SCHEDULE 13D
DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT
February 8, 2005
1. NAME OF REPORTING PERSON
Phillip Goldstein
2. CHECK THE BOX IF MEMBER OF A GROUP a[]
b[]
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) AND 2(e) []
6. CITIZENSHIP OR PLACE OF ORGANIZATION
USA
________________________________________________________________
7. SOLE VOTING POWER
685,364
8. SHARED VOTING POWER
30,344
9. SOLE DISPOSITIVE POWER
2,134,496_______________________________________________________
10. SHARED DISPOSITIVE POWER
0
11. AGGREGATE AMOUNT OWNED BY EACH REPORTING PERSON
2,134,496
12. CHECK IF THE AGGREGATE AMOUNT EXCLUDES CERTAIN SHARES []
________________________________________________________________
13. PERCENT OF CLASS REPRESENTED BY ROW 11
8.36%
14. TYPE OF REPORTING PERSON
IA
________________________________________________________________
This statement constitutes amendment No.2 to the Schedule 13D
filed on October 20, 2004. Except as specifically set forth
herein, the Schedule 13D remains unmodified.
Item 4 is amended as follows:
ITEM 4. PURPOSE OF TRANSACTION
The reporting person has submitted the letters in Exhibits A and
B to the issuer and to the SEC respectively.
Item 7 is amended as follows:
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit A. Letter to Board of Directors.
Exhibit B. Letter to the SEC
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
Dated: 2/8/05
By: /s/ Phillip Goldstein
Name: Phillip Goldstein
Exhibit A.
Opportunity Partners L.P., 60 Heritage Drive, Pleasantville, NY
10570
(914) 747-5262 // Fax: (914) 747-5258//oplp@optonline.net
February 8, 2005
Bruce A. Rosenblum, Corporate Secretary
The Board of Directors
The New Germany Fund, Inc.
345 Park Avenue
New York, NY 10154
Dear Mr. Rosenblum and Board Members:
We received your letter dated January 28, 2005 in which you
refused to waive or eliminate the Fund's qualifications for
director. Ironically, it was delivered to us on January 31,
2005, the day the press was filled with inspiring accounts of the
previous day's Iraqi election in which voters turned out in large
numbers despite threats of terrorist violence. Perhaps this
display of democracy in action will persuade the board to
reconsider and allow shareholders of the Fund a similar
opportunity to freely determine the destiny of their Fund. Do
the directors really want to be branded as opponents of democracy
who, like Sadaam Hussein, can only be "elected" in a sham
election?
How would it look to the brave Iraqi voters if we ceased our
efforts to mount an election campaign at the Fund's annual
meeting just because the board makes the self-serving assertion
that its preclusive qualifications bylaw is "in the best interest
of the Fund?" To the contrary, a free election is always in the
best interest of the Fund and its shareholders, no matter what
assurances your lawyers give you that the directors can
manipulate the election machinery to their own advantage, and it
is clearly not in the best interest of the Fund for the directors
to prevent virtually every public shareholder of the Fund from
serving as a director. You give no indication in your letter
that the directors' desire to impede a proxy challenge was a
factor in their decision but it would be incredible if it was not
after shareholders overwhelmingly repudiated the board's
recommendation against open-ending by a 61-39 margin.
In any event, we will proceed on the basis that the primary
purpose of the Fund's qualifications bylaw is to impede a
shareholder vote on the election of directors and that under the
circumstances, any attempt to enforce it would be an illegal
breach of the board's fiduciary duty to the Fund. Therefore,
assuming there will be four directors elected, we hereby give
notice pursuant to the bylaws of the Fund that we intend to have
our representative appear in person or by proxy at the Fund's
2005 annual meeting to (1) nominate the persons listed below for
election as directors, none of whom meets the illegal preclusive
and inequitable qualifications set forth in Section 3 of Article
II of the Fund's bylaws, and (2) propose that shareholders of the
Fund be afforded an opportunity to realize net asset value for
their shares as soon as practicable. We intend to solicit
proxies from other stockholders and to seek reimbursement from
the Fund for our solicitation expenses.
All pertinent information about each nominee is provided below.
Gerald Hellerman (67), 10965 Eight Bells Lane, Columbia, MD 21044
Principal of Hellerman Associates, a financial and corporate
consulting firm since 1993 ; director of The Mexico Equity and
Income Fund; director and President of Innovative Clinical
Solutions, Ltd., director of Frank's Nursery & Crafts, director
of MVC Capital; director of Brantley Capital Corporation. Mr.
Hellerman is presently serving as Manager-Investment Advisor for
a U.S. Department of Justice Settlement Trust. Mr. Hellerman has
served as a Trustee or Director of Third Avenue Value Trust, a
Trustee of Third Avenue Variable Series Trust, and a Director of
Clemente Strategic Value Fund.
Phillip Goldstein (60), 60 Heritage Drive, Pleasantville, NY
10570
Investment advisor to Opportunity Partners L.P., an activist-
oriented private investment fund, and other clients since 1992.
Mr. Goldstein has been a director of Brantley Capital Corporation
since 2002 and of The Mexico Equity and Income Fund since 1999.
Andrew Dakos (38), 43 Waterford Drive, Montville, NJ 07045
Mr. Dakos has been President of Elmhurst Capital, Inc., an
investment advisory firm, since 2000. Mr. Dakos has also been a
Managing Member of the general partner of Full Value Partners
L.P., an investment partnership, since 2001. In addition, Mr.
Dakos is President & CEO of UVitec Printing Ink Inc., a
manufacturing firm. Mr. Dakos also currently serves as Director
and Chairman of the Audit Committee of The Mexico Equity and
Income Fund Inc., a publicly traded company.
Rajeev Das (36), 68 Lafayette Avenue, Dumont, NJ 07628
Mr. Das has been an analyst at Kimball and Winthrop Inc. the
General Partner of Opportunity Partners L.P. an activist-oriented
private investment fund since 1997 and since September 2004 Mr.
Das has served as portfolio manager of Opportunity Income Plus
L.P. a private investment fund. Mr. Das is currently a director
of the Mexico Equity and Income Fund and a member of its Audit
Committee. Mr. Das holds the CFA designation.
Neither Mr. Hellerman nor Mr. Dakos owns any shares. Mr. Das
beneficially owns 400 shares. I beneficially own 30,344 shares
jointly with my wife and 1,511 in an IRA account. Opportunity
Partners owns of record one share and 685,363 shares in street
name. A representative of Opportunity Partners will appear in
person or by proxy at the annual meeting to nominate the above
persons. I have voting and/or disposal authority for an
additional 1,417,278 shares that are beneficially owned by my
clients (excluding Opportunity Partners). There are no
definitive arrangements or understandings between any of our
nominees and Opportunity Partners or its affiliates. The
required consents of each nominee are enclosed.
Please advise us immediately if this notice is deficient in any
way so that we can promptly cure any deficiency.
Very truly yours,
Phillip Goldstein
Portfolio Manager
Exhibit B
Opportunity Partners L.P., 60 Heritage Drive, Pleasantville, NY
10570
(914) 747-5262 // Fax: (914) 747-5258//oplp@optonline.net
February 7, 2005
Martin Kimel
Senior Counsel
Office of Chief Counsel
Division of Investment Management
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0506
The New Germany Fund,
Inc. (the "Fund")
Dear Mr. Kimel:
This is in response to your letter dated January 21, 2005 in
which you requested further information about my purchases of the
Fund's shares.
As I stated in my previous letter, (1) the 7.13% interest in the
Fund set forth in the schedule 13D filed on October 30, 2004
represents the aggregate number of shares beneficially owned by
clients for whom I have discretionary and/or voting authority and
(2) neither Opportunity Partners nor any other company that I
control or advise has acquired more than 3% of the Fund's
outstanding shares.
Between October 30, 2004 and January 6, 2005, none of the
aforementioned shares were sold and my beneficial ownership of
the Fund's shares increased via additional purchases as reflected
in an amended schedule 13D filed on January 11, 2005. That
filing indicates that as of January 6, 2005 I beneficially owned
a total of 2,134,496 shares or 8.36% of the Fund's 25,522,725
shares outstanding as of June 30, 2004 (based on the Fund's semi-
annual report filed on September 9, 2004). Below is a list of
the number of shares that are owned directly by private funds
that I control or advise and that are included in the 2,134,496
share total. I do not control or advise any investment companies
that own shares of the Fund and none of the entities listed below
owns any shares indirectly.
Opportunity Partners L.P. 685,364 shares
Full Value Partners L.P. 741,849 shares
Calapasas Investment Partnership 228,908 shares
Steady Gain Partners 144,489 shares
Mercury Partners 216,634 shares
As you can see, no private fund I control or advise owns more
than 3% (765,682 shares) of the Fund's outstanding shares. I
hope this information is adequate to allay your concerns.
However, please do not hesitate to call me if you need any
additional information.
Since you are investigating complaints about possible violations
of the Investment Company Act of 1940 (the "Act"), I would like
you to determine whether one of the Fund's bylaws violates of
section 16(a) of the Act and to advise me of your finding. The
bylaw in question was adopted by the Fund's board of directors
without shareholder approval and purports to establish onerous
qualifications for any nominee for director who is not an
incumbent director or an officer of the Fund's investment
adviser. In relevant part, it reads:
Qualifications. Directors need not be stockholders. Each
Director shall hold office until the earlier of: (a) the
expiration of his term and his or her successor shall have
been elected and qualifies, (b) his or her death, (c) his or
her resignation, (d) December 31 of the year in which he or
she shall have reached 70 years of age, or (e) his or her
removal; provided that clause (d) shall not apply to any
person who was a Director on October 15, 1999 or to any
person who the Nominating Committee (or in the absence of
such a Committee, the Board of Directors) determines to
except from that clause on the basis that the person's prior
public or government service or other broad-based activities
in the business community make it essential that the
Corporation continue to receive the benefit of the person's
services as a Director. The determination described in the
previous sentence shall be made on or before July 31 of the
year in which the Director in question reaches the age
specified in clause (d). To be eligible for nomination as a
director a person must, at the time of such person's
nomination, have Relevant Experience and Country Knowledge
(as defined below) and must not have any Conflict of
Interest (as defined below). Whether a proposed nominee
satisfies the foregoing qualifications shall be determined
by the Nominating Committee or, in the absence of such a
Committee, by the Board of Directors, each in its sole
discretion.
"Relevant Experience and Country Knowledge" means experience
in business, investment, economic or political matters of
Germany or the United States through service for 10 of the
past 20 years (except where a shorter period is noted) in
one or more of the following principal occupations:
(1) senior executive officer or partner of a financial or
industrial business headquartered in Germany that has annual
revenues of at least the equivalent of US $500 million,
(2) senior executive officer or partner of a financial or
industrial business headquartered in the United States that
has annual revenues of at least the equivalent of US $500
million and whose management responsibilities include
supervision of European business operations,
(3) director (or the equivalent) for 5 of the past 10 years
of one or more investment businesses or vehicles (including
this Corporation) a principal focus of which is investment
in Germany and that have at least the equivalent of US $250
million in combined total assets of their own,
(4) senior executive officer or partner of an investment
management business having at least the equivalent of US
$500 million in securities of German companies or securities
principally traded in Germany under discretionary management
for others,
(5) senior executive officer or partner of a business
consulting, accounting or law firm having at least 100
professionals and (b) whose principal responsibility
involves or involved providing services involving European
matters for financial or industrial businesses, investment
businesses or vehicles or investment management businesses
as described in (1) - (4) above,
(6) senior official (including ambassador or minister) in
the national government, a government agency or the central
bank of Germany or the United States, in a major
supranational agency or organization of which Germany or the
United States is a member, or in a leading international
trade organization relating to Germany or the United States,
in each case in the area of finance, economics, trade or
foreign relations, or
(7) current director or senior officer (without regard to
years of service) of an investment manager or adviser of the
Corporation, or of any entity controlling or under common
control with an investment manager or adviser of the
Corporation.
The effect of this bylaw is to preclude virtually every public
shareholder, or for that matter, virtually anyone in the United
States except the incumbent directors themselves from being
elected a director. (To confirm this, why don't you send an
email to everyone at the SEC to see if anyone qualifies or knows
anyone that qualifies?) Section 1(b) of the Act requires that
every provision of the Act be interpreted so as to prevent
investment companies from being operated in the interest of
directors rather than shareholders. Using that interpretive
guideline, it is impossible to reconcile section 16(a) with the
Fund's qualifications bylaw. As in any democratic election, the
question of qualifications for director is to be determined by
the electorate, i.e., the shareholders, not the incumbent
directors. Otherwise, section 16(a) would be meaningless.
It is indisputable that the qualifications bylaw benefits the
directors at the expense of shareholders by denying the latter
the opportunity to nominate and elect directors of their choice.
Moreover, courts have invariably found that the right to elect
directors is not only the right to vote for a candidate that
management has selected, but the right to nominate and vote for
directors of the shareholders' choosing. In Durkin v. The
National Bank of Olyphant, 772 F.2d 55, 59 (3rd Cir. 1985), the
Third Circuit Court eloquently expressed this principle:
The unadorned right to cast a ballot in a contest for
office, a vehicle for participatory decision making and the
exercise of choice, is meaningless without the right to
participate in selecting the contestants. As the
nominating process circumscribes the range of the choice to
be made, it is a fundamental and outcome-determinative step
in the election of officeholders. To allow for voting
while maintaining a closed candidate selection process thus
renders the former an empty exercise. This is as true in
the corporate suffrage context as it is in civic elections,
where federal law recognizes that access to the candidate
selection process is a component of constitutionally-
mandated voting rights.
The Delaware Chancery Court in Linton v. Everett, 1997 WL 441189,
at 9 (Del. Ch. 1997) affirmed that principle, noting "[t]he right
of shareholders to participate in the voting process includes the
right to nominate an opposing slate. See also Hubbard v.
Hollywood Park Realty Enterprises, 1991 WL 3151, at 11 (Del. Ch.
1991) (recognizing the fundamental right of shareholders to vote
for and nominate candidates for the board of directors). Given
the fundamental nature of shareholders' right to nominate and
vote for directors, the Court concludes that the directors'
decision to preclude plaintiff's nominees was unfair as they
acted in the absence of any valid authority and thereby thwarted
plaintiff's exercise of his rights as a shareholder."
The standard for a fair corporate election was set forth in
Aprahamian v. HBO & Co., 531 A.2d 1204, 1206-07 (Del. Ch. 1987):
The corporate election process, if it is to have any
validity, must be conducted with scrupulous fairness and
without any advantage being conferred or denied to any
candidate or slate of candidates. In the interests of
corporate democracy, those in charge of the election
machinery of a corporation must be held to the highest
standards in providing for and conducting corporate
elections.
Plainly, the Fund's qualifications bylaw is inconsistent with a
fair election. If it is not challenged, it will effectively
preclude the possibility that the Fund's shareholders can elect
directors in any meaningful sense. If it is challenged by a
shareholder via a lawsuit, I am confident that a court would
invalidate it. However, that is an expensive proposition and the
costs would probably be ultimately borne by the Fund's
stockholders. Since the Commission is charged with enforcing the
Act and protecting stockholders, I urge it act now so that they
are spared the unnecessary costs of litigation. In my opinion,
the failure by the Commission to take prompt action to enforce
section 16(a) under these circumstances would be a shameful
abdication of its responsibility to insure that the election of
the Fund's directors is more than "an empty exercise."
Thank you for your prompt attention to this important matter.
Very truly yours,
Phillip Goldstein
President
Kimball & Winthrop, Inc.
General Partner