM. Their Proposal, which was prepared in secret and purports to negotiate on behalf of the Company regarding the composition of the Board, includes a slate of director candidates selected by the Sham Litigation Committee. The 2025 AGM Proposal also addresses the renewal of the management contract with the Company’s investment adviser, a critical Board matter under the ICA. These subject matter areas are clearly beyond any conception of the Litigation Committee’s mandate.

 

Even more concerning, [ ], acting on behalf of the Sham Litigation Committee and in direct conflict to the New Directors and Board as a whole, suggested that the Company would “hold up” the 2025 AGM if the New Directors did not agree to nominate Ms. Hoene and Mr. Donovan at the 2025 AGM under the terms of the 2025 AGM Proposal. [ ] threatened weaponization of ASA’s corporate machinery to advance the Continuing Directors’ self-interests is unethical, outrageous… Mr. Donovan then intimated that holding up the 2025 AGM would not be necessary because the Sham Litigation Committee would select the Company’s slate of nominees, thereby ensuring that the Continuing Directors would be included on the Company’s slate without full Board approval. When it became clear that Messrs. Kazarian and Desai would not succumb to pressure, Ms. Hoene resorted to impugning Mr. Desai’s independence – referring to him as a “cipher,” denigrating his abilities and maligning his independence.

 

The discussion and purported negotiation of the 2025 AGM Proposal during the Sept. 24 Meeting displays a critical lack of understanding of the New Directors’ roles and relationship to the Company. Messrs. Kazarian and Desai are independent directors duly elected by the shareholders of the Company, and they are subject to their full obligations and fiduciary duties and entitled to their full rights and privileges as directors under Bermuda law. Both are sophisticated directors who fully understand their fiduciary duties under Bermuda law. When the New Directors attend a Board meeting, they act in their capacities as independent directors of the Company. The fact that Saba originally nominated Mr. Desai for election does not diminish his independence or capacity as a director, and he has no authority to act on behalf of Saba. While Mr. Kazarian is affiliated with Saba, this does not diminish or otherwise negatively affect his status as a full independent member of the Board. Shareholders routinely seek to have representatives elected or appointed to a company’s board of directors – this is not a novel situation – and Mr. Kazarian has observed proper ethical walls to distinguish his roles and capacities as a member of the Board and a representative of Saba. For example, after Mr. Kazarian’s appointment to the Board, he sent emails to Ms. Hoene and Mr. Merk introducing them to Michael D’Angelo, Saba’s General Counsel, explaining that he would serve as the Company’s point of contact for Saba going forward. In addition, Saba disclosed this association to the Company’s shareholders in connection with the 2024 AGM. Despite the foregoing, the Continuing Directors [ ] are attempting to treat the New Directors as indistinguishable from Saba.

 

 

October 14, 2024

Page 5

 

Furthermore, even if the Litigation Committee were validly constituted, which it is not, the April 26 Resolutions do not delegate authority to the Litigation Committee to recommend actions with respect to Board composition at the 2025 AGM, deliver the Proposal or unilaterally select the Company’s slate of directors. The Litigation Committee’s mandate is specifically limited to matters and actions concerning “the Saba Litigation or other litigation relating to the Rights Plan or any other rights plan adopted by the Company.”

 

Ms. Hoene’s and Messrs. Donovan’s [ ] threats at the Sept. 24 Meeting to hijack the review and determination of director candidates on behalf of the Company, as evidenced by the delivery of the 2025 AGM Proposal, inappropriately seek to strip the full Board of its duty to oversee and make the final determinations as to the Company’s slate – a determination on which all serving directors are entitled to have input. Directors must retain the duty and obligation to supervise and have final authority over functions delegated to board committees.

 

Instead of addressing the 2025 Saba Nomination Notice as a Board issue, and properly following the Board’s corporate governance processes, the Continuing Directors [ ] have instead opted to contort the Sham Litigation Committee’s mandate to contend that it has the authority to identify a slate of directors purportedly on behalf of the Company, but in reality, to advance their own self-interests. The determination of the Company’s slate is a fundamental determination that must reflect the input and decisions of the entire Board acting as a whole and cannot be entirely delegated to a committee. Indeed, under ASA’s governing documents and proper corporate governance functioning, the Nominating Committee reviews and evaluates director candidates and then makes a recommendation to the full Board, which has the authority to approve the final director slate. As experienced directors and members of the Nominating Committee, Ms. Hoene and Mr. Donovan are fully aware of these requirements.⁸

 

The Sham Committees were formed for an improper purpose – specifically to entrench the Company’s existing management by excluding the New Directors and depriving them of their full rights, duties and obligations under Bermuda law. The Continuing Directors’ actions at the Sept. 24 Meeting and delivery of the 2025 AGM Proposal amplify and expose this bad faith entrenching purpose. The Board, advised by non-conflicted counsel, must promptly meet to review the formation, propriety and potential disbandment of the Sham Committees.

…

 

⁸ The 2025 AGM Proposal is inconsistent with corporate governance standards (which reflect the SEC’s position on governance best practices) under the ICA, which state, “The disinterested directors of the fund select and nominate any other disinterested director of the fund.” ICA Rule 0-1(a)(7)(ii).

 

 

October 14, 2024

Page 6

 

4.

The Nomination Committee Should Resume Proper Functioning and the Full Board Should Meet to Attempt to Determine and Approve the Company’s 2025 AGM Slate

 

The Nominating Committee, currently consisting of Ms. Hoene and Messrs. Donovan and Desai, is the proper committee empowered with the authority to consider candidates for recommendation to the Board. Specifically, the Charter for the Nominating Committee (the “Nominating Committee Charter”) states that the Board has delegated to the Nominating Committee the authority, responsibility and duty to “consider candidates for recommendation to the Board from any source deemed appropriate by the Committee, including… the Company’s shareholders,” and to make a recommendation to the Board after reviewing and evaluating the candidates.⁹

 

The Nominating Committee Charter further requires the Nominating Committee to conduct an impartial review of shareholder nominated candidates provided that such nominating shareholder has compiled with certain procedural requirements.¹⁰ While the Nominating Committee has held meetings to conduct its audit and ethics duties, to the New Directors’ knowledge, since Mr. Desai was elected to the Board, it has not held a meeting where Board composition, potential director candidates for the 2025 AGM or the 2025 Saba Nomination Notice and the Saba Nominees have been discussed or considered. Instead, the Continuing Directors – to the exclusion of the Nominating Committee and the full Board – have seemingly reviewed the Saba Nominees behind closed doors and delivered the 2025 AGM Proposal in response.

 

Notably, Ms. Hoene and Mr. Donovan serve on both the Nominating Committee and the Sham Litigation Committee. The Sham Litigation Committee’s attempted hijacking of the Nominating Committee’s authority appears to be motivated by the desire to improperly exclude Mr. Desai from such review. But the fact that Mr. Desai is included as a Saba Nominee does not provide a basis to exclude Mr. Desai from participating in Nominating Committee deliberations. Under the BCA and the Bye-Laws, Mr. Desai is not required to recuse himself from deliberations concerning the Saba Nominees. Indeed, nominating committees frequently review and make recommendations as to the re-nomination of incumbent directors, including those serving on such committees. The Continuing Directors cannot continue to exclude Mr. Desai from the review of director candidates by failing to convene the Nominating Committee.

 

The Board should promptly resume its proper corporate governance functions, and the Nominating Committee should promptly meet to review all received director candidates and issue recommendations to the full Board. If the full Board is unable to agree on recommendations with respect to the Company’s slate for the 2025 AGM, then the Company should not pick sides and instead should issue proxy materials that do not include any director candidate recommendations from the Company.

 

⁹ See Sections C.8.c and c of the Nominating Committee Charter.

¹⁰ Id. at Section E.

 

 

October 14, 2024

Page 7

 

For the avoidance of doubt, given the Continuing Directors previous and ongoing involvement in improper entrenchment tactics, including the adoption and renewal of the Rights Plan, the formation of the Sham Committees, the inappropriate delivery of the 2025 AGM Proposal and their threats to manipulate ASA’s corporate machinery for their own personal benefit, the New Directors will not support a proposed Company slate that includes Ms. Hoene and Mr. Donovan as director candidates. However, the New Directors encourage the Nominating Committee to fully and faithfully execute its mandate and to consider other additional director candidates, in particular credible candidates who value sound corporate governance practices.¹¹

…

 

We look forward to ASA’s return to proper corporate governance, and the Board and the Nominating Committee resuming their proper functioning for the benefit of the Fund and all shareholders.

 

Accordingly, our clients expect the following:

…

 

2.       The Board should retain non-conflicted counsel to advise on Corporate Matters;

 

3.       The Board, advised by non-conflicted counsel, should promptly meet to review the formation, propriety and potential disbandment of the Sham Committees; and

 

4.       The Nominating Committee resume its proper functioning, and thereafter, all members of the Board immediately meet and confer with respect to the Nominating Committee’s recommendations regarding the Company’s slate of director candidates for the 2025 AGM.

 

We look forward to your prompt response.

 

¹¹ If Ms. Hoene and Mr. Donovan, in their capacity as shareholders, want to nominate a slate of director candidates for election at the 2025 AGM, they need to comply with the BCA and Bye-Laws, including the requirement of having at least 5% ownership or not less than 100 shareholders support the nomination.

 

ASA Gold and Precious Metals Limited 8-K

 

Exhibit 99.2

 

ROPES & GRAY LLP PRUDENTIAL TOWER 800 BOYLSTON STREET BOSTON, MA 02199-3600 WWW.ROPESGRAY.COM

 

November 1, 2024	Amy D. Roy
	T +1 617 951 7445
	amy.roy@ropesgray.com

 

BY E-MAIL

 

Lori Marks-Esterman, Esq. 

Olshan Frome Wolosky LLP

1325 Avenue of the Americas

New York, NY 10019

 

Re:

ASA Gold and Precious Metals Limited

 

Dear Ms. Marks-Esterman:

 

We represent Mary Joan Hoene and William Donovan (the “Legacy Directors”) in their capacities as directors of ASA Gold and Precious Metals Limited (“ASA” or the “Company”) and as members of the Litigation Committee (the “Litigation Committee”) and the Rights Plan Committee (the “Rights Plan Committee”) of the Board of Directors (the “Board”) of the Company. I write in response to your letter of October 14, 2024 (the “October 14 Letter”) addressed to Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”) as it relates to the Legacy Directors. We understand that Skadden has separately responded to the October 14 Letter as it relates to that firm’s representation of the Company.

 

The October 14 Letter’s assertions of purported “misconduct” by the Legacy Directors are wholly unfounded, and we reject them categorically. The allegations are premised on many factual mischaracterizations and basic disregard for the governance requirements for a closed-end fund registered under the Investment Company Act of 1940 (the “ICA”) and the record of the Legacy Directors’ efforts to engage with the New Directors on the latter’s views about the Company. The Legacy Trustees have always acted in good faith and in a manner they reasonably believe to be in the best interest of the Company and its shareholders, including taking actions they reasonably believe are necessary to ensure the Company’s compliance with the ICA and other laws.

 

 

 

Lori Marks-Esterman, Esq.

- 2 -

November 1, 2024

 

First, as explained in the litigation captioned Saba Capital Master Fund, Ltd. v. ASA Gold and Precious Metals, Ltd., No. 24-cv-690 (SDNY) (the “Litigation”), the Legacy Directors reasonably believe that the efforts of Saba Capital Management, L.P. (“Saba”) to gain control of the Board in furtherance of its closed-end fund “arbitrage” strategy – and its apparent goal of replacing Merk Investments LLC (“Merk”) and most likely becoming ASA’s investment adviser – are contrary to the best interests of the Company and its shareholders. At least one court has already recognized that Saba’s short-term arbitrage profit-taking is detrimental to the objectives of long-term fund shareholders, and that closed-end fund board members have legitimate business reasons for adopting measures to protect long-term shareholders from harm caused by Saba’s strategy.¹ Consistent with these views, when Saba accumulated a significant minority position in ASA’s outstanding shares, nominated a slate of candidates to the Board, and stated its belief that ASA should terminate its current investment adviser, the then-board (including the Legacy Directors) determined it was in the best interests of the Company and its shareholders to adopt a limited-duration shareholder rights plan in December 2023. As described at length in the Litigation briefing, a key goal of the rights plan in the face of Saba’s effort to gain creeping control of the Company was to create an incentive for Saba to negotiate with the Board regarding the future of the Company, to protect the interests of all shareholders and ASA’s strategic focus on long-term capital appreciation in the global gold-mining industry. For similar reasons, the then-board adopted a new plan in April 2024 and established by board resolution the Rights Plan Committee. When the Legacy Directors, acting as the Rights Plan Committee, adopted a new plan in August 2024, it was likewise based upon the Legacy Directors’ reasonable business judgment that Saba’s efforts to gain control of the Board are adverse to the interests of the Company and its shareholders considering the detrimental impact of Saba’s short-term arbitrage strategy on other investors. The Legacy Directors have accordingly followed up on these steps with efforts to engage with the New Directors to learn their views and explore whether reasonable compromise could be reached. Contrary to the assertions in the October 14 Letters, none of these actions was taken to “entrench and empower” the Legacy Directors.

 

Neither the Rights Plan Committee nor the Litigation Committee is a “sham” committee as claimed in the October 14 Letter. Each committee was validly established by resolution of the then-board in April 2024 pursuant to Bye-law 71 of the Company’s Amended and Restated Bye-laws (the “Bye-laws”) following considerable evaluation of the purpose of and need for such committees – i.e., to reasonably and legitimately protect all shareholders’ interests. Each committee will remain in existence and is authorized to act under its delegated authority unless and until a majority of the current Board (or a future one) votes to dissolve it or otherwise change the authority delegated to it. The fact that your clients, current directors Paul Kazarian and Ketu Desai (together, the “New Directors”), may disagree with certain of the actions taken by the Committees does not in any way call into question their validity or their delegated authority to act on behalf of the Board and the Company. Nor does the fact that the views of the Board appear to be evenly divided on the continuation of the Committees undermine their validity in any way, given that previously-adopted measures will remain in place under Bye-law 72 in the event of an evenly-divided vote on a proposal to rescind it. Under these circumstances, there is simply no basis to accuse the Legacy Directors of “manipulation of the Company’s corporate machinery” as claimed in the October 14 Letter. These allegations amount to an aggressive and unfounded effort to eliminate by threat legitimate and necessary oversight.

 

¹ In granting partial summary judgment against Saba in connection with its claim for breach of fiduciary duty against certain Eaton Vance closed-end funds and their independent trustees, a Massachusetts Superior Court found that the “Trustees had a legitimate business reason for their action … that the purpose of the Bylaw Amendments was to protect Funds’ retail shareholders from the harm they perceived that activist hedge funds like Saba could cause if they gained a concentrated minority of shares, forced short-term liquidity events, and thereby threatened retail investors’ interest in the Funds and the Funds’ viability” as long-term investment vehicles. Eaton Vance Senior Income Tr. v. Saba Cap. Master Fund, Ltd., No. 2084CV01533-BLS2, 2023 WL 1872102, at *11 (Mass. Super. Ct. Jan. 21, 2023). In its trial ruling rejecting Saba’s challenge to a majority-of-outstanding-shares voting standard, the court found that “Saba’s activist objectives are generally inconsistent with the Funds’ investment objectives. The goal of monetizing the discount to [net asset value] differs from the goal of managing a stable pool of assets for a steady income stream over a long period of time.” Findings of Fact, Conclusions of Law, and Order for Judgment, Eaton Vance Senior Income Tr. v. Saba Cap. Master Fund, Ltd., No. 2084CV01533-BLS2, slip op. at 13 (Mass. Super. Ct. Oct. 21, 2024).

 

 

 

Lori Marks-Esterman, Esq.

- 3 -

November 1, 2024

 

To the contrary, it is the New Directors who are transparently attempting to utilize their Board positions to further particular interests – namely, Saba’s arbitrage agenda and its apparent goal of replacing Merk and most likely becoming ASA’s investment adviser (to provide itself a fee revenue stream, as it has done in other closed-end funds) – rather than protecting the best interests of the Company and all of its shareholders. As the New Directors are aware, several important fund governance actions will be required in the coming weeks and months for the Company to continue ordinary operations and to remain in compliance with the ICA and other laws, including without limitation the scheduling of the Company’s Annual General Meeting (“AGM”); the determination of Board nominees; the issuance of the Company’s proxy statement in connection with the AGM; the approval of the continuance of the existing investment advisory agreement or a new advisory agreement; and disclosure of material developments in connection with potential disagreements among the directors. Given the unique circumstance of a board with evenly divided views on some or all of these issues, the Legacy Directors have attempted to initiate a good faith dialogue with the New Directors on these issues in an effort to find a path to compromise. This was the purpose of the talking points circulated by the Corporate Secretary in advance of the September 25, 2024 Board meeting – to provide a potential structure for discussion purposes at the Board meeting as to how compromise on the upcoming governance actions might be reached. In fact, it was suggested that the Board continue to review and consider the elements of the proposal and be prepared for discussion at the next Board meeting, in October. The New Directors declined even to engage in such a discussion, and the October 14 Letter now mischaracterizes the circulation of the talking points as an “ambush” – which is demonstrably inaccurate.

 

The Legacy Directors are gravely concerned that the New Directors, based on their actions to date, are unwilling to participate in good faith exploration of potential compromise on the governance actions that are necessary for the Company to remain in ordinary operation and comply with applicable laws (e.g., AGM, nominees, proxy statements, advisory agreement). Nevertheless, the Legacy Directors remain willing and anxious to keep trying, as they believe there is a path to a timely compromise on these questions, even acknowledging that disagreements will likely remain over other issues such as the continuation of the Litigation Committee and Rights Plan Committee. There is still time to reach agreement on the necessary governance actions before the Company is put at unnecessary risk of violating the law and being unable to continue ordinary operations.

 

 

 

Lori Marks-Esterman, Esq.

- 4 -

November 1, 2024

 

On a related but separate note, the Legacy Directors believe there is an urgent legal requirement for the Company to make disclosure public on Form 8-K about the potential inability of the Board to reach agreement on the governance actions discussed above. Although they remain hopeful agreement can be reached on these matters, they must acknowledge there is no guarantee it will be. The Legacy Directors thus believe the present risk of a negative outcome, including the consequences of the Company violating the law and/or having to cease ordinary operations (for instance, if the continuance of the existing advisory agreement or a new advisory agreement is not approved by the Board prior to the expiration of the current term of the advisory agreement in [March] 2025), is information material to shareholders and potential shareholders that must be publicly disclosed. We understand that in recent discussions on this topic, counsel to the New Directors have asserted that no such disclosure is necessary or, in the alternative, that a detailed recitation of the New Directors’ allegations discussed above should be included (and presumably the Legacy Directors’ responses thereto). We ask the New Directors and their counsel to reconsider this position, including that a likely Board impasse on these critical matters is not material to an investment in the Company’s shares at this point requiring disclosure.² Shareholders should be made aware of the Board’s potential inability to reach agreement, but there is no need for disclosure of the parties’ respective positions underlying the disagreement. We have attached for consideration some potential language for a Form 8-K disclosure.

 

We look forward to hearing from you, and to working with you in what we believe can be a productive manner going forward.

 

Very truly yours,

 

Amy D. Roy

 

cc:	Robert A. Skinner
	George M. Silfen
	Jennifer Gonzalez

 

² See, e.g., Section 202.05 of the New York Stock Exchange Listed Company Manual (“A listed company is expected to release quickly to the public any news or information which might reasonably be expected to materially affect the market for its securities. This is one of the most important and fundamental purposes of the listing agreement which the company enters into with the Exchange.”). In addition, we point out that Regulation FD generally requires the Fund to disclose publicly any material nonpublic information that the Fund or persons acting on its behalf (e.g., directors) has disclosed to various categories of recipients, including shareholders (e.g., Saba) where it is reasonably foreseeable that the shareholder will purchase or sell the Fund’s securities on the basis of the information.

 

 

 

Lori Marks-Esterman, Esq.

- 5 -

November 1, 2024

 

Potential 8-K language for discussion

 

The Board of Directors (the “Board”) of ASA Gold and Precious Metals Limited, a Bermuda limited liability company (the “Fund”), is comprised of four members. Two directors were initially elected in April 2024 upon the nomination of Fund shareholders, and two directors were reelected in April 2024 upon the nomination of the then-constituted Fund Board. There is a risk that the Board will be unable to reach a required majority vote to approve certain Fund governance and management matters critical to the continued ordinary operations of the Fund, including the approval of the continuance of the Fund’s existing investment advisory agreement or the approval of a new advisory agreement prior to the expiration of the current one-year term of the existing advisory agreement in [March] 2025. This situation may also result in a material increase in expenses borne by Fund shareholders. For instance, the members of the Board have retained separate counsel in connection with fund governance issues and have requested reimbursement under the Fund’s bye-laws for their counsel expenses.

 

The information contained in this Item 7.01 is being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that Section or Sections 11 and 12(a)(2) of the Securities Act. The information contained in this Item 7.01 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act or into any filing or other document pursuant to the Exchange Act, except as otherwise expressly stated in any such filing.

 

ASA Gold and Precious Metals Limited 8-K

 

Exhibit 99.3

 

EMAIL: LMARKSESTERMAN@OLSHANLAW.COM

DIRECT DIAL: 212.451.2257

 

November 7, 2024

 

BY EMAIL

 

Ropes & Gray

Prudential Tower

800 Boylston Street

Boston,  MA 02199-3600

Attn:

Amy D. Roy

 

Re:

ASA Gold & Precious Metals Ltd.

 

Dear Amy:

 

Thank you for the call earlier this week. We look forward to continuing the dialogue. We write to address certain issues raised your November 1, 2024 letter (the “November 1 Letter”).¹

 

Your November 1 Letter improperly presumes that the Litigation Committee and the Rights Plan Committee are valid. You purport to rely on the Company’s Amended and Restated Bye-Laws to justify your position, but conveniently ignore that the Committees’ stripping of the directors’ rights is prohibited by Bermuda law. Further, though you assert that the Committees were formed to “protect all shareholders’ interests,” you also ignore that the Committees – formed hours before the 2024 AGM – seek to perpetuate the will of the outgoing Board, over the express desires of ASA’s shareholders who voted on the Board’s composition at the 2024 AGM and elected Messrs. Kazarian and Desai as directors. The Committees were structured to contradict the clear will of the Company’s shareholders, and to seek to preserve and entrench the will of a former Board that its shareholders did not reelect. To be clear, it is our position that any actions previously taken or to be taken by the Committees going forward are unlawful. In the event that the Legacy Directors do not agree to disband the Committees, or the Board is unable to reach a resolution regarding the Committees and the Legacy Directors purport to act under the guise of the Committees, the New Directors will take all steps necessary to enforce their rights as directors.

 

Likewise, your November 1 Letter attacks the New Directors for advocating a change in the Company’s investment manager. This ignores that any new investment adviser to the Company will be subject to the approval of ASA’s shareholders, and further ignores that Messrs. Kazarian and Desai ran on a campaign that included criticism of Merk Investments LLC (“Merk”) and a recommendation to terminate the Investment Advisory Agreement between the Company and Merk. ASA’s shareholders overwhelmingly elected Messrs. Kazarian and Desai to ASA’s Board on a platform of replacing Merk, and voted to not reelect Mr. Merk.

 

 

1

All capitalized terms not defined herein are as defined in our October 14th letter.

 

 

 

Your November 1 Letter thus repeatedly ignores a crucial fact: there was an election in which the New Directors were voted onto the Board by shareholders. What the Legacy Directors are seeking with the Committees is to perpetuate the dead hand control of the Company by the pre-election board. That is a true corruption of sound governance principles.

 

Finally, your November 1 Letter states that our clients’ allegations in our October 14^th letter “are premised on … [a] basic disregard for the governance requirements for a closed-end fund registered under the Investment Company Act of 1940.” Quite the contrary, these allegations reflect that our clients are in fact serving the Company as independent watchdogs (as is directed by the Securities and Exchange Commission) seeking to advance the best interests of the Company’s shareholders.

 

We look forward to discussing these issues further at the November 12, 2024 Board meeting.

 

	Very truly yours,
	Lori Marks-Esterman

 

 

cc:

Robert A. Skinner, Ropes & Gray LLP Jennifer Gonzalez, K&L Gates, LLP Paul Kazarian, Director

Ketu Desai, Director

Rebecca L. Van Derlaske, Olshan Frome Wolosky LLP

George M. Silfen, Kramer Levin Naftalis & Frankel LLP

Keith Robinson, Carey Olsen Bermuda Limited

Matthew Summers, Carey Olsen Bermuda Limited

 

v3.24.3

Cover	Nov. 08, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 08, 2024
Entity File Number	811-21650
Entity Registrant Name	ASA Gold and Precious Metals Limited
Entity Central Index Key	0001230869
Entity Tax Identification Number	98-6000252
Entity Incorporation, State or Country Code	D0
Entity Address, Address Line One	Three Canal Plaza, Suite 600
Entity Address, Address Line Two	Suite 600
Entity Address, City or Town	Portland
Entity Address, State or Province	ME
Entity Address, Postal Zip Code	04101
City Area Code	(207) 347-2000
Local Phone Number	347-2000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Shares, par value $1.00 per share
Trading Symbol	ASA
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Entity Information, Former Legal or Registered Name	Not Applicable

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