Approximately four million shareholders of Puerto Rico Residents Tax Free Fund Inc. (PRITF I) have voted in favor of Ocean Capital’s proposal to terminate the advisory and management contracts of UBS Financial Services and Popular Asset Management on closed-end mutual funds in Puerto Rico.
The investment firm announced the news last Tuesday after an Annual Meeting where shareholders also elected Ocean Capital’s candidate, Ian McCarthy, to the fund’s Board of Directors with overwhelming support.
This latest development comes after shareholders have consistently voted in favor of Ocean Capital candidates at eight Annual Meetings that the funds have refused to recognize. The bid to change leadership of the nine closed mutual funds in Puerto Rico began in 2021 and has seen several unsuccessful attempts by Ocean Capital to appoint new independent directors.
Ocean Capital’s founder, William Heath Hawk, expressed disappointment that the funds continue to resist change despite the clear mandate from shareholders. He criticized the funds for hiding behind costly litigation to avoid the necessary leadership transformation.
In June 2022, Ocean Capital appealed to the Court of First Instance to recognize two proposed directors elected by shareholders, alleging that PRITF I refuses to acknowledge the replacements. This comes after previous attempts by Ocean Capital to restructure other investment funds faced resistance from UBS.
Ocean Capital claims that the funds have already spent more than $5 million on outside advisers to fight against the proposed changes. They argue that the current directors have remained in their positions for too long, despite shareholder elections.
Heath Hawk emphasized that the recent shareholder vote marks the eighth Annual Meeting where Ocean Capital candidates have received significant support. He called for the resignation of the current directors and urged the immediate termination of the management agreements with UBS and Popular Asset Management.
Clients of these closed-end mutual funds in Puerto Rico have been caught in the middle of this dispute and the government’s bankruptcy. Questions have been raised about the independence of the directors and their alleged ties to the investment house.
Ocean Capital remains committed to advocating for the voice of shareholders and pushing for much-needed change within the funds’ leadership.