ASA LIMITED
PADDOCK VIEW
36 WIERDA ROAD WEST
SANDTON 2196, SOUTH AFRICA
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NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
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NOTICE IS HEREBY GIVEN that the Annual General Meeting (the Meeting) of
Shareholders of ASA Limited (the Company) will be held on Friday, February 6,
2004, at 10:00 A.M., New York City time, at the UBS building, 1285 Avenue of the
Americas, 14th Floor, New York, NY, USA, for the purpose of considering and
acting upon the following business:
1. To elect the Company's Board of Directors.
2. To ratify the selection of Ernst & Young LLP and Ernst & Young,
Johannesburg, South Africa as the Company's independent public
accountants for the fiscal year ending November 30, 2004.
3. To receive and consider the Annual Report of the Company for the
fiscal year ended November 30, 2003, including financial statements.
4. Such other business as may properly come before the Meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business on January 30, 2004
as the record date for the determination of the shareholders of the Company
entitled to notice of, and to vote at, the Meeting and any adjournments thereof.
Robert J.A. Irwin
Chairman of the Board and Treasurer
December 30, 2003
Each shareholder entitled to attend and vote at the Meeting is entitled to
appoint one or more proxies, who need not be shareholders, to attend the Meeting
and to vote and speak on his or her behalf. It is important that your shares be
represented at the Meeting in person or by proxy; whether or not you expect to
attend the Meeting, please date, sign and indicate voting instructions on the
accompanying proxy form and mail it promptly in the enclosed addressed envelope.
Any shareholder who submits a completed proxy form is entitled to attend the
Meeting and to vote in person, should that shareholder decide to do so.
PROXY STATEMENT
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SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy form is solicited by the Board of Directors of ASA
Limited (the Company) for use at the Annual General Meeting of the Company's
shareholders (the Meeting) to be held on February 6, 2004. The proxy form may be
revoked by the shareholder at any given time prior to its use at the Meeting by
an instrument in writing delivered to the United States Secretary, c/o LGN
Associates, P.O. Box 269, 140 Columbia Turnpike, Florham Park, N.J. 07932 or
delivered to him at the Meeting.
The expense of preparing, assembling, printing and mailing the form of
proxy and the material used for the solicitation of proxies will be paid by the
Company. In addition to the solicitation of proxies by use of the mails, the
Company will retain D.F. King & Co., Inc., New York, N.Y. to aid in the
solicitation of proxies. Such solicitation will be by mail and telephone. For
these services the Company will pay D.F. King & Co., Inc. a fee of $13,000, plus
reimbursement of its out-of-pocket expenses. The Company will also reimburse
brokers, nominees and fiduciaries who are record owners of shares of the Company
for the out-of-pocket and clerical expenses of transmitting copies of the proxy
material to the beneficial owners of such shares. The approximate mailing date
of the proxy statement and form of the proxy will be December 30, 2003.
VOTING AT THE MEETING
Only shareholders of record at the close of business on January 30, 2004
will be entitled to vote except that a person who at least 48 hours before the
Meeting satisfies the directors that he has the right to transfer shares into
his name in consequence of the death or bankruptcy of any shareholder of record
shall be entitled to vote such shares. Proof of any such right should be
presented to the United States Secretary, c/o LGN Associates, P.O. Box 269, 140
Columbia Turnpike, Florham Park, N.J. 07932. There are 9,600,000 shares of the
Company outstanding, each of which is entitled to one vote. Each valid proxy
received in time will be voted at the Meeting in accordance with the
instructions on the proxy form. If no instructions are indicated and the
shareholder does not appoint his own proxy, the proxies appointed by the
Company's Board of Directors and named in the enclosed proxy form will vote in
favor of each proposal. If no instructions are indicated, and the shareholder
appoints his own proxy, the proxy may vote as he/she thinks fit.
The Company does not know of any beneficial owner of more than five percent
of the Company's outstanding shares.
The Annual Report of the Company for the fiscal year ended November 30,
2003, including financial statements, accompanies this proxy statement and will
also be mailed to each person who becomes a registered shareholder of the
Company on or before January 30, 2004.
QUORUM AND REQUIRED VOTING
The South African Companies Act No. 61 of 1973 (the Companies Act) and the
Company's organizational documents require that three shareholders entitled to
vote at the Meeting be present personally or if the shareholder is a body
corporate, represented, to constitute a quorum. Thus the Meeting cannot take
place on its scheduled date if three such shareholders are not present
personally or represented, as the case may be. If, within half an hour from the
time scheduled for the Meeting, a quorum of shareholders is not present, the
Meeting shall stand adjourned to the same day the next week at the same time and
place, or to such other day, time and place as the directors may by notice to
the shareholders appoint. If a quorum is present but sufficient votes in favor
of any of the items are not received the Chairman of the Meeting or any
shareholder who is present or represented and entitled to vote at the Meeting
may propose one or more adjournments of the Meeting to permit further soliciting
of proxies from the Company's shareholders. Any such adjournment will require
the affirmative vote of the holders of a majority of the shares that are
represented (in person or by proxy) at the Meeting to be adjourned. If the
persons named in the enclosed proxy form are appointed as proxies, such proxies
will vote in favor of any such adjournment if they determine that such
adjournment and additional solicitation are reasonable and in the interest of
the shareholders.
The election of directors and the ratification of the selection of
independent public accountants each requires the affirmative vote of a majority
of the shares represented at the Meeting, whether in person or by proxy.
Therefore, abstentions will have the effect of votes against those proposals.
"Broker non-votes" (i.e., shares held by brokers or nominees as to which (i)
instructions have not been received from the beneficial owner or persons
entitled to vote and (ii) the broker or nominee does not have discretionary
voting power on a particular matter) are not expected to occur at the meeting
because the proposals are considered routine matters, therefore, brokers and
nominees have discretionary voting power on these matters.
PROPOSAL 1: ELECTION OF DIRECTORS
Unless contrary instructions are given, if the persons named in the
enclosed proxy form are appointed as a proxy, such persons will vote such proxy
form for the election of the nominees listed below to serve as directors of the
Company until the next Annual General Meeting of Shareholders. Each nominee was
elected to serve as a director of the Company at the Annual General Meeting of
Shareholders held on February 27, 2003. Each nominee has consented to serve if
elected. In the event that any of the nominees is unable or declines to serve as
a director, an event which the management of the Company does not anticipate,
proxy forms may be voted at the Meeting for the election of another person in
his stead. The following is a list of each nominee, their age, address,
principal occupations and present positions, including any affiliations with the
Company, the length of service to the Company and any other directorships held.
POSITION, TERM OF OFFICE(2) PRINCIPAL OCCUPATION
NAME, ADDRESS(1) AND AGE AND LENGTH OF TIME SERVED DURING PAST FIVE YEARS OTHER DIRECTORSHIPS
-------------------------- --------------------------- -------------------------- --------------------------
INTERESTED DIRECTORS*:
Robert J.A. Irwin, 76 Chairman of the Board Chairman of the Board Former director,
since 1993; Treasurer since 1993; Treasurer President and
since 1999; since 1999; Chief Executive
Director since Director since Officer of Niagara
1987 1987 Share Corporation.
Chester A. Crocker, 62 Director since February James R. Schlesinger Director of: Ashanti
1996; United States Professor of Strategic Goldfields, Ltd.; First
Secretary since Studies, School of Foreign Africa Holdings Ltd.
1999 Service, Georgetown and Modern Africa
University; President Growth & Income Fund
of Crocker Group (private equity fund);
(consultants). Chairman and Director of
United States Institute
of Peace.
Ronald L. McCarthy, 70 Director and Managing Director and Managing None
Director since 1988; Director of the Company
South African Secretary since 1988; South African
since 2001 Secretary since 2001
INDEPENDENT DIRECTORS:
Henry R. Breck, 66 Director since 1996 Chairman and director of Director of Butler
Ark Asset Management Capital Corp.
Co., Inc. (registered
investment adviser)
Harry M. Conger, 73 Director since 1984 Chairman and CEO Director of Apex Silver
Emeritus of Homestake Mines (silver mining
Mining Company company).
Joseph C. Farrell, 68 Director since 1999 Former Chairman, President Director of
and CEO of The Universal Corporation.
Pittston Company
(mineral products,
transportation and
security services)
2
POSITION, TERM OF OFFICE(2) PRINCIPAL OCCUPATION
NAME, ADDRESS(1) AND AGE AND LENGTH OF TIME SERVED DURING PAST FIVE YEARS OTHER DIRECTORSHIPS
-------------------------- --------------------------- -------------------------- --------------------------
James G. Inglis, 59 Director since 1998 Chairman of Melville Director of Harding
Douglas Investment International Investments.
Management (Pty) Ltd.
since 1997.
Malcolm W. MacNaught, 66 Director since 1998 Former Vice President and Director of Meridian
Portfolio Manager at Gold Corporation.
Fidelity Investments.
Robert A. Pilkington, 58 Director since 1979 Investment banker and Director of Avocet
Managing Director of Mining PLC.
UBS Securities, LLC or
predecessor companies
since 1985.
A. Michael Rosholt, 83 Director since 1982 Chairman of the National Former Chairman of
Business Initiative Barlow Rand Limited
(South Africa), a (financial, industrial and
non-profit organization. mining corporation).
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(1) The address for each director is c/o LGN Associates, P.O. Box 269, Florham
Park, NJ 07932.
(2) Each director serves as a director of the Company until the next Annual
General Meeting of Shareholders.
* An "interested person" of the Company, as such term is defined in the
Investment Company Act of 1940, by reason of being an officer of the
Company.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of November 30, 2003
regarding the beneficial ownership of the Company's shares by each director,
each executive officer and all directors and all executive officers as a group,
including the dollar range of the value of equity securities of the Company
beneficially owned by each director. The executive officers of the Company are
also directors of the Company.
NAME OF BENEFICIAL AMOUNT AND NATURE DOLLAR RANGE OF
OWNER OF BENEFICIAL OWNERSHIP (1)(2) SHARE OWNERSHIP
------------------------- ------------------------------ ---------------------
INTERESTED DIRECTORS:
Robert J.A. Irwin 3,000 Over $100,000
Ronald L. McCarthy* None None
Chester A. Crocker 400 $10,001-$50,000
INDEPENDENT DIRECTORS:
Henry R. Breck 1,000 $10,001-$50,000
Harry M. Conger 1,100 $50,001-$100,000
Joseph C. Farrell 1,000 $10,001-$50,000
James G. Inglis* None None
Malcolm W. MacNaught 1,000 $10,001-$50,000
Robert A. Pilkington 3,000 Over $100,000
A. Michael Rosholt* None None
All Directors and
Executive Officers as
a group 10,500
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* As residents of South Africa, Messrs. McCarthy, Inglis and Rosholt are
prohibited by the Company's organizational documents from owning any shares
of the Company.
(1) Each individual has sole voting and investment power over the shares shown
opposite his name except that Mr. Irwin has shared voting and investment
power over 142 shares owned by his wife.
(2) The shares shown for each individual and for all directors and executive
officers as a group constituted less than 1% of the Company's outstanding
shares.
3
Required Vote: The election of Directors requires the affirmative vote
of a majority of the shares represented at the meeting.
The Directors unanimously recommend that you vote FOR Proposal No. 1.
The Board of Directors has an Audit Committee, a Compensation Committee, an
Ethics Committee and a Nominating Committee.
The Audit Committee consists of Messrs. MacNaught (Chairman), Pilkington
and Rosholt, each of whom is independent as defined in the New York Stock
Exchange's listing standards. The Audit Committee acts pursuant to a written
charter which is attached as Exhibit A. The responsibilities of the Audit
Committee include overseeing (i) the Company's accounting and financial
reporting policies and practices, (ii) the Company's internal control over
financial reporting and procedures and (iii) the integrity, quality and
objectivity of the Company's financial statements and the audit thereof. The
Audit Committee is directly responsible for the selection (subject to
ratification by a majority of the independent directors and by the
shareholders), compensation, oversight and, when appropriate, termination of the
Company's independent auditors, subject to the approval of the shareholders. The
Audit Committee met following the Company's fiscal year-end to review the
audited financial statements of the Company. Attached as Exhibit B is the report
of the Audit Committee regarding the audited financial statements.
The Compensation Committee consists of Messrs. Conger (Chairman), Inglis
and Pilkington. The responsibilities of the Compensation Committee include
reviewing and making recommendations to the Board of Directors regarding
compensation to be provided to officers and directors.
The Ethics Committee consists of Messrs. Farrell (Chairman), Breck and
Crocker. The Ethics Committee is responsible for enforcing compliance by
directors, officers and certain other persons with the Company's Code of Ethics
adopted in accordance with Rule 17j-1 under the Investment Company Act of 1940.
The Nominating Committee consists of Messrs. Pilkington (Chairman), Conger
and Rosholt. The Nominating Committee is responsible for nominating individuals
to serve as Directors of the Board and recommending Directors to serve on
Committees of the Board.
INFORMATION REGARDING THE COMPANY'S PROCESS FOR NOMINATING
DIRECTOR CANDIDATES
Nominating Committee Charter. The Nominating Committee does not currently
have a written charter. The Board has asked that a written charter be prepared
for the Committee.
Shareholder Communications. The Nominating Committee will consider nominees
recommended by shareholders; shareholders may send resumes of recommended
persons to the Chairman-Nominating Committee of ASA Limited c/o LGN Associates,
P.O. Box 269, Florham Park, NJ 07932. No nominee recommendation has been
received from a shareholder within the past 120 days.
Nominee Qualifications. While there is no formal list of qualifications,
the Nominating Committee considers, among other things, whether prospective
nominees have distinguished records in their primary careers, unimpeachable
integrity, and substantive knowledge in areas important to the Board's
operations, such as a background in gold and other precious metals, finance,
securities law, the workings of the securities markets, or investment advice.
The Committee also considers whether the prospective candidates' workloads would
allow them to attend the vast majority of Board meetings, be available for
service on Board committees, and devote the additional time and effort necessary
to keep up with Board matters and the rapidly changing regulatory environment in
which the Company operates. Different substantive areas may assume greater or
lesser significance at particular times, in light of the Board's present
composition and the Committee's (or the Board's) perceptions about future issues
and needs.
Identifying Nominees. The Nominating Committee considers prospective
candidates from any reasonable source. The Committee initially evaluates
prospective candidates on the basis of their resumes, considered in light of the
criteria discussed above. Those prospective candidates that appear likely to be
able to fill a significant need of the Board would be contacted by a Committee
member by telephone to discuss the position; if there appeared to be sufficient
interest, an in-person meeting with one or more Committee members would be
arranged. If the Committee, based on the results of these contacts, believed it
had identified a viable candidate, it would air the matter with the full group
of independent Board members for input. Any request by management to meet with
the prospective candidate would be given appropriate consideration.
4
DIRECTOR ATTENDANCE AT MEETINGS
Although the Company does not have a policy on director attendance at the
Annual General Meetings of Shareholders, directors are encouraged to do so. Due
to a late scheduling change by the Company, only 3 directors were able to attend
the February 27, 2003 Annual General Meeting. The Annual General Meeting held on
February 1, 2002 was attended by 9 of the 10 directors of the Company.
During the fiscal year ended November 30, 2003 there were seven meetings of
the Board of Directors, four meetings of the Audit Committee, one meeting of the
Compensation Committee and three meetings of the Ethics Committee. Each director
attended 75% or more of meetings of the Board of Directors and the Committees on
which he served. The Nominating Committee was established subsequent to the end
of the fiscal year ended November 30, 2003.
EXECUTIVE OFFICERS
The current executive officers of the Company are Mr. Irwin, who has been
Chairman of the Board since 1993 and Treasurer since 1999, Mr. McCarthy, who has
been Managing Director since 1988 and South African Secretary since 2001 and Mr.
Crocker who has been United States Secretary since 1999. Executive Officers are
elected at the first Board of Directors' meeting after each annual meeting of
shareholders to serve for the ensuing year.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company does not know of any director, officer or beneficial owner of
more than 10% of the Company's shares who failed to file on a timely basis,
during the fiscal year ended November 30, 2003, reports required by Section
16(a) of the Securities Exchange Act of 1934.
ASA EDUCATIONAL TRUST
The ASA Educational Trust (the Trust) was formed by a Deed of Trust between
the Company and the Trust in 1988. The purpose of the Trust is to assist in the
education and training of students in South Africa through the granting of
scholarships, bursaries and/or stipends for use at institutions for secondary
and tertiary education.
During the fiscal year ended November 30, 2003, the Company contributed
$117,300 to the Trust.
DIRECTOR/OFFICER COMPENSATION
Each non-South African director receives an annual fee of $20,000 for his
services as a director and a fee of $1,000 for each Board meeting that he
attends. Each South African director receives the rand equivalent of $20,000 as
an annual fee for his services as a director and the rand equivalent of $2,000
for each Board meeting that he attends. In addition, directors receive a fee of
$1,000 for each committee meeting that they attend. The Chairman of the Audit
Committee receives a meeting fee of $3,000. The Company pays to any retired
director who served as a director for at least twelve years an annual retirement
benefit equal to 75% of the annual directors' fee from time to time in effect.
Directors retiring after attaining the age of 70 are entitled to such retirement
benefit for life; directors retiring prior to attaining such age are entitled to
such retirement benefit for the lesser of life or the number of years they
served as a director.
5
A summary of the compensation and benefits for the directors, and for each
of the officers having aggregate compensation from the Company for the fiscal
year ended November 30, 2003 in excess of $60,000, is shown below:
PENSION OR
RETIREMENT
BENEFITS ESTIMATED TOTAL
AGGREGATE ACCRUED AS ANNUAL COMPENSATION
COMPENSATION PART OF BENEFITS FROM COMPANY
FROM COMPANY UPON PAID FOR
NAME OF PERSON & POSITION COMPANY EXPENSES(1) RETIREMENT(2) DIRECTORS
---------------------------------------- ------------ ------------- ------------- -------------
INTERESTED DIRECTORS:
Robert J.A. Irwin, $ 316,450 $ 41,562 $ 60,000 $ 25,750
Chairman, Chief Executive
Officer, Treasurer and Director
Ronald L. McCarthy, $ 98,750 -- $ 15,000 $ 28,750
Managing Director,
South African Secretary
and Director
Chester A. Crocker, $ 27,750 -- $ 15,000 $ 27,750
United States Secretary
and Director
INDEPENDENT DIRECTORS:
Henry R. Breck, $ 28,750 -- $ 15,000 $ 28,750
Director
Harry M. Conger, $ 24,750 -- $ 15,000 $ 24,750
Director
Joseph C. Farrell, $ 28,750 -- $ 15,000 $ 28,750
Director
James G. Inglis, $ 27,750 $ 15,000 $ 27,750
Director
Malcolm W. MacNaught, $ 34,750 -- $ 15,000 $ 34,750
Director
Robert A. Pilkington, $ 29,750 -- $ 15,000 $ 29,750
Director
A. Michael Rosholt, $ 31,750 $ 15,000 $ 31,750
Director
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(1) In 1994, the Company entered into a supplemental non-qualified pension
agreement with its Chairman. Under the terms of the agreement, the Company
agreed to credit $25,000 per year for five years, beginning December 1,
1993, to a Supplemental Pension Account with interest credited at an annual
rate of 3.5%. The Board of Directors approved increases in the amount of
the annual credit as follows: $28,125 in May 1999; $31,250 in February 2002
and $45,000 in March 2003. As a result, the Company recorded an expense
amount of $41,562 for the year ended November 30, 2003. The Company has
also recorded an asset in the amount of $145,000 related to the retirement
obligation liability of $315,900. The amount shown for Mr. Irwin includes
the retirement benefits payable to him as a director and the amounts
payable to him under the supplemental pension agreement for his benefit by
the Company.
(2) All directors qualify to receive retirement benefits if they have served
the Company for at least twelve years prior to retirement. The amount shown
for each director is the total benefits which are or would be payable to
such person assuming such director had served twelve years as of November
30, 2003.
6
PROPOSALS 2a AND b: RATIFICATION OF THE SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has selected Ernst & Young LLP and Ernst & Young,
Johannesburg, South Africa as the Company's independent public accountants to
audit the accounts of the Company for the fiscal year ending November 30, 2004.
The Board of Directors, including a majority of independent directors, has
ratified their selection and has directed the submission of their selection to
shareholders for ratification. Ernst & Young LLP and Ernst & Young,
Johannesburg, South Africa have no direct or indirect interest in the Company,
except in their capacity as the Company's independent public accountants.
Ernst & Young LLP was selected as the Company's independent public
accountant on July 25, 2002 to replace Arthur Andersen LLP. The Company's
replacement of Arthur Andersen LLP and the selection of Ernst & Young LLP as its
independent public accountant were recommended by the Company's Audit Committee
and were approved by the Company's Board of Directors.
The report on the financial statements audited by Arthur Andersen for the
year ended November 30, 2001 for the Company did not contain an adverse opinion
or disclaimer of opinion, and was not qualified or modified as to uncertainty,
audit scope or accounting principles. There were no disagreements between the
Company and Arthur Andersen on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures, which
disagreements, if not resolved to the satisfaction of Arthur Andersen, would
have caused it to make reference to the subject matter of the disagreements in
connection with its reports on the financial statements of such years.
During the fiscal year ended November 30, 2003, fees billed or expected to
be billed by Ernst & Young LLP or Ernst & Young, Johannesburg, South Africa for
the audit of the Company's financial statements for such year total $97,000 and
$15,000 for tax services in connection with tax planning and review. An
additional $25,000 in audit related fees is expected to be billed for services
in connection with the review of documents filed with the SEC related to the
relocation of the Company from South Africa to Bermuda. No fees were billed or
are expected to be billed for financial information systems design and
implementation or for any other fees.
The Company's Audit Committee reviewed the services provided by Ernst &
Young LLP and Ernst & Young, Johannesburg, South Africa and determined that
Ernst & Young LLP and Ernst & Young, Johannesburg, South Africa are each
independent of the Company.
A representative of Ernst & Young LLP is expected to be present at the
Meeting to respond to appropriate questions and will be given the opportunity to
make a statement if he or she desires to do so. A representative of Ernst &
Young, Johannesburg, South Africa will not be present at the meeting but will be
available in the event any matter requires his or her attention.
Required Vote: The ratification of the selection of the Company's independent
public accountants requires the affirmative vote of a majority of the shares
represented at the meeting.
The Directors unanimously recommend that you vote FOR Proposals No. 2a and b.
SHAREHOLDER PROPOSALS
In order for a shareholder proposal to be included in the Proxy Statement
and Proxy for the 2005 Annual Meeting the proposal must be received no later
than September 1, 2004.
In the case of a shareholder who wishes to present a proposal for
consideration at the 2005 Annual Meeting without inclusion of such proposal in
the Company's Proxy Statement and Proxy, unless notice of such proposal is
received by the Company no later than November 15, 2004, management proxies
would be allowed to use their discretionary authority to vote on such proposal.
OTHER MATTERS
The management of the Company knows of no other business which will be
presented for consideration at the Meeting, but should any other matters
requiring a vote of shareholders arise, the persons named in the enclosed proxy
form will, if appointed as proxy, vote thereon in accordance with their best
judgment.
ASA Limited
Robert J.A. Irwin
Chairman of the Board and Treasurer
December 30, 2003
7
EXHIBIT A
ASA LIMITED
AUDIT COMMITTEE CHARTER
A. PURPOSE
The Audit Committee has been created to assist the Board of Directors in its
oversight and monitoring of:
1. the Company's accounting and financial reporting policies and
practices;
2. the Company's internal control over financial reporting, and, as
appropriate, the internal control over financial reporting of certain
of the Company's service providers;
3. the integrity, quality and objectivity of the Company's financial
statements and the independent audit thereof;
4. the Company's independent auditors, including their qualifications,
independence and performance;
5. the Company's compliance with legal and regulatory requirements.
Although the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements are complete and accurate and
are in accordance with generally accepted accounting principles. In carrying out
its responsibilities, the members of the Committee shall be entitled to rely, in
good faith, on (1) the integrity of those persons and organizations inside and
outside the Company from which the Committee receives information and (2) the
accuracy of the financial and other information provided to the Committee by
such persons or organizations.
The Committee's function is oversight. Management is responsible for maintaining
appropriate accounting and financial reporting principles and policies and
internal controls and procedures designed to ensure compliance with accounting
standards and applicable laws and regulations. The independent auditors are
responsible for planning and carrying out a proper audit. The independent
auditors shall report directly to the Committee and are ultimately accountable
to the Board of Directors and the Committee.
B. COMMITTEE MEMBERSHIP
1. Number. The Committee shall be comprised of at least three members of
the Board of Directors.
2. Independence. Each member of the Committee shall meet the independence
requirements of the New York Stock Exchange ("NYSE") and Section
10A(m)(3) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), and the applicable rules thereunder. No member of
the Committee shall be an "interested person" (as defined in Section
2(a)(19) of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the rules thereunder) of the Company.
3. Financial Literacy. Each member of the Committee shall be financially
literate, as such qualification is determined by the Board of
Directors in its business judgment (or shall become financially
literate within a reasonable period of time after his or her
appointment). At least one member of the Committee shall have
accounting or related financial management expertise, as such
qualification is determined by the Board of Directors in its business
judgment. The Board of Directors shall determine whether any members
of the Committee are "audit committee financial experts" as defined by
applicable Securities and Exchange Commission ("SEC") rules.
4. Chairman. Unless the Board of Directors appoints a Chair of the
Committee, the Committee shall appoint a Chair.
5. Compensation. The compensation of Committee members shall be set by
the Board of Directors. No member may accept, directly or indirectly,
any consulting, advisory or other compensatory fee from the Company
(other than fees for serving on the Board of Directors or any
committee thereof). The receipt of a fixed amount of pension or other
form of deferred compensation from the Company for prior service
(provided such compensation is not contingent in any way on continued
service) is not considered a compensatory fee. The requirement that
such amount be fixed does not preclude customary objectively
determined adjustment provisions such as cost of living adjustments.
A-1
6. Selection and Removal. Members of the Committee shall be appointed by
the Board of Directors.
C. MEETINGS AND PROCEDURES
1. Meetings. The Committee shall meet as often as it determines is
appropriate to carry out its responsibilities under this Charter, but
at least twice annually. Meetings may be called by the Chair of the
Committee or by a majority of the Committee members. Meeting shall be
chaired by the Chair of the Committee or, in the Chair's absence, by a
member chosen by the Committee. Meetings may be conducted with members
present in person or by telephone or other communications facilities
which permit all persons participating in the meeting to hear or
communicate with each other simultaneously. The Chair of the
Committee, in consultation with the other Committee members, shall set
meeting agendas and the places and times of the meetings consistent
with this Charter. A majority of the members of the Committee shall
constitute a quorum for the transaction of business. When more than
two members are present, the act of a majority of the members present
at a meeting at which a quorum is present shall be the act of the
Committee, and when only two members are present, the unanimous vote
of the two members shall constitute the act of the Committee.
The Committee shall keep minutes of its meetings and provide copies of
such minutes to the full Board for its review.
The Committee shall meet periodically with management and with the
independent auditors in separate executive sessions.
The Committee may request any officer or employee of the Company or
representatives of the Company's service providers, outside counsel or
independent auditors to attend a meeting of the Committee or to meet
with any members of, or consultants to, the Committee.
2. Subcommittees. The Committee may delegate its authority to one or more
subcommittees (including a subcommittee comprised of a single member)
when it deems appropriate.
3. Independent Advisers. The Committee shall have the authority, to the
extent it deems necessary or appropriate and without seeking approval
of the full Board, to retain special legal, accounting or other
advisers.
4. Funding. The Company shall provide appropriate funding, as determined
by the Committee, for payment of compensation to the independent
auditor for the purpose of rendering or issuing an audit report or
rendering other audit, review or attest services and to any advisers
retained by the Committee and for payment of ordinary administrative
expenses of the Committee that are necessary or appropriate in
carrying out its duties.
D. AUTHORITY AND RESPONSIBILITIES
In addition to any other duties and responsibilities which may be assigned from
time to time by the Board, the Committee shall be responsible for the following
matters:
Oversight of Independent Auditors
1. Selection and Termination. The Committee shall be directly responsible
for selecting, compensating, overseeing, evaluating and, when
appropriate, terminating the Company's independent auditors (subject
to the applicable requirements of the Investment Company Act and the
rules and orders thereunder, including those pertaining to approval by
disinterested directors and ratification by shareholders).
2. Independence. The Committee shall review and evaluate the independent
auditors' independence. In connection with this review and evaluation,
the Committee shall at least annually obtain and review a report by
the independent auditors describing all relationships between the
independent auditors and the Company, including the disclosures
required by Independence Standards Board Standard No. 1. The Committee
shall discuss with the independent auditors any disclosed
relationships or services that might impact the objectivity and
independence of the auditors. The Committee shall consider whether:
a. the independent auditors should be rotated, and
b. the lead audit or reviewing partner should be rotated more
frequently than is required by law and applicable SEC rules.
3. Qualifications. The Committee shall review and evaluate the
independent auditors' qualifications, including considering whether
the independent auditors' quality controls are adequate. In connection
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with this review and evaluation, the Committee shall at least annually
obtain and review a report by the independent auditors describing:
a. the independent auditors' internal quality control
procedures; and
b. any material issues raised by (1) the most recent internal
quality - control review, or peer review, of the firm, or
(2) any inquiry or investigation by governmental or
professional authorities within the preceding five years
regarding one or more independent audits carried out by the
firm, and any steps taken to deal with any such issues.
The Committee shall review and evaluate the lead partner of the
independent auditor team.
4. Pre-approval of Audit and Non-audit Services. Except as provided in
the next sentence, the Committee shall have the sole authority to
pre-approve all audit and non-audit services to be provided by the
independent auditors, subject to the deminimis exceptions for
non-audit services described in Section 10A(i)(1)B of the Exchange Act
which are approved by the Committee prior to the completion of the
audit. If the Committee has delegated its pre-approval authority to a
subcommittee, any decision of the subcommittee shall be presented to
the full Committee at its next scheduled meeting. Pre-approval of
audit and non-audit services shall not be required if the engagement
to render the services is entered into pursuant to pre-approved
policies and procedures established by the Committee, provided the
Committee is informed of each such service.
5. Compensation. The Committee shall approve all audit and non-audit fees
of the independent auditor.
6. Hiring of Employees of Independent Auditors. The Committee shall
recommend to the full Board policies for the Company's hiring of
current or former employees of the independent auditors who
participated in any capacity in the audit of the company.
7. Oversight. The independent auditors shall report directly to the
Committee and the Committee shall be directly responsible for
oversight of the work of the independent auditors, including
resolution of disagreements between the Company's management and the
independent auditors regarding financial reporting. In connection with
its oversight role, the Committee shall:
a. review and discuss with the independent auditors the
planning, scope and staffing of the independent auditors'
audits; and
b. obtain assurance from the independent auditors that Section
10A of the Exchange Act has not been implicated.
Financial Statement and Disclosure Matters
8. Review and Discussion of Audited Financial Statements. The Committee
shall review the Company's financial statements sent to shareholders
and filed with the SEC. In connection with the review of the annual
audited financial statements the Committee shall:
a. Discuss with management and the independent auditors:
. significant issues regarding accounting principles and
financial statement presentations, including any
significant changes in the Company's selection or
application of accounting principles;
. any major issues as to the adequacy of the Company's
internal control over financial reporting and any steps
adopted in light of significant or material control
deficiencies;
. any analyses or other communications (whether written
or oral) prepared by management and/or the independent
auditors setting forth significant financial reporting
issues and judgments made in connection with the
preparation of the financial statements, including the
development, selection and disclosure of critical
accounting policies and analysis of the effect of
alternative assumptions, estimates or GAAP methods on
the Company's financial statements;
. the effect of regulatory and accounting initiatives on
the Company's financial statements;
. related-party transactions; and
. any correspondence with regulators or governmental
agencies and any published reports which raise material
issues regarding the Company's financial statements or
accounting policies.
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b. Review the bases of accounting and valuation for marketable
securities and, when applicable, the method of determining
fair value for securities for which a market price is not
available.
c. Discuss with the independent auditors the matters required
to be discussed by Statement of Auditing Standards No. 61
relating to the conduct of the audit, including any
difficulties encountered in the course of the audit work,
any restrictions on the scope of activities or access to
requested information, and any significant disagreements
with management.
d. Discuss with the Company's legal counsel legal matters that
may have a material effect on the financial statements, the
Company's compliance policies and any material reports or
inquiries received from regulators or governmental agencies.
e. In conjunction with the Chairman of the Board, review the
Company's internal controls over financial reporting and
disclosure controls and procedures, including whether there
are any significant deficiencies or material weaknesses in
the design or operation of such internal control over
financial reporting, any corrective action taken with regard
to such deficiencies or weaknesses and any fraud involving
management or other employees with a significant role in
such internal control over financial reporting.
f. Recommend to the full Board whether the annual audited
financial statements should be included in the Company's
annual report to be sent to shareholders and filed with the
SEC.
g. Prepare the report required by the rules of the SEC to be
included in the Company's annual proxy statement.
h. Discuss generally the Company's earnings releases with
officers of the Company.
9. Procedures for Complaints - the Committee shall:
a. Establish procedures for:
. the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal
accounting controls or auditing matters; and
. the confidential, anonymous submission by employees of
the Company and its service providers of concerns
regarding questionable accounting or auditing matters.
b. Review any significant complaints regarding accounting,
internal accounting controls or auditing matters received
pursuant to such procedures.
10. Risk Management. The Committee shall discuss with management the
Company's major financial risk exposure and the steps management has
taken to monitor and control such exposures, including the Company's
risk assessment and risk management policies.
E. REPORTING TO THE BOARD
1. Reports to the Board. The Committee shall make regular reports to the
full board. Such reports shall include a review of any issues that
arise with respect to the quality or integrity of the Company's
financial statements, the Company's compliance with legal and
regulatory requirements, the qualifications, independence and
performance of the Company's independent auditors and any other
matters that the Committee deems appropriate or is requested to be
included by the Board.
2. Charter. The Committee shall review and reassess the adequacy of this
Charter at least annually and recommend any proposed changes to the
Board for approval.
3. Self-evaluation. The Committee shall evaluate its own performance
annually.
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EXHIBIT B
AUDIT COMMITTEE REPORT
ASA LIMITED
The Audit Committee of the Board of Directors of ASA Limited (the Company)
has reviewed the Company's audited financial statements for the fiscal year
ended November 30, 2003. In conjunction with its review, the Audit Committee has
met with the management of the Company to discuss the audited financial
statements. In addition, the Audit Committee has discussed with the Company's
independent auditors, Ernst & Young LLP, the matters required pursuant to SAS 61
and has received the written disclosures and the letter from Ernst & Young LLP
required by Independence Standards Board Standard No. 1. The Audit Committee has
also discussed with Ernst & Young LLP the independence of Ernst & Young LLP.
Based on this review and discussion, the Audit Committee recommended to the
Company's Board of Directors that the audited financial statements be included
in the Company's Annual Report for the fiscal year ended November 30, 2003.
This report has been approved by all of the members of the Audit Committee
(whose names are listed below), each of whom has been determined to be
independent as defined in the New York Stock Exchange's listing standards.
Malcolm W. MacNaught (Chairman)
Robert A. Pilkington
A. Michael Rosholt
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