DEF 14A 1 ddef14a.htm DEFINITIVE PROXY STATEMENT Definitive Proxy Statement

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No.                     )

 

Filed by the Registrant    x

 

Filed by a Party other than the Registrant    ¨

 

Check the appropriate box:

 

  

¨         Preliminary Proxy Statement

  

¨         Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

x        Definitive Proxy Statement

 

  

¨         Definitive Additional Materials

 

  

¨         Soliciting Material Pursuant to §240.14a-12

  

 

The Greater China Fund, Inc.

(Name of Registrant as Specified in Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

  Payment   of Filing Fee (Check the appropriate box):

 

  x   No fee required.

 

  ¨   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

  1)   Title of each class of securities to which transaction applies:

 

 

 

  2)   Aggregate number of securities to which transaction applies:

 

 

 

  3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

  4)   Proposed maximum aggregate value of transaction:

 

 

 

  5)   Total fee paid:

 

 

 

  ¨   Fee paid previously with preliminary materials.

 

  ¨   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

  1)   Amount Previously Paid:

 

 

 

  2)   Form, Schedule or Registration Statement No.:

 

 

 

  3)   Filing Party:

 

 

 

  4)   Date Filed:

 

 

THE GREATER CHINA FUND, INC.

c/o Prudential Investments LLC

Gateway Center Three

100 Mulberry Street

Newark, New Jersey 07102

May 15, 2007

To the Stockholders:

The annual meeting of stockholders of The Greater China Fund, Inc. (the “Fund”) is to be held at 11:00 a.m. on June 28, 2007, at the offices of White & Case LLP, 1155 Avenue of the Americas, 40th Floor, New York, New York 10036. Stockholders who are unable to attend this meeting are strongly encouraged to vote by proxy, which is customary in corporate meetings of this kind. A proxy statement regarding the meeting, a proxy card so your vote can be cast at the meeting and a postage prepaid envelope in which to return your proxy card are enclosed.

At the annual meeting, stockholders will (i) elect certain of the Fund’s directors whose terms expire in 2007 and (ii) vote on a proposal to amend the Fund’s fundamental investment restrictions to permit the Fund to purchase and sell stock index futures contracts. There will also be an opportunity to discuss matters of interest to you as a stockholder.

Your Fund’s directors recommend that stockholders re-elect Messrs. Edward Y. Baker, John A. Bult and Jonathan J.K. Taylor, who are standing for election as directors of the Fund.

 

   Respectfully,

LOGO

    LOGO

RONALD G.M. WATT

    RICHARD B. BRADLEY

President

    Chairman of the Board

 

STOCKHOLDERS ARE URGED TO SIGN THE PROXY CARD AND MAIL IT IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE SO AS TO ENSURE A QUORUM AT THE MEETING. THIS IS IMPORTANT REGARDLESS OF HOW MANY SHARES YOU OWN.

 

THE GREATER CHINA FUND, INC.

NOTICE OF

ANNUAL MEETING OF STOCKHOLDERS

To the Stockholders of

THE GREATER CHINA FUND, INC.:

Notice is hereby given that the annual meeting of the stockholders of The Greater China Fund, Inc. (the “Fund”) will be held at the offices of White & Case LLP, 1155 Avenue of the Americas, 40th Floor, New York, New York 10036 on June 28, 2007, at 11:00 a.m. for the following purposes:

(1) To elect three Class I directors to serve for a term expiring on the date of the annual meeting of stockholders in 2010 or until their respective successors shall have been duly elected and qualified.

(2) To approve an amendment to the Fund’s fundamental investment restrictions to permit the Fund to purchase and sell stock index futures contracts.

(3) To consider and act upon such other business as may properly come before the meeting or any adjournments thereof.

Holders of record of the shares of common stock of the Fund at the close of business on April 12, 2007, are entitled to vote at the meeting or any adjournments thereof.

By order of the Board of Directors,

LOGO

DEBORAH A. DOCS

Secretary

May 15, 2007

 

IMPORTANT—WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE AND IS INTENDED FOR YOUR CONVENIENCE. YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD MAY SAVE THE FUND THE NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO ENSURE A QUORUM AT THE ANNUAL MEETING. IF YOU CAN ATTEND THE MEETING AND WISH TO VOTE YOUR SHARES IN PERSON AT THAT TIME, YOU WILL BE ABLE TO DO SO.

 

PROXY STATEMENT

GENERAL

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of The Greater China Fund, Inc. (the “Fund”) for use at the annual meeting of stockholders, to be held at the offices of White & Case LLP, 1155 Avenue of the Americas, 40th Floor, New York, New York 10036 on June 28, 2007, at 11:00 a.m., and at any adjournments thereof.

This proxy statement, the notice of annual meeting and the proxy card will first be mailed to stockholders on or about May 21, 2007. All properly executed proxies received in time for the meeting will be voted as specified in the proxy or, if no specification is made, according to the recommendation of the Fund’s Board of Directors for the proposal referred to in the proxy statement. Any stockholder giving a proxy has the power to revoke it by mail (addressed to Deborah A. Docs, Secretary to the Fund, c/o Prudential Investments LLC, Gateway Center Three, 100 Mulberry Street, Newark, New Jersey, 07102) or in person at the meeting by executing a superseding proxy or by submitting a notice of revocation to the Fund.

Holders of record of the common stock of the Fund at the close of business on April 12, 2007, will be entitled to one vote per share on all business of the meeting and any adjournments. There are 16,828,042 shares of common stock outstanding as of the date of this proxy statement. Abstentions and “broker non-votes” (as defined below) are counted for purposes of determining whether a quorum is present, but do not represent votes cast with respect to any proposal. “Broker non-votes” are shares held by a broker or nominee for which an executed proxy is received by the Fund, but are not voted as to one or more proposals because instructions have not been received from the beneficial owners or persons entitled to vote and the broker or nominee does not have discretionary voting power.

PROPOSAL 1. ELECTION OF CLASS I DIRECTORS

The Fund’s Board of Directors has been divided into three classes, the term of one of which expires each year. The terms of Messrs. Edward Y. Baker, John A. Bult and Jonathan J.K. Taylor, constituting Class I directors, expire at the 2007 annual meeting of stockholders.

Persons named in the accompanying form of proxy intend, in the absence of contrary instructions, to vote all proxies in favor of the election of the three nominees listed below as directors of the Fund to serve as Class I directors of the Fund for a term expiring on the date of the 2010 annual meeting of stockholders, or until their successors are duly elected and qualified. All nominees have consented to stand for election and to serve if elected. If any such nominee should be unable to serve, an event not now anticipated, the proxies will be voted for such person, if any,

 

1

as shall be designated by the Board of Directors to replace any such nominee. YOUR FUND’S DIRECTORS RECOMMEND THAT STOCKHOLDERS VOTE IN FAVOR OF THE ELECTION OF THE NOMINEES LISTED BELOW.

CLASS I

Edward Y. Baker

John A. Bult

Jonathan J.K. Taylor

Required Vote

Election of each of the listed nominees for director requires the affirmative vote of a plurality of the votes cast at the meeting in person or by proxy, which means that the three nominees receiving the highest number of votes cast will be elected regardless of whether the number of votes received by any such nominee constitutes a majority of the number of votes cast. Your Fund’s directors recommend that stockholders vote in favor of the director nominees.

INFORMATION CONCERNING NOMINEES AND MEMBERS OF THE BOARD OF DIRECTORS

The following table sets forth certain information concerning each of the directors and the nominees for director of the Fund. Each of the nominees is currently a director of the Fund.

Directors considered by the Fund and its counsel to be “interested persons” (as defined in the Investment Company Act of 1940, as amended (the “1940 Act”)) of the Fund or of the Fund’s investment manager, Baring Asset Management (Asia) Ltd. (the “Investment Manager”):

 

Name (Age) and Address

  

Position(s)
Held with
Fund

  

Term of

Office;

Length of

Time Served

  

Principal Occupation(s)

During Past

Five Years; Other

Directorships Held

   Number of
Portfolios in
Fund
Complex
Overseen by
Director

John A. Bult (71)*

PaineWebber International Inc.

1285 Avenue of the Americas

37th Floor

New York, NY 10019

   Director   Director since 1992; term expires 2007   Chairman of PaineWebber International Inc.; Director of The Germany Fund, Inc.; The New Germany Fund, Inc; The Central Europe and Russia Fund, Inc.   1
* Mr. Bult is deemed to be an “interested person” due to his affiliation with affiliates of UBS Securities LLC, 299 Park Avenue, New York, New York 10171, the lead manager of the underwriting syndicate in connection with the initial public offering of the Fund’s shares and the dealer manager in the rights offerings conducted by the Fund in 1994 and 1996.

 

2

Directors considered by the Fund and its counsel not to be “interested persons” (as defined in the 1940 Act):

 

Name (Age) and Address

   

Position(s)

Held with

Fund

   

Term of

Office;

Length of

Time Served

   

Principal Occupation(s)

During Past

Five Years; Other

Directorships Held

   

Number of

Portfolios in

Fund

Complex

Overseen by

Director

Edward Y. Baker (72)

15 Artinger Court

Toronto, Ontario

Canada M3B 1J9

    Chairman of Audit Committee and Director    Director since 1992; term expires 2007   

Investment Consultant; Chairman, Board of Trustees, Rogers Sugar Income Fund; previously President and Chief Executive Officer,

HOOPP Investment Management Limited

and Chief Investment Officer, Hospitals of Ontario Pension Plan

    1

Richard B. Bradley (69)

22 Smith Terrace

London SW3 4DL

England

    Chairman of Board and Director    Director since 1992; term expires 2008   

Director of The

Aberdeen New Dawn Investment Trust

Limited; previously Group Managing

Director of Asia Equity Holdings

    1

John A. Hawkins (64)

HSBC Securities
Services (Guernsey) Limited

Arnold House

St. Julian’s Avenue

St. Peter Port

Guernsey GY1 3NF

Channel Islands

    Director    Director since 1992; term expires 2009   

Previously Executive

Vice President—Private Clients with The Bank of Bermuda Ltd.; Director

of HSBC Investment Solutions; SR Global

Fund Inc.; MW Japan

Fund Ltd.; MW Nippon Fund Ltd.

    1

 

3

Name (Age) and Address

   

Position(s)

Held with

Fund

   

Term of

Office;

Length of

Time Served

   

Principal Occupation(s)

During Past

Five Years; Other

Directorships Held

   

Number of

Portfolios in

Fund

Complex

Overseen by

Director

C. William Maher (45)

LPL Financial Services

9785 Towne Centre Dr.

San Diego, CA 92121

    Director    Director since 2003; term expires 2008   

Managing Director and

Chief Financial Officer of LPL Financial Services; previously Managing

Director of Nicholas Applegate Capital Management

    1

Jonathan J.K. Taylor (63)

Dragon Partners Ltd.

41 Burlington Road

London SW6 4NH

England

    Director   

Director

since 1992;

term expires 2007

   

Chairman and Managing Director of Dragon

Partners Ltd. (consulting

for investment managers); Chairman, Schroder Japan Growth Fund plc;

Director, Onyx Country Estates Limited (family property company); Director, AVK Securities

& Finance Ltd. (Russia); Member, International Advisory Board of Datawind Net Access Corporation

    1

Tak Lung Tsim (60)

T.L. Tsim & Associates Limited

Suite 1001, Century Square

1 D’Aguilar Street

Central

Hong Kong

    Director    Director since 1992; term expires 2009    Principal, T.L. Tsim & Associates Ltd. (macropolitical analysis); Member of Li Po Chun United World College of Hong Kong; Director of Playmates Holdings Limited (toy company)    1

 

4

Executive Officers

The following people are executive officers of the Fund:

 

Name (Age) and Address

  

Position(s)

Held with

Fund

  

Term of

Office;

Length of

Time Served

  

Principal Occupation(s)

During Past

Five Years; Other

Directorships Held

  

Number of

Portfolios in
Fund Complex

Overseen by

Officer

Ronald G.M. Watt (60)

Baring Asset Management

155 Bishopsgate

London EC2M 3XY

England

   President   President since 1998*   Director of Investment Companies of Baring Asset Management Limited   2

Brian Corris (48)

Baring Asset Management

155 Bishopsgate

London EC2M 3XY

England

   Vice President   Vice President since 2007*  

Director of Institutional Group of Barings Asset Management; Joined Baring Asset

Management in 2005; formerly Head of Institutional Pension Funds at Isis Asset Management, previously worked at Citigroup

Asset Management,

Credit Lyonnaise Securities (USA), Indosuez Capital Securities, James Capel

& Co and Barclays de Zoete Wedd Ltd.

   2

Lilian Co (38)

Baring Asset Management (Asia) Limited

Edinburgh Tower,

19th Floor

15 Queens Road Central

Hong Kong

   Vice President   Vice President since 2007*  

Portfolio Manager of Baring Asset

Management (Asia) Limited’s Hong Kong China Fund; previously

at Credit Agricole Asset Management

   1

 

5

Name (Age) and Address

  

Position(s)

Held with

Fund

  

Term of

Office;

Length of

Time Served

  

Principal Occupation(s)

During Past

Five Years; Other

Directorships Held

  

Number of

Portfolios in
Fund Complex

Overseen by

Officer

Robert F. Gunia (60)

Prudential Investments LLC

Gateway Center Three

100 Mulberry Street

Newark, New Jersey 07102

   Vice President   Vice President since 2007*   Chief Administrative Officer (since September 1999) and Executive Vice President (since April 1999) of Prudential Investments LLC; President (since April 1999) of Prudential Investment Management Services LLC; Executive Vice President (since March 1999) and Treasurer (since May 2000) of Prudential Mutual Fund Services LLC; Chief Administrative Officer, Executive Vice President and Director (since May 2003) of AST Investment Services, Inc.   2

Grace C. Torres (47)

Prudential Investments LLC

Gateway Center Three

100 Mulberry Street

Newark, New Jersey 07102

   Vice President   Vice President since 2007*  

Assistant Treasurer (since March 1999) and Senior Vice President (since September 1999) of Prudential Investments; Assistant Treasurer (since May 2003) and Vice President (since June 2005) of AST Investment Services, Inc.; Senior

Vice President and Assistant Treasurer (since May 2003) of Prudential Annuities Advisory Services, Inc.; formerly Senior Vice President (May 2003-June 2005) of AST Investment

Services, Inc.

   1

 

6

Name (Age) and Address

  

Position(s)

Held with

Fund

  

Term of

Office;

Length of

Time Served

  

Principal Occupation(s)

During Past

Five Years; Other

Directorships Held

  

Number of

Portfolios in
Fund Complex

Overseen by

Officer

Jack Benintende (42)

Prudential Investments LLC

Gateway Center Three

100 Mulberry Street

Newark, New Jersey 07102

   Treasurer and Principal Financial and Accounting Officer   Treasurer and Principal Financial and Accounting Officer since 2007*  

Vice President (since June 2000) within Prudential Mutual Fund Administration; formerly Senior Manager within

the investment

management practice of PricewaterhouseCoopers LLP (May 1994-June

2000)

   1

Deborah Docs (49)

Prudential Investments LLC

Gateway Center Three

100 Mulberry Street

Newark, New Jersey 07102

   Chief Legal Officer and Secretary   Chief Legal Officer and Secretary since 2007*  

Vice President and Corporate Counsel (since January 2001) of Prudential; Vice President (since December 1996)

and Assistant Secretary (since March 1999) of PI; formerly Vice President and Assistant Secretary (May 2003-June 2005) of AST Investment Services, Inc.

   2

Valerie Simpson (48)

Prudential Investments LLC

Gateway Center Three

100 Mulberry Street

Newark, New Jersey 07102

   Chief Compliance Officer   Chief Compliance Officer since 2007*   Vice President and Senior Compliance Officer (since March 2006) of Prudential Investments; Vice President—Financial Reporting (since March 2006) for Prudential Life and Annuities Finance   2

 

7

Name (Age) and Address

  

Position(s)

Held with

Fund

  

Term of

Office;

Length of

Time Served

  

Principal Occupation(s)

During Past

Five Years; Other

Directorships Held

  

Number of

Portfolios in
Fund Complex

Overseen by

Officer

Lee Augsburger (47)

Prudential Investments LLC

Gateway Center Three

100 Mulberry Street

Newark, New Jersey 07102

   Deputy Chief Compliance Officer   Deputy Chief Compliance Officer since 2007*   Senior Vice President and Chief Compliance Officer (since April 2003) of PI; Vice President (since November 2000) and Chief Compliance Officer (since October 2000) of Prudential Investment Management, Inc.; Chief Compliance Officer and Senior Vice President (since May 2003) of AST Investment Services, Inc.   2

Peter Parrella (48)

Prudential Investments LLC

Gateway Center Three

100 Mulberry Street

Newark, New Jersey 07102

   Assistant Treasurer   Assistant Treasurer since 2007*   Director within Prudential Mutual Fund Administration; formerly Tax Manager at SSB Citi Fund Management LLC   1
* The President, Treasurer and Secretary each holds office until his or her successor has been duly elected and qualified; all other officers hold office at the discretion of the Board of Directors.

Committees of the Board—Board Meetings

The Board of Directors of the Fund has an Executive Committee, an Audit Committee and a Nominating Committee. The Board does not have a compensation committee.

The Board of Directors of the Fund met five times during the fiscal year ended December 31, 2006. During such period, each director attended at least 75% of the aggregate of all meetings of the Board of Directors and of the committees of the Board on which they served.

Executive Committee

The Board has an Executive Committee consisting of Messrs. Baker, Bradley and Taylor, each of whom is not an “interested person” of the Fund or of the Investment Manager within the

 

8

meaning of Section 2(a)(19) of the 1940 Act (a “noninterested director”). The Executive Committee is authorized to exercise the general powers of the Board of Directors between meetings of the Board. The Executive Committee did not meet during the fiscal period ended December 31, 2006.

Audit Committee

The Board has an Audit Committee consisting of Messrs. Baker, Bradley, Hawkins, Maher and Tsim, each of whom is a noninterested director and meets the “independence” requirements of Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended. The Audit Committee met five times during the fiscal year ended December 31, 2006. The Audit Committee has a charter, a copy of which is available on the Fund’s web site at http://www.greaterchinafund.com.

The function of the Audit Committee is to oversee the Fund’s accounting and financial reporting processes, which includes the selection, retention, compensation and termination of the Fund’s independent registered public accounting firm. In connection therewith, the Audit Committee reviews with management and the Fund’s independent registered public accounting firm, among other things, the scope of the independent registered accounting firm’s audit of the Fund’s financial statements, reviews and discusses the Fund’s annual audited financial statements with management, reviews the independent registered public accounting firm’s required communications regarding the scope and results of the audit, reviews and approves in advance the type of services to be rendered by the independent registered public accounting firm, reviews matters related to the independence of the Fund’s independent registered public accounting firm and in general considers and reports to the Board on matters regarding the Fund’s accounting and financial reporting processes.

In performing its oversight function, at a meeting held on February 20, 2007, the Audit Committee reviewed and discussed the audited financial statements with management of the Fund and the independent auditors and discussed the audit of such financial statements with the independent auditors. The Audit Committee also discussed with the independent auditors the matters required to be discussed by SAS 61 (Codification of Statements on Auditing Standards, AU Section 380). The Audit Committee received the written disclosures and the letter from the independent auditors required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and discussed with the independent auditors their independence.

The members of the Audit Committee are not, and do not represent themselves to be, accountants or auditors by profession or experts in the fields of accounting or auditing, including in respect of auditor independence or internal controls notwithstanding the fact that one or more members may be designated an “audit committee financial expert.” Moreover, the Audit

 

9

Committee relies on and makes no independent verification of the facts presented to it or representations made by management or the independent auditors. Accordingly, the Audit Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate financial reporting principles and policies, or internal controls, designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee’s considerations and discussions referred to above do not provide assurance that the audit of the Fund’s financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles or that the Fund’s auditors are in fact “independent.”

Based on its consideration of the audited financial statements and the discussions and reports referred to above with management and the independent auditors, and subject to the limitations on the responsibilities and role of the Audit Committee set forth in the Audit Committee Charter and those discussed above, the Audit Committee recommended to the Board of Directors of the Fund that the audited financial statements of the Fund be included in the Fund’s annual report to stockholders for the fiscal year ended December 31, 2006.

Edward Y. Baker

Richard B. Bradley

John A. Hawkins

C. William Maher

Tak Lung Tsim

February 20, 2007

Nominating Committee

The Board has a Nominating Committee consisting of Messrs. Baker and Bradley, each of whom is a noninterested director. The Nominating Committee met once during the fiscal period ended December 31, 2006. The Nominating Committee has a charter, a copy of which is available on the Fund’s website at http://www.greaterchinafund.com.

The Nominating Committee is responsible for identifying individuals qualified to become members of the Board of Directors, selecting or recommending that the Board select the Fund’s nominees to be submitted to the stockholders for election as directors of the Fund each year or, if applicable, at a special meeting of stockholders. In the case of vacancy in the office of a director, the Nominating Committee may recommend a nominee to fill such vacancy either through appointment by the Board of Directors or through election by stockholders. The Nominating Committee is also responsible for reviewing with the Board the requisite skills and criteria for new Board members as well as the composition of the Board as a whole.

 

10

The Nominating Committee has used an informal process to identify potential candidates for nomination as directors. Candidates for nomination have been recommended by existing directors, and considered by the Nominating Committee and the Board of Directors.

The Nominating Committee will consider nominees recommended by stockholders, provided that such recommendations are made in writing to the address and by the date specified below for stockholder proposals to be presented at the 2008 annual meeting of stockholders of the Fund. Each recommendation should include a personal biography of the suggested nominee, an indication of the background or experience that qualifies the person for consideration and a statement that the person has agreed to serve if nominated and elected. Nominees will be evaluated based on the criteria set forth in the Nominating Committee Charter and other factors which the Nominating Committee considers appropriate. The evaluation process does not depend on the source of the recommendation.

The Board does not have a policy regarding Board member attendance at the annual meeting of stockholders. No directors attended the 2006 annual meeting of stockholders.

Transactions with and Compensation of Directors and Officers

The Fund’s officers receive no compensation from the Fund. The directors who are “interested persons” of the Fund or of the Investment Manager receive no compensation from the Fund. The following table provides information regarding the compensation paid by the Fund for the fiscal year ended December 31, 2006, to the persons who were noninterested directors during such period:

 

Name of

Noninterested Director

   

Aggregate

Compensation

from Fund

   

Pension or Retirement

Benefits Accrued As

Part of Fund Expenses

   

Estimated

Annual

Benefits Upon

Retirement

   

Total Compensation

From Fund and Fund

Complex Paid to

Directors(1)

Edward Y. Baker

    $ 34,000    —      —      $ 34,000

Richard B. Bradley

    $ 35,500    —      —      $ 35,500

John A. Hawkins

    $ 28,000    —      —      $ 28,000

C. William Maher

    $ 28,000    —      —      $ 28,000

Jonathan J.K. Taylor

    $ 22,000    —      —      $ 22,000

Tak Lung Tsim

    $ 26,000    —      —      $ 26,000
(1) The Fund is one of two investment companies included in the Fund Complex.

The directors of the Fund do not receive any pension or retirement benefits from the Fund. Each noninterested director receives fees, paid by the Fund, of (i) $2,000 (or, in the case of the Fund’s Chairman, $3,500) per directors’ meeting attended, (ii) $1,000 (or, in the case of the Audit

 

11

Committee’s Chairman, $2,500) per Audit Committee meeting attended and (iii) an annual director’s fee of $14,000.

The Investment Manager supervises the Fund’s investments, pays the compensation and certain expenses of its personnel who serve as officers of the Fund and receives a management fee for its services. Two of the Fund’s officers are also officers and/or employees of the Investment Manager or affiliates thereof.

Director Ownership of Equity Securities in the Fund or Fund Complex

As of March 31, 2007, directors of the Fund beneficially owned the following amounts of equity securities in the Fund and/or the Fund Complex (unless otherwise noted, beneficial ownership is based on sole voting and investment power):

 

Name of Interested

Director

  

Dollar Range of Equity Securities

in the Fund

  

Aggregate Dollar Range of Equity

Securities in All Registered

Investment Companies Overseen

by Director in Fund Complex

John A. Bult

   Over $100,000   Over $100,000

 

Name of Noninterested

Director

  

Dollar Range of Equity Securities

in the Fund

  

Aggregate Dollar Range of Equity

Securities in All Registered

Investment Companies Overseen

by Director in Fund Complex

Edward Y. Baker

   $10,001-50,000   $10,001-50,000

Richard B. Bradley

   $10,001-50,000   $10,001-50,000

John A. Hawkins

   $10,001-50,000   $10,001-50,000

C. William Maher

   $0   $0

Jonathan J.K. Taylor

   $10,001-50,000   $10,001-50,000

Tak Lung Tsim

   $0   $0

Director Ownership of Securities in Investment Advisers or Principal Underwriters of the Fund or Their Affiliates

As of December 31, 2006, noninterested directors of the Fund and their immediate family members owned beneficially or of record the following securities in investment advisers or principal underwriters of the Fund or the affiliates of such investment advisers and underwriters:

 

Name of

Noninterested Director

   

Name of Owners and

Relationships to

Director

    Company   

Title of

Class

   

Value of

Securities

   

Percent

of

Class

John A. Hawkins

    John and
Jennifer
Hawkins(1)		    Baring-Coller
Secondaries Fund(2)		    Units(3)    $ 69,202    *

 

12

* Amounts to less than 1% of class.
(1) Joint account with spouse.
(2) Fund managed by Baring Asset Management Limited, of which the Fund’s Investment Manager is an indirect subsidiary.
(3) Each unit is comprised of the following: 500 A shares (nominal non-cumulative redeemable preference shares; par value $0.01); 499 B shares (redeemable equity shares; par value $0.01); 1 C share (equity share; par value $0.01).

Other Director Interests in Investment Advisers or Principal Underwriters of the Fund or Their Affiliates

As of March 31, 2007, John A. Hawkins, a noninterested director of the Fund, had been named a beneficiary of a discretionary trust for the benefit of his mother. Northern Trust Fiduciary Services (Guernsey) Limited serves as trustee for the trust, and Baring Asset Management (C.I.) Limited provides investment advice to the trustee. Baring Asset Management (C.I.) Limited is an indirect subsidiary of Baring Asset Management Holdings Limited, of which the Investment Manager is also an indirect subsidiary. As of March 31, 2007, Mr. Hawkins’s contingent beneficial interest in the trust was approximately $841,815.

Stock Ownership of Certain Beneficial Owners

To the best of the Fund’s knowledge, as of March 31, 2007, no person had beneficial ownership of more than 5% of the outstanding voting stock.

PROPOSAL 2. AMENDMENT TO THE FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUND TO PERMIT THE PURCHASE AND SALE OF STOCK INDEX FUTURES CONTRACTS

Current Investment Restrictions

The Fund has adopted certain fundamental investment restrictions, including one that states that the Fund may not:

“[p]urchase or sell commodities, commodity contracts, futures contracts, real estate or interests in real estate, except that the Fund may invest in securities issued by companies, including real estate investment trusts, that invest in real estate or interests in real estate, and may purchase and sell forward contracts on foreign currencies to the extent permitted under applicable law….”

 

13

Proposed Investment Restrictions

The Board of Directors is proposing to amend the fundamental investment restrictions of the Fund to state that the Fund may not:

“[p]urchase or sell commodities, commodity contracts, futures contracts, real estate or interests in real estate, except that the Fund may invest in securities issued by companies, including real estate investment trusts, that invest in real estate or interests in real estate, and may purchase and sell forward contracts on foreign currencies and stock index futures contracts, in each case, to the extent permitted under applicable law….” (emphasis added)

Discussion of the Proposal

This proposal would permit the Fund to purchase and sell stock index futures contracts (“Stock Index Futures”). The Investment Manager has advised the Board of Directors that it would like to be able to use Stock Index Futures to hedge a portion of the Fund’s exposure to the risk of a decline in the market prices of the equity securities of Chinese companies held in the Fund’s portfolio. In accordance with the rules and regulations of the U.S. Commodity Futures Trading Commission, the Fund may engage in stock index futures trading as a hedge against changes resulting from market conditions in the value of securities which are held in the Fund’s portfolio or which the Fund intends to purchase. The Investment Manager believes such transactions will be economically appropriate for the reduction of risks inherent in the ongoing management of the Fund.

A Stock Index Future is an agreement in which one party agrees to deliver to the other an amount of cash equal to a specific dollar amount times the difference between the value of a specific stock index at the close of the last trading day of the contract and the price at which the agreement is made. No physical delivery of the underlying stocks in the index is made. When the Stock Index Future contract is entered into, each party deposits with a broker or in a segregated custodial account approximately 10% of the contract amount, called “initial margin”. In a process known as mark to the market, subsequent payments to and from the broker, called “variation margin”, will be made on a daily basis as the price of the underlying stock index fluctuates thereby making the long and short positions in the Stock Index Future more or less valuable.

A Stock Index Future is compatible with the Fund’s investment objective if the Investment Manager believes there is a reasonable correlation between the prices of the securities that are included in the Stock Index Future and the prices of the securities that are held by the Fund. Currently the only available Stock Index Future compatible with the Fund’s investment objective is based on the Hang Seng Index and is traded on the Hong Kong Future Exchange Ltd. If, however, the proposed amendment is approved the Fund may invest in other Stock Index Futures compatible with the Fund’s investment objective that may from time to time become available in the future.

 

14

After the Fund purchases a Stock Index Future, an amount of cash and cash equivalents, equal to the market value of the futures contracts, will be deposited in a segregated account with the Fund’s custodian or subcustodian and/or in a margin account with a broker to collateralizie the position and thereby insure that the use of such futures is unleveraged. The Fund will not purchase or sell Stock Index Futures if, immediately thereafter, more than one-third of its net assets would be hedged. In addition, the Fund will sell Stock Index Futures only if the amount resulting from the multiplication of the then current level of the index (or indices) upon which the futures contract(s) is based, the applicable multiplier(s), and the number of futures that would be outstanding would not exceed one-third of the value of the Fund’s net assets. As a result, the Fund’s maximum risk of loss in connection with the sale of Stock Index Futures to hedge its portfolio is equal to the increase in the price of the Stock Index Futures during the time period covered by Stock Index Futures multiplied by one-third of the Fund’s net assets. The Fund also may not purchase or sell Stock Index Futures if, immediately thereafter, the sum of the amount of margin deposits on the Fund’s existing futures positions would exceed 5% of the market value of the Fund’s total assets.

Successful use of Stock Index Futures will be subject to the Investment Manager’s ability to correctly predict movements in the direction of the market. For example, the Investment Manager may believe that there is a possibility that the prices of the stocks in the Fund’s portfolio may decline over a certain period of time and decide to sell one or more Stock Index Future to hedge against the risk of a decline in the prices of the stocks held by the Fund. If the stock prices do not decline and instead increase during the period, the Fund will lose part or all of the benefit of the increased value of the stocks in its portfolio because it will have offsetting losses in its Stock Index Futures positions. Stockholders should be aware that the investment techniques and skills required to use Stock Index Futures successfully are different from those required to select equity securities for investment. The Investment Manager believes that it has the experience and skills necessary to use Stock Index Futures successfully.

The Investment Manager’s ability to use Stock Index Futures effectively will also depend upon the extent to which price movements in the Fund’s portfolio correlate with price movements of the index selected. The correlation between movements in the price of the Stock Index Future and the price of the securities being hedged may be imperfect and the risk from imperfect correlation increases as the composition of the Fund’s portfolio diverges from the composition of the relevant index. In addition, the ability of the Fund to close out a Stock Index Futures position depends on a liquid secondary market. There is no assurance that liquid secondary markets will exist for any particular Stock Index Futures contract at any particular time.

The Fund’s Investment Manager has advised the Board of Directors that it believes that the Fund will benefit from having the flexibility to use Stock Index Futures as a hedging tool. Your Fund’s directors recommend that stockholders approve the proposed amendment to the fundamental investment restrictions of the Fund to permit the use of Stock Index Futures.

 

15

Required Vote

Approval of the proposed amendment to the fundamental investment restrictions of the Fund requires the affirmative vote of a majority of the Fund’s outstanding voting securities. Your Fund’s directors recommend that stockholders approve the proposed amendment to the fundamental investment restrictions of the Fund to permit the purchase and sale of Stock Index Futures.

OTHER ADDITIONAL INFORMATION ABOUT THE FUND

Investment Manager and Administrator

Baring Asset Management (Asia) Limited serves as investment manager for the Fund pursuant to an Investment Management Agreement (the “Investment Management Agreement”) dated June 30, 2005, between the Fund and the Investment Manager. The Investment Manager’s offices are located at Edinburgh Tower, 19th Floor, 15 Queen’s Road Central, Hong Kong. The Investment Manager is an indirect wholly-owned subsidiary of Massachusetts Mutual Life Insurance Company, 1295 State Street, Springfield, Massachusetts 01111-0001. David J. Brennan, 15 Queen’s Road Central, Hong Kong, is the Chairman and principal executive officer of the Investment Manager.

Prudential Investments LLC serves as the Fund’s administrator. The administrator’s offices are located at Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, and Section 30(h) of the 1940 Act as applied to the Fund require the Fund’s officers and directors, persons who beneficially own more than 10 percent of a registered class of the Fund’s own equity securities and certain other persons to file reports of ownership of the Fund’s securities and changes in such ownership with the Securities and Exchange Commission and the New York Stock Exchange. Based solely upon its review of the copies of such forms furnished to it, and written representations from certain reporting persons that no reports on Form 5 were required for those persons, during the fiscal year ended December 31, 2006 the Fund believes that all filings applicable to the Fund’s officers, directors and ten-percent stockholders required for such fiscal year were made.

Independent Registered Public Accounting Firm

The Audit Committee of the Board has recommended, and the Board of Directors, including a majority of those members who are noninterested directors, has selected, Ernst & Young LLP

 

16

(“Ernst & Young”) as the independent registered public accounting firm to audit the accounts of the Fund for the fiscal year ended December 31, 2007. Ernst & Young served as the independent registered public accounting firm to audit the Fund’s accounts for the fiscal year ended December 31, 2006. The Board does not know of any direct or indirect financial interest of Ernst & Young in the Fund.

The aggregate fees billed to the Fund by Ernst & Young for services rendered by Ernst & Young for the fiscal years ended December 31, 2006 and 2005, respectively, are described below.

Audit Fees

For the fiscal years ended December 31, 2006 and December 31, 2005, the aggregate audit fees billed by Ernst & Young to the Fund are shown in the table below.

 

2006

    2005

$55,600

    $69,000

Fees included in the audit fees category are those associated with the annual audits of financial statements and services that are normally provided in connection with statutory and regulatory filings or engagements and registration statement consents.

Audit-Related Fees

In each of the fiscal years ended December 31, 2006 and December 31, 2005, the aggregate audit-related fees billed by Ernst & Young for services rendered for assurance and related services to the Fund that are reasonably related to the performance of the audits or reviews of the Fund’s semi-annual financial statements, but not reported as audit fees, are shown in the table below.

 

2006

    2005

$2,500

    $2,500

Fees included in the audit-related category are those associated with reading and providing comments on the Fund’s semi-annual financial statements as of June 30, 2005 and June 30, 2006.

 

17

Tax Fees

In each of the fiscal years ended December 31, 2006 and December 31, 2005, the aggregate tax fees billed by Ernst & Young for professional services rendered for tax services for the Fund are shown in the table below.

 

2006

    2005

$9,700

    $6,200

Fees included in the tax fees category comprise all services performed by professional staff in the independent accountant’s tax division except those services related to audits. This category comprises fees for tax compliance and tax return preparation.

All Other Fees

In each of the fiscal years ended December 31, 2006 and December 31, 2005, the aggregate fees billed by Ernst & Young for all other non-audit services are shown in the table below.

 

2006

    2005

$0

    $0

Fees included in the all other fees category would consist of services related to internal control reviews, strategy and other consulting, financial information systems design and implementation, consulting on other information systems, and other tax services unrelated to the Fund.

Audit Committee Pre-approval Policies and Procedures

The Fund’s Audit Committee pre-approves in advance at regularly scheduled Audit Committee meetings all audit and non-audit services (to the extent that such service directly affects the financial reporting or operations of the Fund) performed by the Fund’s independent registered public accounting firm for the Fund, the Investment Manager, and any entity controlling, controlled by, or under common control with the Investment Manager that provides ongoing services to the Fund. If such a service is required between regularly scheduled audit meetings, pre-approval may be authorized by the Chairman of the Audit Committee. The Chairman will update the Audit Committee at the next regularly scheduled meeting of any interim approval granted.

 

18

Services Approved Pursuant to Paragraph (c)(7)(i)(c) of Rule 2-01 of Regulation S-X

There were no services included in Audit Related Fees, Tax Fees and All Other Fees above that were approved by Fund’s Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

For the fiscal years ended December 31, 2006 and December 31, 2005, the aggregate fees for non-audit services rendered on behalf of the Fund (“Covered Services”), its investment adviser and any entity controlling, controlled by, or under common control with the investment adviser (“Non-covered Services”) that provides ongoing services to the Fund are shown in the table below.

 

     2006    2005

Covered Services

    $ 12,200    $ 8,700

Non-covered Services*

    $ 1,482,000    $ 249,000
* For the fiscal years ended December 31, 2006 and December 31, 2005, fees represent Non-covered Services provided to Massachusetts Mutual Life Insurance Company and ING Group N.V., respectively.

During the past fiscal year, all Covered Services provided by Ernst & Young to the Fund were pre-approved by the Fund’s Audit Committee. There were no Non-covered Services required to be considered by the Fund’s Audit Committee under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. Accordingly, the Audit Committee was not required to consider whether the provision of any Non-covered Services by Ernst & Young would be compatible with maintaining the independence of Ernst & Young.

OTHER MATTERS

The Board of Directors is not aware of any other business to be brought before the meeting other than as set forth above. If, however, any other matters properly come before the meeting, it is the intention of the persons named in the enclosed proxy form to vote such proxies on such matters in accordance with their best judgment.

Miscellaneous

Proxies will be solicited by mail and may be solicited in person or by telephone or telegraph by officers of the Fund or personnel of Prudential Investments LLC, the Fund’s administrator, or PFPC Inc., the Fund’s transfer agent. The expenses connected with the solicitation of the proxies and with any further proxies that may be solicited by the Fund’s officers or personnel of the administrator or the transfer agent in person, by telephone or by telegraph will be borne by the

 

19

Fund. In addition, the Fund has retained D.F. King & Co., Inc. to aid in the solicitation of proxies, for whose services the Fund will pay an estimated fee in the range of $22,500 to $30,500 plus reasonable out-of-pocket expenses. The Fund will reimburse banks, brokers and other persons holding the Fund’s shares registered in their names or in the names of their nominees for their expenses incurred in sending proxy material to and obtaining proxies from the beneficial owners of such shares. The Fund expects that broker-dealer firms holding shares of the Fund in “street name” for their customers will request voting instructions from their customers and beneficial owners. If these instructions are not received by the date specified in the broker-dealer firms’ proxy solicitation materials, the Fund understands that New York Stock Exchange rules permit the broker-dealers to vote on the proposals on behalf of their customers and beneficial owners. Certain broker-dealers may exercise discretion over shares held in their name for which no instructions are received by voting these shares in the same proportion as they vote shares for which they received instructions.

A majority of the shares entitled to vote, present in person or represented by proxy, will constitute a quorum at the meeting. The shares over which broker-dealers have discretionary voting power, the shares that represent “broker non-votes” (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or persons entitled to vote and (ii) the broker or nominee does not have discretionary voting power on a particular matter), and the shares whose proxies reflect an abstention on any item will all be counted as shares present and entitled to vote for purposes of determining whether the required quorum of shares exists.

In the event that sufficient votes in favor of any proposal set forth in the notice of this meeting are not received by June 28, 2007, the persons named as attorneys in the enclosed proxy may propose one or more adjournments of the meeting to permit further solicitation of proxies. Any such adjournment will require the affirmative vote of the holders of a majority of the shares present in person or by proxy at the session of the meeting to be adjourned. The persons named as attorneys in the enclosed proxy will vote in favor of such adjournment those proxies which they are entitled to vote in favor of the proposal for which further solicitation of proxies is to be made. They will vote against any such adjournment those proxies required to be voted against such proposal. Abstentions and broker non-votes shall not be counted or voted for purposes of, and accordingly will have no effect on the outcome of, a vote to adjourn the meeting. The costs of any such additional solicitation and of any adjourned session will be borne by the Fund.

The Fund’s annual report to stockholders for the fiscal year ended December 31, 2006, was mailed to stockholders on or about February 28, 2007. The Fund will furnish, without charge, a copy of its 2006 annual report and the most recent semiannual report succeeding that annual report, if any, to any stockholder upon request. Requests should be directed to the Fund’s transfer agent, PFPC Inc.; telephone: (800) 331-1710.

 

20

Stockholder Proposals

Any proposal by a stockholder of the Fund intended to be presented at the 2008 annual meeting of stockholders of the Fund must be received by Deborah A. Docs, Secretary of the Fund, c/o Prudential Investments LLC, Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102, not later than December 15, 2007.

Stockholder Communications

The Board of Directors has a process for stockholders of the Fund to send communications to it. Any stockholder that wishes to communicate with the Board of Directors or a specific director may do so by submitting correspondence in writing to the Fund administrator, Prudential Investments LLC, Gateway Center Three, 100 Mulberry Street, Newark, New Jersey 07102, referencing the Fund and specifying the intended addressee. Stockholder communications addressed to the Board of Directors will be forwarded promptly after receipt to the Chairman of the Board for review. The Chairman will review each such communication in order to determine whether the communication should be relayed directly to each Board member. Stockholder communications that the Chairman determines involve routine matters will be forwarded to the Fund’s administrator and/or officers of the Fund for review and response, and the Chairman will report to the full Board, as appropriate, on the nature and substance of such communications. Stockholder communications that the Chairman determines involve nonroutine matters will be forwarded to each member of the Board for review. Stockholder communications addressed to a specific director will be forwarded to the addressee promptly upon receipt.

By order of the Board of Directors,

LOGO

DEBORAH A. DOCS

Secretary

Gateway Center Three

100 Mulberry Street

Newark, New Jersey 07102

May 15, 2007

 

21

 

  Annual Meeting Proxy Card   

 

ê PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ê

 

 

    A   Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Item 2.      
    1. Election of Class I Directors:   For   Withhold         For   Withhold           For   Withhold   +
        01—Edward Y. Baker   ¨   ¨       02—John A. Bult   ¨   ¨         03—Jonathan J.K. Taylor   ¨   ¨    
                                 
                                 
                                 
                                 
                For   Against   Abstain              
   

2. Proposal to Amend the Fund’s Fundamental Investment

    Restrictions to Permit the Purchase and Sale of Stock

    Index Futures.

   ¨   ¨   ¨              
                           
    B   Non-Voting Items                        
    Change of Address — Please print new address below.                      
                                                                           
                                                                           
    C   Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below    
    If shares are held jointly, each Stockholder named should sign. If only one signs, his or her signature will be binding. If the Stockholder is a corporation, the President or a Vice President should sign in his or her own name, indicating title. If the Stockholder is a partnership, a partner should sign in his or her own name, indicating that he or she is a “Partner.”        
    Date (mm/dd/yyyy) — Please print date below.     Signature 1 — Please keep signature
within the box.		     Signature 2 — Please keep signature
within the box.		    
                                                                     
    /   /                                         
                                                                     

ê PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ê

 

 

     Proxy — THE GREATER CHINA FUND, INC.
  

Gateway Center Three

100 Mulberry Street

Newark, NJ 07102

   THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
   The undersigned hereby appoints Deborah Docs, Grace C. Torres and Ronald Watt as Proxies, each with the power to appoint his or her substitute, and hereby authorizes either or both to represent and to vote all shares of Common Stock of The Greater China Fund, Inc. held of record by the undersigned on April 12, 2007, at the Annual Meeting of Stockholders to be held on June 28, 2007, or any adjournment thereof.
   THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1 AND ITEM 2. SHARES WILL BE SO VOTED UNLESS YOU OTHERWISE INDICATE. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
   SIGN, DATE AND MAIL YOUR PROXY TODAY.