Securities Exchange Act of 1934 — Rules 14a-8(i)(3) and (8)
H & Q Life Sciences Investors
February 4, 2011
Joseph R. Fleming, Esq.
200 Clarendon Street, 27th Floor
Boston, MA 02116-5021
Re: Omission of Shareholder Proposal Pursuant to Rule 14a-8 for H&Q Life Sciences Investors.
Dear Mr. Fleming:
In a letter dated December 20, 2010, on behalf of H&Q Life Sciences Investors (the “Fund”), you request confirmation from the staff of the Division of Investment Management that it would not recommend an enforcement action to the Securities and Exchange Commission if a shareholder proposal (“Proposal”) submitted by a shareholder of the Fund (“Proponent”) described in your letter is omitted from the proxy statement and form of proxy (the “Proxy Materials”) for the Fund’s 2011 Annual Meeting of Shareholders. The Proposal states, in relevant part:
RESOLVED, shareholders ask that our Company take the steps necessary to reorganize the Board of Trustees into one class with each trustee subject to election each year and to complete this transition within one-year.
You request our assurances that we would not recommend enforcement action if the Fund omits the Proposal from the Proxy Materials pursuant to Rule 14a-8(i)(8) under the Securities Exchange Act of 1934, because it relates to an election to the Company’s Board of Trustees.
We have considered your request,1 and there appears to be some basis for your view that the Fund may exclude the Proposal from the Proxy Materials under Rule 14a-8(i)(8) to the extent it could, if implemented, disqualify trustees previously elected from completing their terms on the board. It appears, however, that this defect could be cured if the Proposal were revised to provide that it will not affect the unexpired terms of trustees elected to the board at or prior to the upcoming annual meeting. Accordingly, unless the Proponent provides the Fund with a Proposal revised in this manner, within seven calendar days after receiving this letter, we will not recommend enforcement action to the Commission if the Fund omits the Proposal from the Proxy Materials in reliance on Rule 14a-8(i)(8).
You also request our assurances that we would not recommend enforcement action if the Fund omits from the Proposal a statement that the merit of the Proposal “should also be considered in the context of the need for additional improvements in our company’s 2010 reported corporate governance status.” You argue that that the statement may be excluded under Rule 14a-8(i)(3) under the Securities Exchange Act of 1934 because the statement is false or misleading and “indirectly impugns the character, integrity or personal reputation of the Trustees by suggesting, without factual support, that the governance of [the Fund] has been deficient and that the Trustees have been neglectful of their duties and have acted improperly or unlawfully.”
After considering your request, we are unable to concur with your view that the Fund may exclude the statement from the Proposal under Rule 14a-8(i)(3). Accordingly, if the Proposal is included in the Proxy Materials we do not believe that the Fund may omit the statement from the Proposal in reliance on Rule 14a-8(i)(3).
Attached is a description of the informal procedures the Division follows in responding to shareholder proposals. If you have any questions or comments concerning this matter, please call me at (202) 551-6773.
Kieran G. Brown
Office of Disclosure and Review
1 We also considered a letter submitted on behalf of the Proponent dated January 12, 2011.