Table of Contents
As filed with the Securities and Exchange Commission on June 21, 2021
Registration Statement No. 333-253614
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 2 to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
iSHARES® GOLD TRUST MICRO
SPONSORED BY iSHARES DELAWARE TRUST SPONSOR LLC
(Exact name of Registrant as specified in its charter)
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New York
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1040
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83-6527686
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(State or other jurisdiction of incorporation or organization)
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(Primary Standard Industrial Classification Code Number)
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(I.R.S. Employer Identification No.)
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c/o iShares Delaware Trust Sponsor LLC
400 Howard Street, San Francisco, CA 94105
Attn: Product Management Team,
iShares Product Research & Development
(415) 670-2000
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
iShares Delaware Trust Sponsor LLC
400 Howard Street, San Francisco, CA 94105
Attn: Product Management Team,
iShares Product Research & Development
(415) 670-2000
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
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Clifford R. Cone, Esq.
Jason D. Myers, Esq.
Clifford Chance US LLP
31 West 52nd Street
New York, NY 10019
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Deepa Damre Smith, Esq.
BlackRock, Inc.
400 Howard Street
San Francisco, CA 94105
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Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer ☐
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Non-accelerated filer
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Smaller reporting company ☒
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Emerging growth company ☒
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act. ☒
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CALCULATION OF THE REGISTRATION FEE
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Title of each
Class of
Securities to
be Registered
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Amount to be
registered
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Proposed
maximum
offering
price per
unit
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Proposed maximum
aggregate offering
price1
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Amount of
registration fee
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iShares
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120,000,000
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18.884
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2,266,080,000
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$
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247,229.33
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(1)
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Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(d) under the Securities Act of 1933. The initial amount of gold required for deposit with the iShares Gold Trust Micro to create Shares is 500 ounces per Basket (a Basket is 50,000 Shares). The price of gold used to calculate the proposed maximum offering price per Share is $1,888.40, which is based upon the LBMA Gold Price PM on June 7, 2021.
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The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said section 8(a), may determine.
The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
PROSPECTUS
SUBJECT TO COMPLETION, DATED JUNE 21, 2021
120,000,000 Shares
iShares® Gold Trust Micro
The iShares Gold Trust Micro (the “Trust”) issues shares (“Shares”) representing fractional undivided beneficial interests in its net assets. The assets of the Trust consist primarily of gold held by a custodian on behalf of the Trust. The Trust seeks to reflect generally the performance of the price of gold. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. iShares Delaware Trust Sponsor LLC (the “Sponsor”) is the sponsor of the Trust; The Bank of New York Mellon (the “Trustee”) is the trustee of the Trust, and JPMorgan Chase Bank N.A., London branch (the “Custodian”), is the custodian of the Trust. The Trust is not an investment company registered under the United States Investment Company Act of 1940, as amended (the “Investment Company Act”). The Trust is not a commodity pool for purposes of the United States Commodity Exchange Act of 1936, as amended (the “Commodity Exchange Act” or “CEA”), and its sponsor is not subject to regulation by the U.S. Commodity Futures Trading Commission (the “CFTC”) as a commodity pool operator or a commodity trading advisor with respect to the Trust.
The Trust intends to issue Shares on a continuous basis. The Trust issues and redeems Shares only in blocks of 50,000 or integral multiples thereof. A block of 50,000 Shares is called a “Basket.” These transactions take place in exchange for gold. Baskets will be offered continuously at the net asset value per Share (“NAV”) for 50,000 Shares on the day that an order to create a Basket is accepted by the Trust. Only registered broker-dealers that become authorized participants by entering into a contract with the Sponsor and the Trustee (“Authorized Participants”) may purchase or redeem Baskets. Shares will be offered to the public from time to time at varying prices that will reflect the price of gold and the trading price of the Shares on NYSE Arca, Inc. (“NYSE Arca”) at the time of the offer.
Prior to this offering, there has been no public market for the Shares. The Shares will be listed and traded on NYSE Arca under the ticker symbol “IAUM.” Market prices for the Shares may be different from the NAV.
The London Bullion Market Association (“LBMA”) Gold Price PM on June 18, 2021 was $1,773.10.
Except when aggregated in Baskets, Shares are not redeemable securities. Baskets are only redeemable by Authorized Participants.
The Trust is an “emerging growth company,” as that term is used in the Jumpstart Our Business Startups Act (the “JOBS Act”), subject to reduced public company reporting requirements under U.S. federal securities laws.
Investing in the Shares involves significant risks. See “Risk Factors” starting on page 9.
Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of the securities offered in this prospectus, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The Shares are not interests in nor obligations of either the Sponsor, the Trustee or BlackRock Financial Management, Inc. (the “Seed Capital Investor”) or their respective affiliates.
“iShares” is a registered trademark of BlackRock, Inc. or its affiliates.
On June 15, 2021, the Seed Capital Investor, an affiliate of the Sponsor, subject to conditions, purchased the Seed Creation Baskets, comprising 500,000 Shares at a per-Share price equal to 1/100th of a fine ounce of gold, as described in “Seed Capital Investor” and “Plan of Distribution.” The price of gold was determined using the LBMA Gold Price PM on June 15, 2021. The price per-Share and the LBMA Gold Price PM on June 15, 2021 were $18.651 and $1,865.10, respectively. Total proceeds to the Trust from the sale of the Seed Creation Baskets were 5,000 ounces of gold. Delivery of the Seed Creation Baskets was made on June 17, 2021. The Seed Capital Investor will act as a statutory underwriter in connection with this purchase.
The price of the Seed Creation Baskets was determined as described above and such Shares could be sold at different prices if sold by the Seed Capital Investor at different times. Prior to this offering, there was no public market for the Shares.
The date of this prospectus is , 2021.
This prospectus contains information you should consider when making an investment decision about the Shares. You may rely on the information contained in this prospectus. Neither the Trust nor the Sponsor has authorized any person to provide you with different information and, if anyone provides you with different or inconsistent information, you should not rely on it. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. This prospectus is not an offer to sell the Shares in any jurisdiction where the offer or sale of the Shares is not permitted.
Until [ ], 2021 (25 days after the date of this prospectus), all dealers effecting transactions in the Shares, whether or not participating in this distribution, may be required to deliver a prospectus. This requirement is in addition to the obligations of dealers to deliver a prospectus when acting as underwriters and with respect to unsold allotments or subscriptions. The Sponsor first intends to use this prospectus on [ ], 2021.
Authorized Participants may be required to deliver a prospectus when making transactions in the Shares. See “Plan of Distribution.”
PROSPECTUS SUMMARY
Although the Sponsor believes that this summary is materially complete, you should read the entire prospectus, including “Risk Factors” beginning on page 9, before making an investment decision about the Shares.
Definitions of terms used in this prospectus can be found in the Glossary on page 48.
Trust Structure, the Sponsor, the Trustee and the Custodian
The Trust was formed on June 15, 2021 when the Sponsor and The Bank of New York Mellon signed the Depositary Trust Agreement (the “Trust Agreement”) and the Seed Capital Investor made the initial deposit for the issuance of ten Baskets. The purpose of the Trust is to own gold transferred to the Trust in exchange for Shares issued by the Trust. Each Share represents a fractional undivided beneficial interest in the net assets of the Trust. The assets of the Trust consist primarily of gold held by the Custodian on behalf of the Trust.
The Sponsor of the Trust is iShares Delaware Trust Sponsor LLC, a Delaware limited liability company and an indirect subsidiary of BlackRock, Inc. (“BlackRock”). The Shares are not obligations of, and are not guaranteed by, iShares Delaware Trust Sponsor LLC, or any of its subsidiaries or affiliates.
The Trust is governed by the provisions of the Trust Agreement executed as of June 15, 2021 by the Sponsor and the Trustee.
The Trust issues Shares only in Baskets of 50,000 or integral multiples thereof. Baskets may be redeemed by the Trust in exchange for the amount of gold corresponding to their redemption value. Individual Shares will not be redeemed by the Trust, but will be listed and traded on NYSE Arca under the ticker symbol “IAUM.” The Trust seeks to reflect generally the performance of the price of gold. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. The material terms of the Trust are discussed in greater detail under the section “Description of the Shares and the Trust Agreement.” The Trust is not a registered investment company under the Investment Company Act and is not required to register under such act. The Trust is not a commodity pool for purposes of the CEA, and its sponsor is not subject to regulation by the CFTC as a commodity pool operator or a commodity trading advisor with respect to the Trust.
The Trust intends to continuously offer Shares but may suspend issuances of Shares at any time.
The Sponsor has arranged for the creation of the Trust, the registration of the Shares for their public offering in the United States and the listing of the Shares on NYSE Arca. The Sponsor has agreed to assume the marketing and the following administrative expenses incurred by the Trust: the Trustee’s fee (the “Trustee’s Fee”) and reimbursement for its reasonable out-of-pocket expenses, the Custodian’s fee (the “Custodian’s Fee”), NYSE Arca listing fees, SEC registration fees, printing and mailing costs, audit fees and expenses and up to $100,000 per annum in legal fees and expenses. The Sponsor will also pay the costs of the Trust’s organization and the initial sale of the Shares. The Sponsor may determine in its sole discretion to assume legal fees and expenses of the Trust in excess of the $100,000 per annum required under the Trust Agreement. To the extent that the Sponsor does not voluntarily assume such fees and expenses, they will be the responsibility of the Trust.
The Sponsor will maintain a public website on behalf of the Trust, containing information about the Trust and the Shares. The Internet address of the Trust’s website will be www.iShares.com. This Internet address is only provided here as a convenience to you, and the information contained on or connected to the Trust’s website is not considered part of this prospectus.
The Sponsor will not exercise day-to-day oversight over the Trustee or the Custodian. The Sponsor may remove the Trustee and appoint a successor trustee if the Trustee ceases to meet certain objective requirements (including the requirement that it have capital, surplus and undivided profits of at least $150 million) or if, having received written notice of a material breach of its obligations under the Trust Agreement, the Trustee has not cured the breach within 30 days, or fails to implement certain controls and procedures requested by the Sponsor. The Sponsor also has the right to replace the Trustee during the 90 days following any merger, consolidation or conversion in which the Trustee is not the surviving entity or, in its discretion, on the fifth anniversary of the creation of the Trust or on any subsequent third anniversary thereafter. The Sponsor also has the right to select any new or additional custodian.
The Sponsor or its affiliates and associates currently engage in, and may in the future engage, in the promotion, management or investment management of other accounts, funds or trusts that invest primarily in gold bullion or other precious metals. Although officers and professional staff of the Sponsor’s management intend to devote as much time to the Trust as is deemed appropriate to perform their duties, the Sponsor’s management may allocate their time and services among the Trust and the other accounts, funds or trusts. In addition, the Sponsor and the Trustee may agree to amend the Trust Agreement, including to increase the Sponsor’s Fee, without Shareholder consent. See "Conflicts of Interest."
The Trustee is The Bank of New York Mellon and the Custodian is JPMorgan Chase Bank N.A., London branch. The agreement between the Trust and the Custodian (the “Custodian Agreement”) is governed by English law.
The Trustee is responsible for the day-to-day administration of the Trust. The responsibilities of the Trustee include (1) processing orders for the creation and redemption of Baskets; (2) coordinating with the Custodian the receipt and delivery of gold transferred to, or by, the Trust in connection with each issuance and redemption of Baskets; (3) calculating the net asset value of the Trust on any day other than: a Saturday or a Sunday, or a day on which NYSE Arca is closed for regular trading (“Business Day”); and (4) selling the Trust’s gold as needed to cover the Trust’s expenses. For a more detailed description of the role and responsibilities of the Trustee see “Description of the Shares and the Trust Agreement” and “The Trustee.”
The Custodian is responsible for safekeeping the gold owned by the Trust. The Custodian is appointed by the Trustee and is responsible for any loss of gold to the Trustee only. The general role and responsibilities of the Custodian are further described in “The Custodian.”
Trust Objective
The Trust seeks to reflect generally the performance of the price of gold. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. The Shares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in physical gold requires expensive and sometimes complicated arrangements in connection with the assay, transportation, warehousing and insurance of the metal. Traditionally, such expense and complications have resulted in investments in physical gold being efficient only in amounts beyond the reach of many investors. The Shares have been designed to remove the obstacles represented by the expense and complications involved in an investment in physical gold, while at the same time having an intrinsic value that reflects, at any given time, the price of the gold owned by the Trust at such time, less the Trust’s expenses and liabilities. Although the Shares are not the exact equivalent of an investment in gold, they provide investors with an alternative that allows a level of participation in the gold market through the securities market.
An investment in Shares is:
Backed by gold held by the Custodian on behalf of the Trust.
The Shares are backed by the assets of the Trust. The Trustee’s arrangements with the Custodian contemplate that at the end of each Business Day there can be in the Trust account maintained by the Custodian no gold in an unallocated form. The Trust’s gold holdings are represented by physical gold, are identified on the Custodian’s or, if applicable, sub-custodian’s, books as the property of the Trust, and are held by the Custodian in New York, London and other locations that may be authorized in the future.
As accessible and easy to handle as any other investment in shares.
Retail investors may purchase and sell Shares through traditional brokerage accounts. Because the intrinsic value of each Share is a function of the price of only a fraction of an ounce of gold held by the Trust, the cash outlay necessary for an investment in Shares should be less than the amount required for currently existing means of investing in physical gold. Shares are eligible for margin accounts.
Listed.
Although there can be no assurance that an actively traded market in the Shares will develop, the Shares will be listed and traded on NYSE Arca under the ticker symbol “IAUM.”
Relatively cost-efficient.
Because the expenses involved in an investment in physical gold will be dispersed among all holders of Shares, an investment in Shares may represent a cost-efficient alternative to investments in physical gold for investors not otherwise in a position to participate directly in the market for physical gold. See “Business of the Trust—Trust Objective.”
Emerging Growth Company Status
The Trust is an “emerging growth company,” as defined in the JOBS Act. For as long as the Trust is an emerging growth company, the Trust may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes–Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in the Trust’s periodic reports and audited financial statements in this prospectus, exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation and shareholder advisory votes on “golden parachute” compensation and exemption from any rules requiring mandatory audit firm rotation and auditor discussion and analysis and, unless otherwise determined by the SEC, any new audit rules adopted by the Public Company Accounting Oversight Board.
Under the JOBS Act, the Trust will remain an emerging growth company until the earliest of:
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the last day of the fiscal year during which the Trust has total annual gross revenues of $1.07 billion or more;
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the last day of the fiscal year following the fifth anniversary of the completion of this offering;
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the date on which the Trust has, during the previous three-year period, issued more than $1 billion in non-convertible debt; or
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the date on which the Trust is deemed to be a “large accelerated filer” (i.e., an issuer that (1) has more than $700 million in outstanding equity held by non-affiliates and (2) has been subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) for at least 12 calendar months and has filed at least one annual report on Form 10-K.
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The JOBS Act also provides that an emerging growth company can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards. The Trust is choosing to opt out of this extended transition period and, as a result, the Trust will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for companies that are not “emerging growth companies.” Section 107 of the JOBS Act provides that the Trust’s decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
Principal Offices
The Sponsor’s office is located at 400 Howard Street, San Francisco, CA 94105 and its telephone number is (415) 670-2000. The Trust’s office is c/o iShares Delaware Trust Sponsor LLC, 400 Howard Street, San Francisco, CA 94105 and its telephone number is (415) 670-2000. The Trustee has a Trust office at 240 Greenwich Street, 8th Floor, New York, New York 10286. The Custodian’s office is located at 125 London Wall, London, EC2Y 5AJ, England.
THE OFFERING
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Offering
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The Shares represent units of fractional undivided beneficial interest in the net assets of the Trust.
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Use of proceeds
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Proceeds received by the Trust from the issuance and sale of Baskets, including the Seed Creation Baskets issued to the Seed Capital Investor, consist of gold deposits. Such deposits are held by the Custodian on behalf of the Trust until (i) delivered to Authorized Participants in connection with a redemption of Baskets or (ii) sold to pay the fee due to the Sponsor and Trust expenses or liabilities not assumed by the Sponsor.
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NYSE Arca ticker symbol
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IAUM
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CUSIP
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46436F 103
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Creation and redemption
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The Trust issues and redeems Baskets on a continuous basis. Baskets are only issued or redeemed in exchange for an amount of gold determined by the Trustee on each day that NYSE Arca is open for regular trading. No Shares are issued unless the Custodian has allocated to the Trust’s account the corresponding amount of gold. At the creation of the Trust, a Basket required delivery of 500 ounces of gold. The amount of gold necessary for the creation of a Basket, or to be received upon redemption of a Basket, will decrease over the life of the Trust, due to the payment or accrual of fees and other expenses or liabilities payable by the Trust. Baskets may be created or redeemed only by Authorized Participants, who pay the Trustee a transaction fee for each order to create or redeem Baskets. See “Description of the Shares and the Trust Agreement” for more details.
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Net Asset Value
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The net asset value of the Trust is obtained by subtracting all accrued fees, expenses and other liabilities of the Trust on any day from the total value of the gold and all other assets of the Trust on that day; the NAV is obtained by dividing the net asset value of the Trust by the number of Shares outstanding on the date the computation is made. On each day on which NYSE Arca is open for regular trading, the Trustee determines the NAV as promptly as practicable after 4:00 p.m. (New York time). The Trustee values the Trust’s gold on the basis of that day’s LBMA Gold Price PM. If there is no LBMA Gold Price PM on any day, the Trustee is authorized to use the most recently announced LBMA Gold Price AM unless the Sponsor determines that such price is inappropriate as a basis for evaluation. See “Business of the Trust—Valuation of Gold; Computation of Net Asset Value.”
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Trust expenses
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The Trust’s only ordinary recurring expense is expected to be the remuneration due to the Sponsor (the “Sponsor’s Fee”). In exchange for the Sponsor’s Fee, the Sponsor has agreed to assume the marketing and the following administrative expenses of the Trust: the Trustee’s Fee and reimbursement for its reasonable out-of-pocket expenses, the Custodian’s Fee, NYSE Arca listing fees, SEC registration fees, printing and mailing costs, audit fees and expenses and up to $100,000 per annum in legal fees and expenses. The Sponsor may determine in its sole discretion to assume legal fees and expenses of the Trust in excess of the $100,000 per annum required under the Trust Agreement. To the extent that the Sponsor does not voluntarily assume such fees and expenses, they will be the responsibility of the Trust.
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The Sponsor will also pay the costs of the Trust’s organization and the initial sale of the Shares. The Sponsor’s Fee is accrued daily at an annualized rate equal to 0.15% of the net asset value of the Trust and is payable monthly in arrears. The Sponsor may, at its discretion and from time to time, waive all or a portion of the Sponsor’s Fee for stated periods of time. The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during any period not covered by the waiver. Effective on the date the Shares are listed for trading on NYSE Arca, the Sponsor has voluntarily agreed to waive a portion of the Sponsor's Fee so that the Sponsor's Fee after the fee waiver will not exceed 0.07% through June 30, 2024. The Trustee from time to time sells gold in such quantity as is necessary to permit payment of the Sponsor’s Fee and may also sell gold in such quantities as may be necessary to permit the payment of Trust expenses and liabilities not assumed by the Sponsor. The Trustee is authorized to sell gold at such times and in the smallest amounts required to permit such payments as they become due, it being the intention to avoid or minimize the Trust’s holdings of assets other than gold. Accordingly, the amount of gold to be sold may vary from time to time depending on the level of the Trust’s expenses and liabilities and the market price of gold. See “Business of the Trust—Trust Expenses” and “Description of the Shares and the Trust Agreement—Trust Expenses and Gold Sales.”
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Tax Considerations
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Owners of Shares will be treated, for U.S. federal income tax purposes, as if they owned a corresponding share of the assets of the Trust. They will also be viewed as if they directly received a corresponding share of any income of the Trust, or as if they had incurred a corresponding share of the expenses of the Trust. Consequently, each sale of gold by the Trust will constitute a taxable event to owners of beneficial interests in the Shares (the “Shareholders”). See “U.S. Federal Income Tax Consequences— Taxation of U.S. Shareholders” and “ERISA and Related Considerations.”
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Voting Rights
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Owners of Shares do not have any voting rights. See “Description of the Shares and the Trust Agreement—Voting Rights.”
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Suspension of Issuance, Transfers and Redemptions
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The Trustee may, and upon the direction of the Sponsor shall, suspend the acceptance of purchase orders or the delivery or registration of transfers of Shares generally, or may, and upon the direction of the Sponsor shall, refuse a particular purchase order, delivery or registration of shares (i) during any period when the transfer books of the Trustee are closed or (ii) at any time, if the Sponsor thinks it advisable for any reason. The Trustee may, and upon the direction of the Sponsor shall, suspend the right to surrender Shares or postpone the delivery date of gold or other Trust property generally or with respect to a particular redemption order (i) during any period in which regular trading on NYSE Arca is suspended or restricted, or the exchange is closed, or (ii) during an emergency as a result of which delivery, disposal or evaluation of gold is not reasonably practicable. The Trustee shall reject any purchase order or redemption order that is not in proper form. See “Description of the Shares and the Trust Agreement—Requirements for Trustee Actions.”
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Limitation on Obligations and Liability
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The Sponsor and the Trustee:
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● are only obligated to take the actions specifically set forth in the Trust Agreement without negligence or bad faith;
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● are not liable if either of them is prevented or delayed by law or circumstances beyond their control from performing their respective obligations under the Trust Agreement;
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● are not liable for the exercise of discretion permitted under the Trust Agreement;
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● have no obligation to prosecute any lawsuit or other proceeding on behalf of the Shareholders or any other person;
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● are not liable for any loss of gold occurring prior to the delivery of gold to the Custodian or after the delivery of gold by the Custodian; and
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● may rely upon any advice or information from other persons they believe in good faith to be competent to provide such advice or information.
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See “Description of the Shares and the Trust Agreement—Limitations on Obligations and Liability.”
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Termination events
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The Trustee will terminate the Trust Agreement if:
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● the Trustee is notified that the Shares are delisted from NYSE Arca and are not approved for listing on another national securities exchange within five Business Days of their delisting;
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● holders of at least 75% of the outstanding Shares notify the Trustee that they elect to terminate the Trust;
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● 60 days have elapsed since the Trustee notified the Sponsor of the Trustee’s election to resign or since the Sponsor removed the Trustee and a successor trustee has not been appointed and accepted its appointment;
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● the SEC determines that the Trust is an investment company under the Investment Company Act and the Trustee has actual knowledge of that determination;
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● the aggregate market capitalization of the Trust, based on the closing price for the Shares, was less than $350 million on each of five consecutive trading days and the Trustee receives, within six months from the last of those trading days, notice that the Sponsor has decided to terminate the Trust;
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● the CFTC determines that the Trust is a commodity pool under the Commodity Exchange Act and the Trustee has actual knowledge of that determination;
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● the Trust fails to qualify for treatment, or ceases to be treated, as a grantor trust for U.S. federal income tax purposes and the Trustee receives notice that the Sponsor has determined that the termination of the Trust is advisable;
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● any sole custodian then acting resigns, is removed or otherwise ceases to act as custodian and no successor custodian has been employed prior to the effective date of such resignation, removal or cessation;
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● DTC or another depositary has ceased to act as depositary with respect to the Shares and the Sponsor has not identified another depositary that is willing to act in such capacity prior to the effective date of such cessation; or
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● the Sponsor fails to undertake or perform its duties pursuant to the terms of the Trust Agreement.
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The term of the Trust is perpetual (unless terminated earlier in certain circumstances). See “Description of the Shares and the Trust Agreement—Amendment and Termination.”
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After termination of the Trust, the Trustee will deliver Trust property upon surrender and cancellation of Shares and, 90 days or more after termination, shall sell any remaining Trust property in a private or public sale, pursuant to the Sponsor’s direction, or, if the Sponsor does not provide any direction, as the Trustee determines, and hold the proceeds, uninvested and in a non-interest bearing account, for the benefit of the holders who have not surrendered their Shares for cancellation. See “Description of the Shares and the Trust Agreement—Amendment and Termination.”
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Authorized Participants
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Baskets may be created or redeemed only by Authorized Participants. Each Authorized Participant must be a registered broker-dealer, a participant in DTC, have entered into an agreement with the Sponsor and the Trustee (the “Authorized Participant Agreement”) and be in a position to transfer gold to, and take delivery of gold from, the Custodian through one or more gold accounts. The Authorized Participant Agreement provides the procedures for the creation and redemption of Baskets and for the delivery of gold in connection with such creations or redemptions. A list of the current Authorized Participants can be obtained from the Trustee or the Sponsor.
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Clearance and settlement
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The Shares will be evidenced by a global certificate that the Trust issues to DTC. The Shares are issued in book-entry form only. Transactions in Shares clear through the facilities of DTC. Investors may hold their Shares through DTC, if they are participants in DTC, or indirectly through entities that are participants in DTC.
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SUMMARY FINANCIAL CONDITION
As of June 15, 2021, the date of the formation of the Trust and the date the Seed Capital Investor deposited 5,000 fine ounces of gold into the Trust, the net asset value of the Trust was $9,325,500 and the NAV was $18.65.
RISK FACTORS
The Shares are speculative and involve a high degree of risk. Before making an investment decision, you should consider carefully the risks described below, as well as the other information included in this prospectus.
Risks Related to Gold
Actual or perceived disruptions in the processes used to determine the LBMA Gold Price PM, or lack of confidence in that benchmark, may adversely affect the return on your investment in the Shares (if any).
Because the objective of the Trust is to reflect the performance of the price of gold, any disruptions affecting the processes related to how the market determines the price of gold will have an effect on the value of the Shares.
The LBMA Gold Price AM and LBMA Gold Price PM are gold price benchmark mechanisms administered by ICE Benchmark Administration (“IBA”), an independent specialist benchmark administrator appointed by the LBMA. Twice daily during London business hours, IBA hosts an electronic auction consisting of one or more 30-second rounds.
Investors should keep in mind that electronic markets are not exempt from failures, as the experiences of the initial public offerings of Facebook and BATS Global Markets illustrate.
As of the date of this prospectus, the LBMA Gold Price AM and LBMA Gold Price PM have been subjected to the test of actual trading markets for approximately six years. As with any innovation, it is possible that electronic failures or other unanticipated events may occur that could result in delays in the announcement of, or the inability of the system to produce, an LBMA Gold Price AM or LBMA Gold Price PM on any given day. In addition, if a perception were to develop that the LBMA Gold Price AM or LBMA Gold Price PM is vulnerable to manipulation attempts, or if the administrative proceedings surrounding the determination and publication of the LBMA Gold Price AM or LBMA Gold Price PM were seen as unfair, biased or otherwise compromised by the markets, the behavior of investors and traders in gold may change, and those changes may have an effect on the price of gold (and, consequently, the value of the Shares). In any of these circumstances, the intervention of extraneous events disruptive of the normal interaction of supply and demand of gold at any given time may result in distorted prices and losses on an investment in the Shares that, but for such extraneous events, might not have occurred.
Other effects of disruptions in the determination of the LBMA Gold Price AM or LBMA Gold Price PM or any inaccuracies in setting of the auction prices on the operations of the Trust include the potential for an incorrect valuation of the Trust’s gold, an inaccurate computation of the Sponsor’s Fee, and the sales of gold to cover Trust expenses at prices that do not accurately reflect the fundamentals of the gold market. Each of these events could have an adverse effect on the value of the Shares. The operation of the auction process which determines the LBMA Gold Price is also dependent on the continued operation of the LBMA and the IBA and their applicable systems.
The LBMA Gold Price AM and LBMA Gold Price PM are regulated by the Financial Conduct Authority of the United Kingdom (the “FCA”).
As of the date of this prospectus, the Sponsor has no reason to believe that the LBMA Gold Price PM will not fairly represent the price of the gold held by the Trust. Should this situation change, the Sponsor expects to use the powers granted by the Trust’s governing documents to seek to replace the LBMA Gold Price PM with a more reliable indicator of the value of the Trust’s gold. There is no assurance that such alternative value indicator will be identified, or that the process of changing from the LBMA Gold Price PM to a new benchmark price will not adversely affect the price of the Shares.
Future governmental decisions may have significant impact on the price of gold, which may result in a significant decrease or increase in the value of the net assets and the net asset value of the Trust.
Generally, gold prices reflect the supply and demand of available gold. Governmental decisions, such as the executive order issued by the President of the United States in 1933 requiring all persons in the United States to deliver gold to the Federal Reserve or the abandonment of the gold standard by the United States in 1971, have been viewed as having significant impact on the supply and demand of gold and the price of gold. Future governmental decisions may have an impact on the price of gold and may result in a significant decrease or increase in the value of the net assets and the net asset value of the Trust. Further regulations applicable to U.S. banks and non-U.S. bank entities operating in the United States with respect to their trading in physical commodities, such as precious metals, may further impact the price of gold in the United States.
Because the Trust holds only gold, an investment in the Trust may be more volatile than an investment in a more broadly diversified portfolio.
The Trust holds only gold. As a result, the Trust’s holdings are not diversified. Accordingly, the Trust’s net asset value may be more volatile than another investment vehicle with a more broadly diversified portfolio and may fluctuate substantially over short or long periods of time. Fluctuations in the price of gold are expected to have a direct impact on the value of the Shares.
An investment in the Trust may be deemed speculative and is not intended as a complete investment program. An investment in Shares should be considered only by persons financially able to maintain their investment and who can bear the risk of loss associated with an investment in the Trust. Investors should review closely the objective and strategy of the Trust and redemption rights, as discussed herein, and familiarize themselves with the risks associated with an investment in the Trust.
Risks Related to the Shares
Because the Shares are created to reflect the price of the gold held by the Trust, the market price of the Shares will be as unpredictable as the price of gold has historically been. This creates the potential for losses, regardless of whether you hold Shares for a short-, mid- or long-term period.
Shares are created to reflect, at any given time, the market price of gold owned by the Trust at that time less the Trust’s expenses and liabilities. Because the value of Shares depends on the price of gold, it is subject to fluctuations similar to those affecting gold prices. This exposes your investment in Shares to potential losses if you need to sell your Shares at a time when the price of gold is lower than it was when you made your investment in Shares. Even if you are able to hold Shares for the mid- or long-term you may never realize a profit, because gold markets have historically experienced extended periods of flat or declining prices.
Following an investment in Shares, several factors may have the effect of causing a decline in the prices of gold and a corresponding decline in the price of Shares. Among them:
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large sales, including those by the official sector (government, central banks and related institutions), which own a significant portion of the aggregate world holdings. If one or more of these institutions decide to sell in amounts large enough to cause a decline in world gold prices, the price of the Shares will be adversely affected;
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a significant increase in gold hedging activity by gold producers. Should there be an increase in the level of hedge activity of gold producing companies, it could cause a decline in world gold prices, adversely affecting the price of the Shares;
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a significant change in the attitude of speculators and investors towards gold. Should the speculative community take a negative view towards gold, a decline in world gold prices could occur, negatively impacting the price of the Shares;
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global gold supply and demand, which is influenced by such factors as gold’s uses in jewelry, technology and industrial applications, purchases made by investors in the form of bars, coins and other gold products, purchases made by gold producers to unwind gold hedge positions and production and cost levels in major gold-producing countries such as China, South Africa, the United States and Australia;
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global or regional political, economic or financial events and situations, especially those unexpected in nature;
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investors’ expectations with respect to the rate of inflation;
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investment and trading activities of hedge funds and commodity funds;
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other economic variables such as income growth, economic output, and monetary policies; and
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Conversely, several factors may trigger a temporary increase in the price of gold prior to your investment in the Shares. If that is the case, you will be buying Shares at prices affected by the temporarily high prices of gold, and you may incur losses when the causes for the temporary increase disappear.
Investors should be aware that while gold is used to preserve wealth by investors around the world, there is no assurance that gold will maintain its long-term value in terms of future purchasing power. In the event the price of gold declines, the Sponsor expects the value of an investment in the Shares to decline proportionately.
Furthermore, although gold has been used as a portfolio diversifier due to its historically low-to-negative correlation with stocks and bonds, diversification does not ensure against, nor can it prevent against, risk of loss.
The amount of gold represented by each Share will decrease over the life of the Trust due to the sales of gold necessary to pay the Sponsor’s Fee and other Trust expenses. Without increases in the price of gold sufficient to compensate for that decrease, the price of the Shares will also decline and you will lose money on your investment in Shares.
Although the Sponsor has agreed to assume all organizational and certain ordinary administrative and marketing expenses incurred by the Trust, not all Trust expenses have been assumed by the Sponsor. For example, any taxes and other governmental charges that may be imposed on the Trust’s property will not be paid by the Sponsor. As part of its agreement to assume some of the Trust’s ordinary administrative expenses, the Sponsor has agreed to pay legal fees and expenses of the Trust not in excess of $100,000 per annum. Any legal fees and expenses in excess of that amount will be the responsibility of the Trust.
Because the Trust does not have any income, it needs to sell gold to cover the Sponsor’s Fee and expenses not assumed by the Sponsor. The Trust may also be subject to other liabilities (for example, as a result of litigation) that have also not been assumed by the Sponsor. The only source of funds to cover those liabilities will be sales of gold held by the Trust. Even if there are no expenses other than those assumed by the Sponsor, and there are no other liabilities of the Trust, the Trustee will still need to sell gold to pay the Sponsor’s Fee. The result of these sales is a decrease in the amount of gold represented by each Share. New deposits of gold, received in exchange for new Shares issued by the Trust, do not reverse this trend.
A decrease in the amount of gold represented by each Share results in a decrease in its price even if the price of gold has not changed. To retain the Share’s original price, the price of gold has to increase. Without that increase, the lesser amount of gold represented by the Share will have a correspondingly lower price. If these increases do not occur, or are not sufficient to counter the lesser amount of gold represented by each Share, you will sustain losses on your investment in Shares.
An increase in the Trust expenses not assumed by the Sponsor, or the existence of unexpected liabilities affecting the Trust, will force the Trustee to sell larger amounts of gold, and will result in a more rapid decrease of the amount of gold represented by each Share and a corresponding decrease in its value.
The Trust is a passive investment vehicle. The Trust is not actively managed and will be affected by a general decline in gold.
The Trustee does not actively manage the gold held by the Trust. This means that the Trustee does not sell gold at times when its price is high, or acquire gold at low prices in the expectation of future price increases. It also means that the Trustee does not make use of any of the hedging techniques available to professional gold investors to attempt to reduce the risks of losses resulting from price decreases. Any losses sustained by the Trust will adversely affect the value of your Shares.
The price received upon the sale of Shares may be less than the value of the gold represented by them.
The result obtained by subtracting the Trust’s expenses and liabilities on any day from the price of the gold owned by the Trust on that day is the net asset value of the Trust which, when divided by the number of Shares outstanding on that day, results in the net asset value per Share, or NAV.
Shares may trade at, above or below their NAV. The NAV will fluctuate with changes in the market value of the Trust’s assets. The trading prices of Shares will fluctuate in accordance with changes in their NAVs as well as market supply and demand. The amount of the discount or premium in the trading price relative to the NAV may be influenced by non-concurrent trading hours between the major gold markets and NYSE Arca. While the Shares will trade on NYSE Arca until 4:00 p.m. (New York time), liquidity in the market for gold will be reduced after the close of the major world gold markets, including London, Zurich and the Commodity Exchange, Inc. (“COMEX”) in Chicago. As a result, during this time, trading spreads, and the resulting premium or discount on Shares, may widen.
The costs inherent in buying or selling the Shares may detract significantly from investment results.
Buying or selling the Shares on an exchange involves two types of costs that apply to all securities transactions effectuated on an exchange. When buying or selling Shares through a broker or other intermediary, you will likely incur a brokerage commission or other charges imposed by that broker or intermediary. In addition, you may incur the cost of the “spread,” that is, the difference between what investors or market makers are willing to pay for the Shares (the “bid” price) and the price at which they are willing to sell the Shares (the “ask” price). Because of the costs inherent in buying or selling the Shares, frequent trading may detract significantly from investment results and an investment in the Shares may not be advisable for investors who anticipate regularly making small investments.
An investment in the Shares may be adversely affected by competition from other methods of investing in gold.
The Trust competes with other financial vehicles, including traditional debt and equity securities issued by companies in the gold industry and other securities backed by or linked to gold (including exchange-traded products), direct investments in gold and investment vehicles similar to the Trust. Market and financial conditions, and other conditions beyond the Sponsor’s control, may make it more attractive to invest in other financial vehicles or to invest in gold directly, which could limit the market for the Shares and reduce the liquidity of the Shares.
The liquidation of the Trust may occur at a time when the disposition of the Trust’s gold will result in losses to investors in Shares.
The term of the Trust is perpetual. However, if certain events occur, at any time, the Trustee will have to terminate the Trust. See “Description of the Shares and the Trust Agreement—Amendment and Termination” for more information about the termination of the Trust, including when events outside the control of the Sponsor, the Trustee or the Shareholders may prompt the Trust’s termination.
Upon termination of the Trust, the Trustee will sell gold in the amount necessary to cover all expenses of liquidation, and to pay any outstanding liabilities of the Trust. The remaining gold will be distributed among Authorized Participants surrendering Shares. Any gold remaining in the possession of the Trustee after 90 days will be sold by the Trustee pursuant to the Sponsor’s direction, or, if the Sponsor does not provide any direction, as the Trustee determines, and the proceeds of the sale will be held by the Trustee until claimed by any remaining holders of Shares. Sales of gold in connection with the liquidation of the Trust at a time of low prices will likely result in losses, or adversely affect your gains, on your investment in Shares.
The liquidity of the Shares may also be affected by the withdrawal from participation of Authorized Participants.
In the event that one or more Authorized Participants that have substantial interests in Shares withdraw from participation, the liquidity of the Shares will likely decrease, which could adversely affect the market price of the Shares and result in your incurring a loss on your investment in Shares.
There may be situations where an Authorized Participant is unable to redeem a Basket. To the extent the value of gold decreases, these delays may result in a decrease in the value of the gold the Authorized Participant will receive when the redemption occurs, as well as a reduction in liquidity for all Shareholders in the secondary market.
Although Shares surrendered by Authorized Participants in Basket-size aggregations are redeemable in exchange for the underlying amount of gold, redemptions may be suspended during any period while regular trading on NYSE Arca is suspended or restricted, or in which an emergency exists that makes it reasonably impracticable to deliver, dispose of, or evaluate gold. If any of these events occurs at a time when an Authorized Participant intends to redeem Shares, and the price of gold decreases before such Authorized Participant is able again to surrender Baskets for redemption, such Authorized Participant will sustain a loss with respect to the amount that it would have been able to obtain in exchange for the gold received from the Trust upon the redemption of its Shares, had the redemption taken place when such Authorized Participant originally intended it to occur. As a consequence, Authorized Participants may reduce their trading in Shares during periods of suspension, decreasing the number of potential buyers of Shares in the secondary market and, therefore, decreasing the price a Shareholder may receive upon sale.
The Trust is an “emerging growth company” and it cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make the Shares less attractive to investors.
The Trust is an “emerging growth company” as defined in the JOBS Act. For as long as the Trust continues to be an emerging growth company it may choose to take advantage of certain exemptions from various reporting requirements applicable to other public companies but not to emerging public companies, which include, among other things:
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exemption from the auditor attestation requirements under Section 404(b) of the Sarbanes-Oxley Act;
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reduced disclosure obligations regarding executive compensation in the Trust’s periodic reports and audited financial statements in this prospectus;
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exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation and shareholder advisory votes on “golden parachute” compensation; and
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exemption from any rules requiring mandatory audit firm rotation and auditor discussion and analysis and, unless otherwise determined by the SEC, any new audit rules adopted by the Public Company Accounting Oversight Board.
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The Trust could be an emerging growth company until the last day of the fiscal year following the fifth anniversary after its initial public offering, or until the earliest of (1) the last day of the fiscal year in which it has annual gross revenue of $1.07 billion or more, (2) the date on which it has, during the previous three year period, issued more than $1 billion in non-convertible debt or (3) the date on which it is deemed to be a large accelerated filer under the federal securities laws. The Trust will qualify as a large accelerated filer as of the first day of the first fiscal year after it has (A) more than $700 million in outstanding equity held by nonaffiliates, (B) been public for at least 12 months and (C) filed at least one annual report on Form 10-K.
Under the JOBS Act, emerging growth companies are also permitted to elect to delay adoption of new or revised accounting standards until companies that are not subject to periodic reporting obligations are required to comply, if such accounting standards apply to non-reporting companies. However, the Trust has chosen to opt out of this extended transition period for complying with new or revised accounting standards. Section 107 of the JOBS Act provides that the decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
The Trust cannot predict if investors will find an investment in the Trust less attractive if it relies on these exemptions.
Authorized Participants with large holdings may choose to terminate the Trust.
Holders of 75% of the Shares have the power to terminate the Trust. This power may be exercised by a relatively small number of holders. If it is so exercised, investors who wished to continue to invest in gold through the vehicle of the Trust will have to find another vehicle, and may not be able to find another vehicle that offers the same features as the Trust.
The lack of an active trading market for the Shares may result in losses on your investment at the time of disposition of your Shares.
Although Shares are listed for trading on NYSE Arca, you should not assume that an active trading market for the Shares will be maintained. If you need to sell your Shares at a time when no active market for them exists, such lack of an active market will most likely adversely affect the price you receive for your Shares (assuming you are able to sell them).
If the process of creation and redemption of Baskets encounters any unanticipated difficulties, the possibility for arbitrage transactions by Authorized Participants intended to keep the price of the Shares closely linked to the price of gold may not exist and, as a result, the price of the Shares may fall or otherwise diverge from NAV.
If the processes of creation and redemption of Shares (which depend on timely transfers of gold to and by the Custodian) encounter any unanticipated difficulties, potential market participants, such as the Authorized Participants and their customers, who would otherwise be willing to purchase or redeem Baskets to take advantage of any arbitrage opportunity arising from discrepancies between the price of the Shares and the price of the underlying gold may not take the risk that, as a result of those difficulties, they may not be able to realize the profit they expect. If this is the case, the liquidity of the Shares may decline and the price of the Shares may fluctuate independently of the price of gold and may fall or otherwise diverge from NAV. Furthermore, in the event that the London market for physical gold should become relatively illiquid and thereby materially restrict opportunities for arbitraging by delivering gold in return for Baskets, the price of Shares may diverge from the value of physical gold.
As an owner of Shares, you will not have the rights normally associated with ownership of other types of shares.
Shares are not entitled to the same rights as shares issued by a corporation. By acquiring Shares, you are not acquiring the right to elect directors, to receive dividends, to vote on certain matters regarding the issuer of your Shares or to take other actions normally associated with the ownership of shares. You will only have the limited rights described under “Description of the Shares and the Trust Agreement.”
As an owner of Shares, you will not have the protections normally associated with ownership of shares in an investment company registered under the Investment Company Act or the protections afforded by the CEA.
The Trust is not registered as an investment company and is not required to be registered under the Investment Company Act. Consequently, the owners of Shares do not have the protections under the Investment Company Act provided to investors in registered investment companies. For example, the provisions of the Investment Company Act that limit transactions with affiliates, prohibit the suspension of redemptions (except under certain limited circumstances) or limit sales loads, among others, do not apply to the Trust.
The Trust does not hold or trade in commodity futures contracts or any other instruments regulated by the CEA, as administered by the CFTC. Furthermore, the Trust is not a commodity pool for purposes of the CEA. Consequently, the Trustee and the Sponsor are not subject to registration as commodity pool operators with respect to the Trust. The owners of Shares do not receive the CEA disclosure document and certified annual report required to be delivered by the registered commodity pool operator with respect to a commodity pool, and the owners of Shares do not have the regulatory protections provided to investors in commodity pools operated by registered commodity pool operators.
The value of the Shares will be adversely affected if the Trust is required to indemnify the Sponsor or the Custodian as contemplated in the Trust Agreement and the Custodian Agreement.
Under the Trust Agreement, the Sponsor has a right to be indemnified from the Trust for any liability or expense it incurs without negligence, bad faith or willful misconduct on its part. Similarly, the Custodian Agreement provides for indemnification of the Custodian by the Trust under certain circumstances. This means that it may be necessary to sell assets of the Trust in order to cover losses or liability suffered by the Sponsor or the Custodian. Any sale of that kind would reduce the net asset value of the Trust and the value of the Shares.
Risks Related to the Trust and Its Operations
The Trust is exposed to various operational risks.
The Trust is exposed to various operational risks, including human error, information technology failures and failure to comply with formal procedures intended to mitigate these risks, and is particularly dependent on electronic means of communicating, record-keeping and otherwise conducting business. In addition, the Trust generally exculpates, and in some cases indemnifies, its service providers and agents with respect to losses arising from unforeseen circumstances and events, which may include the interruption, suspension or restriction of trading on or the closure of NYSE Arca, power or other mechanical or technological failures or interruptions, computer viruses, communications disruptions, work stoppages, natural disasters, fire, war, terrorism, riots, rebellions or other circumstances beyond the control of the Trust or its service providers and agents. Accordingly, the Trust generally bears the risk of loss with respect to these unforeseen circumstances and events to the extent relating to the Trust or the Shares, which may limit or prevent the Trust from generating returns corresponding to those of the Index or otherwise expose it to loss.
Although it is generally expected that the Trust’s direct service providers and agents will have disaster recovery or similar programs or safeguards in place to mitigate the effect of such unforeseen circumstances and events, there can be no assurance that these safeguards are in place for all parties whose activities may affect the performance of the Trust, or that these safeguards, even if implemented, will be successful in preventing losses associated with such unforeseen circumstances and events. Nor can there be any assurance that the systems and applications on which the Trust relies will continue to operate as intended. In addition to potentially causing performance failures at, or direct losses to, the Trust, any such unforeseen circumstances and events or operational failures may further distract the service providers, agents or personnel on which the Trust relies, reducing their ability to conduct the activities on which the Trust is dependent. These risks cannot be fully mitigated or prevented, and further efforts or expenditures to do so may not be cost-effective, whether due to reduced benefits from implementing additional or redundant safeguards or due to increases in associated maintenance requirements and other expenses that may make it more costly for the Trust to operate in more typical circumstances.
The Trust may be negatively impacted by the effects of the spread of illnesses or other public health emergencies on the global economy and the markets and service providers relevant to the performance of the Trust.
An outbreak of infectious respiratory illness caused by a novel coronavirus known as COVID-19 was first detected in China in December 2019 and has now been spread globally. This outbreak has resulted in travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, prolonged quarantines, event cancellations, supply chain disruptions, and lower consumer demand, layoffs, defaults and other significant economic impacts, as well as general concern and uncertainty. The impact of this outbreak has adversely affected the economies of many nations and the entire global economy and may impact individual issuers and capital markets in ways that cannot necessarily be foreseen. Other infectious illness outbreaks that may arise in the future could have similar impacts. Public health crises caused by the outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally.
The COVID-19 outbreak may continue to have serious negative effects on social, economic and financial systems, including significant uncertainty and volatility in the financial markets. For instance, the suspension of operations of mines, refineries and vaults that extract, produce or store gold, restrictions on travel that delay or prevent the transportation of gold, and an increase in demand for gold may disrupt supply chains for gold, which could cause secondary market spreads to widen and compromise our ability to settle transactions on time. Any inability of the Trust to issue or redeem Shares or the Custodian or any sub-custodian to receive or deliver gold as a result of the outbreak will negatively affect the Trust’s operations.
The duration of the outbreak and its effects cannot be determined with certainty. A prolonged outbreak could result in an increase of the costs of the Trust, affect liquidity in the market for gold as well as the correlation between the price of the Shares and the net asset value of the Trust, any of which could adversely affect the value of your Shares. In addition, the outbreak could also impair the information technology and other operational systems upon which the Trust’s service providers, including the Sponsor, the Trustee and the Custodian, rely, and could otherwise disrupt the ability of employees of the Trust’s service providers to perform essential tasks on behalf of the Trust. Governmental and quasi-governmental authorities and regulators throughout the world have in the past responded to major economic disruptions with a variety of fiscal and monetary policy changes, including, but not limited to, direct capital infusions into companies, new monetary programs and lower interest rates. An unexpected or quick reversal of these policies, or the ineffectiveness of these policies, is likely to increase volatility in the market for gold, which could adversely affect the price of the Shares.
Further, the outbreak could interfere with or prevent the operation of the electronic auction hosted by IBA to determine the LBMA Gold Price, which the Trustee uses to value the gold held by the Trust and calculate the net asset value of the Trust. The outbreak could also cause the closure of futures exchanges, which could eliminate the ability of Authorized Participants to hedge purchases of Baskets, increasing trading costs of Shares and resulting in a sustained premium or discount in the Shares. Each of these outcomes would negatively impact the Trust.
The Trust relies on the information and technology systems of the Custodian, the Trustee and, to a lesser degree, the Sponsor, which could be adversely affected by information systems interruptions, cybersecurity attacks or other disruptions which could have a material adverse effect on our record keeping and operations.
The Custodian, the Trustee and, to a lesser degree, the Sponsor, depend upon information technology infrastructure, including network, hardware and software systems to conduct their business as it relates to the Trust. A cybersecurity incident, or a failure to protect their computer systems, networks and information against cybersecurity threats, could result in loss or unintended disclosure of information or loss or theft of the Trust assets, and could adversely impact the ability of the Trust’s service providers to conduct their business, including their business on behalf of the Trust. Despite implementation of network and other cybersecurity measures, these security measures may not be adequate to protect against all cybersecurity threats.
The Sponsor and its affiliates manage other accounts, funds or trusts, including those that invest in gold bullion or other precious metals, and conflicts of interest may occur, which may reduce the value of the net assets of the Trust, the NAV and the trading price of the Shares.
The Sponsor or its affiliates and associates currently engage in, and may in the future engage, in the promotion, management or investment management of other accounts, funds or trusts that invest primarily in gold bullion or other precious metals. Although officers and professional staff of the Sponsor’s management intend to devote as much time to the Trust as is deemed appropriate to perform their duties, the Sponsor’s management may allocate their time and services among the Trust and the other accounts, funds or trusts. The Sponsor will provide any such services to the Trust on terms not less favorable to the Trust than would be available from a non-affiliated party. Prospective investors should be aware that the Sponsor and the Trustee intend to assert that Shareholders have, by purchasing Shares, consented to the conflicts of interest described in the section “Conflicts of Interest” in the event of any proceeding alleging that such conflicts violated any duty owed by the Sponsor or the Trustee to the Shareholders.
The Sponsor and the Trustee may agree to amend the Trust Agreement without the consent of the Shareholders.
The Sponsor and the Trustee may agree to amend the Trust Agreement, including to increase the Sponsor’s Fee, without Shareholder consent. The Sponsor shall determine the contents and manner of delivery of any notice of any Trust Agreement amendment. If an amendment imposes new fees and charges or increases existing fees or charges, including the Sponsor’s Fee (except for taxes and other governmental charges, registration fees or other such expenses), or prejudices a substantial right of Shareholders, it will become effective for outstanding Shares 30 days after notice of such amendment is given to registered owners. Shareholders that are not registered owners (which most shareholders will not be) may not receive specific notice of a fee increase other than through an amendment to the prospectus. Moreover, at the time an amendment becomes effective, by continuing to hold Shares, Shareholders are deemed to agree to the amendment and to be bound by the Trust Agreement as amended without specific agreement to such increase (other than through the “negative consent” procedure described above).
Risks Related to the Custody of Gold
The Gold Bullion custody operations of the Custodian are not subject to specific governmental regulatory supervision.
The Custodian is responsible for the safekeeping of the Trust’s Gold Bullion and also facilitates the transfer of Gold Bullion into and out of the Trust. Although the Custodian is a market maker, clearer and approved weigher under the rules of the LBMA (which sets out good practices for participants in the bullion market), the LBMA is not an official or governmental regulatory body. Furthermore, although the Custodian is generally regulated in the UK by the Prudential Regulation Authority and the FCA, such regulations do not directly cover the Custodian’s Gold Bullion custody operations in the UK. Accordingly, the Trust is dependent on the Custodian to comply with the best practices of the LBMA and to implement satisfactory internal controls for its Gold Bullion custody operations in order to keep the Trust’s Gold Bullion secure.
The value of the Shares will be adversely affected if gold owned by the Trust is lost or damaged in circumstances in which the Trust is not able to recover the corresponding loss.
The Custodian is responsible to the Trust for loss or damage to the Trust’s gold only under limited circumstances. The Custodian Agreement contemplates that the Custodian will be responsible to the Trust only if it acts with negligence, fraud or in willful default of its obligations under the Custodian Agreement. In addition, the Custodian has agreed to indemnify the Trust for any loss or liability directly resulting from a breach of the Custodian’s covenants, agreements, representations and warranties in the Custodian Agreement, a failure of the Custodian to act in accordance with the Trustee’s instructions or any physical loss, destruction or damage to the gold held for the Trust’s account, except for losses due to nuclear accidents, terrorism, riots, acts of God, insurrections, strikes and similar causes beyond the control of the Custodian for which the Custodian will not be responsible to the Trust. The Custodian has no obligation to replace any gold lost under circumstances for which the Custodian is liable to the Trust. The Custodian’s liability to the Trust, if any, will be limited to the value of any gold lost, or the amount of any balance held on an unallocated basis, at the time of the Custodian’s negligence, fraud or willful default, or at the time of the act or omission giving rise to the claim for indemnification.
In addition, because the Custodian Agreement is governed by English law, any rights which the holders of the Shares may have against the Custodian will be different from, and may be more limited than, those that could have been available to them under the laws of a different jurisdiction. The choice of English law to govern the Custodian Agreement, however, is not expected to affect any rights that the holders of the Shares may have against the Trust or the Trustee.
Any loss of gold owned by the Trust will result in a corresponding loss in the NAV and it is reasonable to expect that such loss will also result in a decrease in the value at which the Shares are traded on NYSE Arca.
Although the relationship between the Custodian and the Trustee concerning the Trust’s allocated gold is expressly governed by English law, a court hearing any legal dispute concerning that arrangement may disregard that choice of law and apply U.S. law, in which case the ability of the Trust to seek legal redress against the Custodian may be limited.
The obligations of the Custodian under the Custodian Agreement are governed by English law. The Trust is a New York common law trust. Any U.S., New York or other court situated in the United States may have difficulty interpreting English law (which, insofar as it relates to custody arrangements, is largely derived from court rulings rather than statute), LBMA rules or the customs and practices in the London custody market. It may be difficult or impossible for the Trust to sue the Custodian in a U.S., New York or other court situated in the United States. In addition, it may be difficult, time consuming and/or expensive for the Trust to enforce in a foreign court a judgment rendered by a U.S., New York or other court situated in the United States.
Shareholders and Authorized Participants lack the right under the Custodian Agreement to assert claims directly against the Custodian, which significantly limits their options for recourse.
Neither the Shareholders nor any Authorized Participant will have a right under the Custodian Agreement to assert a claim of the Trustee against the Custodian. Claims under the Custodian Agreement may only be asserted by the Trustee on behalf of the Trust.
Gold transferred to the Trust in connection with the creation of Baskets may not be of the quality required under the Trust Agreement. The Trust will sustain a loss if the Trustee inadvertently issues Shares in exchange for gold of inferior quality and that loss will adversely affect the value of all existing Shares.
The procedures agreed to with the Custodian contemplate that the Custodian must undertake certain tasks in connection with the inspection of gold delivered by Authorized Participants in exchange for Baskets. The Custodian’s inspection includes review of the corresponding bar list to ensure that it accurately describes the weight, fineness, refiner marks and bar numbers appearing on the gold bars, but does not include any chemical or other tests designed to verify that the gold received does, in fact, meet the purity requirements referred to in the Trust Agreement. Accordingly, such inspection procedures may not prevent the deposit of gold that fails to meet these purity standards. Each Authorized Participant that deposits gold in the Trust is liable to the Trust if that gold does not meet the requirements of the Trust Agreement. The Custodian will not be responsible or liable to the Trust or to any investor in the event any gold otherwise properly inspected by it does not meet the purity requirements contained in the Trust Agreement. To the extent that Baskets are issued in exchange for gold of inferior quality and the Trust is not able to recover damages from the Authorized Participant that deposited that gold, the total value of the assets of the Trust will be adversely affected and, with it, the NAV. In these circumstances, it is reasonable to expect that the value at which the Shares trade on NYSE Arca will also be adversely affected.
The Trust’s lack of insurance protection and the Shareholders’ limited rights of legal recourse against the Trust, the Trustee, the Sponsor, the Custodian and any sub-custodian expose the Shareholders to the risk of loss of the Trust’s gold for which no person is liable.
The Trust does not insure its gold. The Custodian maintains insurance on such terms and conditions as it considers appropriate in connection with its custodial obligations under the Custodian Agreement and is responsible for all costs, fees and expenses arising from the insurance policy or policies. The Trust is not a beneficiary of any such insurance and does not have the ability to dictate the existence, nature or amount of coverage. Therefore, Shareholders cannot be assured that the Custodian maintains adequate insurance or any insurance with respect to the gold held by the Custodian on behalf of the Trust. In addition, the Custodian Agreement does not require any direct or indirect sub-custodians to be insured or bonded with respect to their custodial activities or in respect of the gold held by them on behalf of the Trust. Further, Shareholders’ legal recourse against the Trust, the Trustee, the Sponsor, the Custodian, and any sub-custodians is limited. Consequently, a loss may be suffered with respect to the Trust’s gold which is not covered by insurance and for which no person is liable in damages.
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes statements which relate to future events or future performance. In some cases, you can identify such forward-looking statements by terminology such as “may,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or the negative of these terms or other comparable terminology. All statements (other than statements of historical fact) included in this prospectus that address activities, events or developments that may occur in the future, including such matters as changes in commodity prices and market conditions (for gold and the Shares), the Trust’s operations, the Sponsor’s plans and references to the Trust’s future success and other similar matters are forward-looking statements. These statements are only predictions. Actual events or results may differ materially. These statements are based upon certain assumptions and analyses made by the Sponsor on the basis of its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. Whether or not actual results and developments will conform to the Sponsor’s expectations and predictions, however, is subject to a number of risks and uncertainties, including the special considerations discussed in this prospectus, general economic, market and business conditions, changes in laws or regulations, including those concerning taxes, made by governmental authorities or regulatory bodies, and other world economic and political developments. See “Risk Factors.” Consequently, all the forward-looking statements made in this prospectus are qualified by these cautionary statements, and there can be no assurance that the actual results or developments the Sponsor anticipates will be realized or, even if substantially realized, will result in the expected consequences to, or have the expected effects on, the Trust’s operations or the value of the Shares. Neither the Trust nor the Sponsor is under a duty to update any of the forward-looking statements to conform such statements to actual results or to a change in the Sponsor’s expectations or predictions.
USE OF PROCEEDS
Proceeds received by the Trust from the issuance and sale of Baskets consist of gold deposits. Such deposits are held by the Custodian on behalf of the Trust until (1) delivered to Authorized Participants in connection with redemptions of Baskets or (2) sold to pay fees due to the Sponsor and Trust expenses and liabilities not assumed by the Sponsor. See “Business of the Trust—Trust Expenses.”
THE GOLD INDUSTRY
Introduction
This section provides a brief introduction to the gold industry by looking at some of the key participants, detailing the primary sources of demand and supply and outlining the role of the “official” sector (i.e., central banks) in the market.
Market Participants
The participants in the world gold industry may be classified in the following sectors: the mining and producer sector, the banking sector, the official sector, the investment sector, and the manufacturing sector. A brief description of each follows.
The Mining and Producer Sector
This group includes mining companies that specialize in gold and silver production; mining companies that produce gold as a by-product of other production (such as copper or silver production); and scrap merchants and recyclers.
The Banking Sector
Bullion banks provide a variety of services to the gold market and its participants, thereby facilitating interactions between other parties. Services provided by the bullion banking community include traditional banking products as well as mine financing, physical gold purchases and sales, hedging and risk management, inventory management for industrial users and consumers, and gold deposit and loan instruments.
The Official Sector
The official sector encompasses the activities of the various central banking operations of gold-holding countries. In September 1999 a group of 15 central banks acting to clarify their intentions with respect to their gold holdings signed the Central Bank Gold Agreement commonly called the “Washington Accord on Gold.” The signatories included the European Central Bank and the central banks of Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. The original agreement limited incremental sales by the 15 signatories to 400 tonnes per annum over the ensuing five-year period. The original Washington Accord on Gold expired in September 2004, and was renewed by almost all of the original signatories for a second five-year period (the United Kingdom did not renew in 2004). The second Washington Accord Agreement expired in September 2009 and was renewed again by all signatories of the second agreement for a third five-year period. In addition, the central banks of Cyprus, Greece, Malta, Slovakia and Slovenia signed the 2009 accord. The fourth Washington Accord Agreement was renewed as of September 2014 by all signatories of the third agreement for a fourth five-year period. In addition, the banks of Estonia, Latvia and Finland signed the fourth agreement. The signatories to the fourth Washington Accord Agreement did not renew the agreement upon its expiration on September 26, 2019.
The Investment Sector
This sector includes the investment and trading activities of both professional and private investors and speculators. These participants range from large hedge and mutual funds to day-traders on futures exchanges and retail-level coin collectors.
The Manufacturing Sector
The fabrication and manufacturing sector represents all the commercial and industrial users of gold for whom gold is a daily part of their business. The jewelry industry is a large user of gold. Other industrial users of gold include the electronics and dental industries.
World Gold Supply and Demand (2010-2019)
The following table sets forth a summary of the world gold supply and demand from 2010 to 2019:
|
Tonnes
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
2018
|
|
|
2019
|
|
|
Supply
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mine Production
|
|
|
2,794
|
|
|
|
2,893
|
|
|
|
2,976
|
|
|
|
3,138
|
|
|
|
3,242
|
|
|
|
3,336
|
|
|
|
3,460
|
|
|
|
3,494
|
|
|
|
3,561
|
|
|
|
3,534
|
|
|
Recycling
|
|
|
1,502
|
|
|
|
1,617
|
|
|
|
1,662
|
|
|
|
1,229
|
|
|
|
1,170
|
|
|
|
1,103
|
|
|
|
1,264
|
|
|
|
1,138
|
|
|
|
1,160
|
|
|
|
1,297
|
|
|
Net Hedging Supply
|
|
|
-
|
|
|
|
32
|
|
|
|
-
|
|
|
|
-
|
|
|
|
105
|
|
|
|
13
|
|
|
|
33
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Total Supply
|
|
|
4,296
|
|
|
|
4,542
|
|
|
|
4,638
|
|
|
|
4,366
|
|
|
|
4,517
|
|
|
|
4,453
|
|
|
|
4,756
|
|
|
|
4,632
|
|
|
|
4,721
|
|
|
|
4,831
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jewellery Fabrication
|
|
|
2,117
|
|
|
|
2,196
|
|
|
|
2,213
|
|
|
|
2,766
|
|
|
|
2,544
|
|
|
|
2,479
|
|
|
|
2,019
|
|
|
|
2,257
|
|
|
|
2,285
|
|
|
|
2,137
|
|
|
Industrial Demand
|
|
|
411
|
|
|
|
387
|
|
|
|
365
|
|
|
|
350
|
|
|
|
348
|
|
|
|
332
|
|
|
|
323
|
|
|
|
333
|
|
|
|
335
|
|
|
|
326
|
|
|
Net Physical Investment
|
|
|
1,141
|
|
|
|
1,401
|
|
|
|
1,300
|
|
|
|
1,719
|
|
|
|
1,060
|
|
|
|
1,072
|
|
|
|
1,062
|
|
|
|
1,035
|
|
|
|
1,067
|
|
|
|
850
|
|
|
Net Hedging Demand
|
|
|
118
|
|
|
|
-
|
|
|
|
47
|
|
|
|
25
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
24
|
|
|
|
9
|
|
|
|
1
|
|
|
Net Official Sector Buying
|
|
|
104
|
|
|
|
516
|
|
|
|
582
|
|
|
|
653
|
|
|
|
601
|
|
|
|
580
|
|
|
|
395
|
|
|
|
379
|
|
|
|
657
|
|
|
|
646
|
|
|
Total Demand
|
|
|
3,893
|
|
|
|
4,499
|
|
|
|
4,508
|
|
|
|
5,512
|
|
|
|
4,554
|
|
|
|
4,463
|
|
|
|
3,798
|
|
|
|
4,028
|
|
|
|
4,352
|
|
|
|
3,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Balance
|
|
|
403
|
|
|
|
44
|
|
|
|
130
|
|
|
|
-1,146
|
|
|
|
-37
|
|
|
|
-10
|
|
|
|
958
|
|
|
|
604
|
|
|
|
369
|
|
|
|
872
|
|
|
Net Investment in ETPs
|
|
|
421
|
|
|
|
261
|
|
|
|
251
|
|
|
|
-882
|
|
|
|
-153
|
|
|
|
-129
|
|
|
|
541
|
|
|
|
271
|
|
|
|
75
|
|
|
|
404
|
|
|
Market Balance less ETPs
|
|
|
-18
|
|
|
|
-217
|
|
|
|
-121
|
|
|
|
-265
|
|
|
|
116
|
|
|
|
119
|
|
|
|
417
|
|
|
|
332
|
|
|
|
294
|
|
|
|
469
|
|
|
Gold Price (US$/oz, London)
|
|
|
1,225
|
|
|
|
1,572
|
|
|
|
1,669
|
|
|
|
1,411
|
|
|
|
1,266
|
|
|
|
1,160
|
|
|
|
1,251
|
|
|
|
1,257
|
|
|
|
1,268
|
|
|
|
1,393
|
|
Source: Metals Focus
Historical Chart of the Price of Gold
The price of gold is volatile and its fluctuations are expected to have a direct impact on the value of the Shares. However, movements in the price of gold in the past, and any past or present trends, are not a reliable indicator of future movements. Movements may be influenced by various factors, including announcements from central banks regarding a country’s reserve gold holdings, agreements among central banks, fluctuations in the value of the U.S. dollar, supply and demand, geo-political uncertainties, economic concerns such as inflation, and real or speculative investor interest.
The following chart illustrates the changes in the LBMA gold prices from December 2004 through March 2021:
*London PM Fix until March 19, 2015; LBMA: Gold Price PM thereafter.
Source: LBMA
OPERATION OF THE GOLD MARKET
The global trade in gold consists of over-the-counter (“OTC”) transactions in spot, forwards, and options and other derivatives, together with exchange-traded futures and options.
Over-the-Counter Market
The OTC gold market includes spot, forward, and option and other derivative transactions conducted on a principal-to-principal basis. While this is a global, nearly 24-hour per day market, its main centers are London, New York and Zurich.
Most OTC market trades are cleared through London. The LBMA plays an important role in setting OTC gold trading industry standards. A London Good Delivery Bar (as described below), which is acceptable for settlement of any OTC transaction, will be acceptable for delivery to the Trust in connection with the issuance of Baskets.
Futures Exchanges
Futures exchanges seek to provide a neutral, regulated marketplace for the trading of derivatives contracts for commodities. The terms of futures contracts are defined by the applicable exchange for each commodity. For each commodity traded, the contract specifies the precise quality and quantity standards. The contract’s terms and conditions also define the location and timing of physical delivery.
An exchange does not buy or sell those contracts, but seeks to offer a transparent forum where members, on their own behalf or on the behalf of customers, can trade the contracts in a safe, efficient and orderly manner.
The most significant gold futures exchanges are COMEX, operated by Commodities Exchange, Inc., a subsidiary of New York Mercantile Exchange, Inc. (“NYMEX”), and the Tokyo Commodity Exchange (“TOCOM”). The COMEX is the largest exchange in the world for trading metals futures and options and has been trading gold since 1974. The TOCOM has been trading gold since 1982.
COMEX
Gold futures opened for trading on COMEX on December 31, 1974, coinciding with the lifting of the U.S. Government’s ban on gold ownership by private citizens in the United States. During regular trading hours at COMEX, the commodity contracts are traded through open outcry; a verbal auction in which all bids, offers and trades must be publicly announced to all members. The prices at which each commodity trades throughout the day serve as world benchmarks. They are immediately transmitted around the world by a wide variety of price-reporting services under arrangement with the exchange. Electronic trading is offered by the exchange after regular market hours. Except for brief breaks to switch between open outcry and electronic trading in the evening and the morning, gold futures trade almost 24 hours a day, five business days a week.
The COMEX rules and procedures seek to ensure the integrity of the trading process. They are complemented by a system designed to ensure the quality of the physical gold used for delivery under the futures contracts. For gold to be eligible for delivery upon a COMEX contract, it must be deposited into an exchange-licensed depository from a source that is capable of guaranteeing the gold’s quality. The three sources include: (1) a refiner approved for COMEX gold delivery, (2) an assayer approved to assay such gold, or (3) from another licensed depository, when it entered that depository via either (1) or (2). Gold can only be moved from any of these sources by a COMEX-approved deliverer. Throughout every step, the gold bar must be accompanied by a complete documentary history of its movement. If this chain of integrity is broken at any point, the bar is not eligible and either must be re-assayed to prove its quality or sent back to the refinery to be recast.
The trading unit of COMEX gold futures contracts is 100 troy ounces. Gold bars tendered for delivery can be cast in the form of either one bar or three one-kilogram bars. In either form, the gross weight of the bar or bars tendered for each contract must be within a five-percent tolerance. The bars must assay at not less than 995 fineness, i.e. 99.5% pure gold. The weight, fineness, bar number and identifying stamp of the refiner must be clearly incised on each bar by the approved refiner. The buyer taking delivery pays for the actual gold content, called the fine weight, in the bar. The fine weight is determined by multiplying the gross weight of the bar or bars tendered for each contract by their fineness. For example, a bar with a gross weight of 100 oz. with a fineness of 995, has a fine weight of 99.5 troy ounces. Delivery of COMEX gold is based on negotiable warehouse receipts, called warrants, for specific bars identified on the receipt which are stored in licensed depositories located in New York City.
All procedures described above are set forth in the COMEX rules and regulations as in effect as of the date of this prospectus. These rules and regulations are established by the Board of Directors of the NYMEX and subject to change by that body.
Exchange Regulation
In addition to the public nature of the pricing, futures exchanges in the United States are regulated at two levels, internal and external governmental supervision. The internal is performed through self-regulation and consists of regular monitoring of the following: the open-outcry process to ensure that it is conducted in conformance with all exchange rules; the financial condition of all exchange member firms to ensure that they continuously meet financial commitments; and the positions of commercial and non-commercial customers to ensure that physical delivery and other commercial commitments can be met, and that pricing is not being improperly affected by the size of any particular customer positions. External governmental oversight is performed by the CFTC, which reviews all the rules and regulations of U.S. futures exchanges and monitors their enforcement. The CFTC oversees the operation of the U.S. commodity futures markets, including COMEX. One of the principal public policy objectives of the Commodity Exchange Act is to ensure the integrity of the markets it oversees and the reliability of the prices of trades on those markets. The Commodity Exchange Act and CFTC require markets, including COMEX, to have rules and procedures to prevent market manipulation, abusive trade practice and fraud and the CFTC conducts regular review of the markets’ rule enforcement programs.
The London Bullion Market
Most trading in physical gold is conducted on the OTC market, predominantly in London. LBMA coordinates various OTC-market activities, including clearing and vaulting, acts as the principal intermediary between physical gold market participants and the relevant regulators, promotes good trading practices and develops standard market documentation. In addition, the LBMA promotes refining standards for the gold market by maintaining the “London Good Delivery List,” which identifies refiners of gold that have been approved by the LBMA.
In the OTC market, gold bars that meet the specifications for weight, dimensions, fineness (or purity), identifying marks (including the assay stamp of an LBMA-acceptable refiner) and appearance described in “The Good Delivery Rules for Gold and Silver Bars” published by the LBMA are referred to as “London Good Delivery Bars.” A London Good Delivery Bar (typically called a “400 ounce bar”) must contain between 350 and 430 fine troy ounces of gold (1 troy ounce = 31.1034768 grams), with a minimum fineness (or purity) of 995 parts per 1000 (99.5%), be of good appearance and be easy to handle and stack. The fine gold content of a gold bar is calculated by multiplying the gross weight of the bar (expressed in units of 0.025 troy ounces) by the fineness of the bar. A London Good Delivery Bar must also bear the stamp of one of the refiners identified on the London Good Delivery List.
London Market Regulation
Following the enactment of the Financial Markets Act 2012, the Prudential Regulation Authority of the Bank of England is responsible for regulating most of the financial firms that are active in the bullion market, and the FCA is responsible for consumer and competition issues. Trading in spot, forwards and wholesale deposits in the bullion market is subject to the Non-Investment Products Code adopted by market participants.
Not a Regulated Commodity Pool
The Trust will not trade in gold futures contracts on COMEX or on any other futures exchange. The Trust will take delivery of physical gold that complies with the LBMA gold delivery rules. Because the Trust will not trade in gold futures contracts on any futures exchange, the Trust will not be regulated by the CFTC under the Commodity Exchange Act as a “commodity pool,” and will not be operated by a CFTC-regulated commodity pool operator. Investors in the Trust will not receive the regulatory protections afforded to investors in commodity pools operated by registered commodity pool operators, nor may COMEX or any futures exchange enforce its rules with respect to the Trust’s activities. In addition, investors in the Trust will not benefit from the protections afforded to investors in gold futures contracts on regulated futures exchanges.
Other Methods of Investing in Gold
The Trust competes with other financial vehicles, including traditional debt and equity securities issued by companies in the gold industry and other securities backed by or linked to gold, direct investments in gold and investment vehicles similar to the Trust.
BUSINESS OF THE TRUST
The activities of the Trust are limited to (1) issuing Baskets in exchange for the gold deposited with the Custodian as consideration, (2) selling gold as necessary to cover the Sponsor’s Fee, Trust expenses not assumed by the Sponsor and other liabilities and (3) delivering gold in exchange for Baskets surrendered for redemption. The Trust is not actively managed. It does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the price of gold.
Trust Objective
The Trust seeks to reflect generally the performance of the price of gold. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. The Shares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in gold. An investment in physical gold requires expensive and sometimes complicated arrangements in connection with the assay, transportation, warehousing and insurance of the metal. Traditionally, such expense and complications have resulted in investments in physical gold being efficient only in amounts beyond the reach of many investors. The Shares have been designed to remove the obstacles represented by the expense and complications involved in an investment in physical gold, while at the same time having an intrinsic value that reflects, at any given time, the price of the gold owned by the Trust at such time less the Trust’s expenses and liabilities. Although the Shares are not the exact equivalent of an investment in gold, they provide investors with an alternative that allows a level of participation in the gold market through the securities market.
An investment in Shares is:
Backed by gold held by the Custodian on behalf of the Trust.
The Shares are backed by the assets of the Trust. The Trustee’s arrangements with the Custodian contemplate that at the end of each Business Day there can be in the Trust account maintained by the Custodian no gold in an unallocated form. Accordingly, the Trust’s gold holdings are represented by physical gold, are identified on the Custodian’s or, if applicable, sub-custodian’s, books as the property of the Trust and are held by the Custodian in New York, London and other locations that may be authorized in the future.
As accessible and easy to handle as any other investment in shares.
Retail investors may purchase and sell Shares through traditional brokerage accounts. Because the intrinsic value of each Share is a function of the price of only a fraction of an ounce of gold held by the Trust, the cash outlay necessary for an investment in Shares should be less than the amount required for currently existing means of investing in physical gold. Shares are eligible for margin accounts.
Listed.
Although there can be no assurance that an actively traded market in the Shares will develop, the Shares will be listed and traded on NYSE Arca under the ticker symbol “IAUM.”
Relatively cost-efficient.
Because the expenses involved in an investment in physical gold will be dispersed among all holders of Shares, an investment in Shares may represent a cost-efficient alternative to investments in physical gold for investors not otherwise in a position to participate directly in the market for physical gold.
Secondary Market Trading
While the Trust seeks to reflect generally the performance of the price of gold less the Trust’s expenses and liabilities, Shares may trade at, above or below their NAV. The NAV of the Shares will fluctuate with changes in the market value of the Trust’s assets. The trading prices of Shares will fluctuate in accordance with changes in their NAV as well as market supply and demand. The amount of the discount or premium in the trading price relative to the NAV may be influenced by non-concurrent trading hours between the major gold markets and NYSE Arca. While the Shares will trade on NYSE Arca until 4:00 p.m. (New York time), liquidity in the market for gold may be reduced after the close of the major world gold markets, including London, Zurich and COMEX. As a result, during this time, trading spreads, and the resulting premium or discount, on Shares may widen. However, given that Baskets can be created and redeemed in exchange for the underlying amount of gold, the Sponsor believes that the arbitrage opportunities may provide a mechanism to mitigate the effect of such premium or discount.
The Trust is not registered as an investment company for purposes of U.S. federal securities laws, and is not subject to regulation by the SEC as an investment company. Consequently, the owners of Shares do not have the regulatory protections provided to investors in registered investment companies. For example, the provisions of the Investment Company Act that limit transactions with affiliates, prohibit the suspension of redemptions (except under certain limited circumstances) or limit sales loads, among others, do not apply to the Trust.
The Trust does not hold or trade in commodity futures contracts or any other instruments regulated by the Commodity Exchange Act as administered by the CFTC. Furthermore, the Trust is not a commodity pool for purposes of the CEA. Consequently, the Trustee and the Sponsor are not subject to registration as commodity pool operators with respect to the Trust. The owners of Shares do not receive the CEA disclosure document and certified annual report required to be delivered by the registered commodity pool operator with respect to a commodity pool, and the owners of shares do not have the regulatory protections provided to investors in commodity pools operated by registered commodity pool operators.
Valuation of Gold; Computation of Net Asset Value
On each Business Day, as soon as practicable after 4:00 p.m. (New York time), the Trustee evaluates the gold held by the Trust and determines the net asset value of the Trust and the NAV. For purposes of making these calculations, a Business Day means any day other than a day when NYSE Arca is closed for regular trading.
The Trustee values the gold held by the Trust using that day’s LBMA Gold Price PM.
LBMA Gold Price is the price per troy ounce, in U.S. dollars, of unallocated gold delivered in London determined by IBA following an electronic auction consisting of one or more 30-second rounds starting at 10:30 a.m. (London time) (in the case of LBMA Gold Price AM) or 3:00 p.m. (London time) (in the case of LBMA Gold Price PM) on each day that the London gold market is open for business, and published shortly thereafter. At the start of each round of auction, IBA publishes a price for that round. Participants then have 30 seconds to enter, change or cancel their orders (i.e., how much gold they want to buy or sell at that price). At the end of each round, order entry is frozen, and the system checks to see if the imbalance (i.e., the difference between buying and selling) is within the threshold (normally 10,000 troy ounces for gold). If the imbalance is outside the threshold at the end of a round, then the auction is not balanced, the price is adjusted and a new round starts. If the imbalance is within the threshold then the auction is finished, and the price is set as the LBMA Gold Price AM or LBMA Gold Price PM, as appropriate, for that day. Any imbalance is shared equally between all direct participants (even if they did not place orders or did not log in), and the net volume for each participant trades at the final price. The prices during the auction are determined by an algorithm that takes into account current market conditions and activity in the auction. Each auction is actively supervised by IBA staff. As of the date of this prospectus, information publicly available on IBA’s website indicates that the direct participants currently qualified to submit orders during the electronic auctions used for the daily determination of the LBMA Gold Price are Bank of China, Bank of Communications, Citibank, N.A. London Branch, Coins ‘N’ Things Inc., Goldman Sachs, HSBC Bank USA NA, Industrial and Commercial Bank of China (ICBC), StoneX Financial Ltd, Jane Street Global Trading LLC, JP Morgan Chase Bank N.A. London Branch, Koch Supply and Trading LP, Marex Financial Limited, Morgan Stanley, Standard Chartered Bank and Toronto Dominion Bank.
If there is no LBMA Gold Price PM on any day, the Trustee is authorized to use the most recently announced LBMA Gold Price AM unless the Sponsor determines that such price is inappropriate as a basis for evaluation. The Sponsor may conclude that the LMBA Gold Price AM is inappropriate if: (i) there is no LBMA Gold Price AM on that day; (ii) it differs significantly from recent price quotations or otherwise no longer appears to reflect fair value; or (iii) there is a significant event subsequent to the price being published. A “significant event” is deemed to occur if the Sponsor, determines in its reasonable business judgment prior to or at the time of pricing the Trust's gold that the event is likely to cause a material change to the price of gold held by the Trust. Once the value of the Trust’s gold has been determined, the Trustee subtracts all accrued fees, expenses and other liabilities of the Trust from the total value of the gold and all other assets of the Trust. The resulting figure is the net asset value of the Trust. The Trustee determines the NAV by dividing the net asset value of the Trust by the number of Shares outstanding on the day the computation is made.
Trust Expenses
The Trust’s only ordinary recurring expense is expected to be the Sponsor’s Fee. In exchange for the Sponsor’s Fee, the Sponsor has agreed to assume the marketing and the following administrative expenses incurred by the Trust: the Trustee’s Fee and reimbursement for its reasonable out-of-pocket expenses, the Custodian’s Fee, NYSE Arca listing fees, SEC registration fees, printing and mailing costs, audit fees and expenses and up to $100,000 per annum in legal fees and expenses. The Sponsor may determine in its sole discretion to assume legal fees and expenses of the Trust in excess of the $100,000 per annum required under the Trust Agreement. To the extent that the Sponsor does not voluntarily assume such fees and expenses, they will be the responsibility of the Trust. The Sponsor will also pay the costs of the Trust’s organization and the initial sale of the Shares.
The Sponsor’s Fee is accrued daily at an annualized rate equal to 0.15% of the net asset value of the Trust and is payable monthly in arrears. The Sponsor may, at its discretion and from time to time, waive all or a portion of the Sponsor’s Fee for stated periods of time. The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during any period not covered by the waiver. Effective on the date the Shares are listed for trading on NYSE Arca, the Sponsor has voluntarily agreed to waive a portion of the Sponsor's Fee so that the Sponsor's Fee after the fee waiver will not exceed 0.07% through June 30, 2024. The Trustee will, when directed by the Sponsor, and, in the absence of such direction, may, in its discretion, sell gold in such quantity and at such times, as may be necessary to permit payment of the Sponsor’s Fee and of Trust expenses or liabilities not assumed by the Sponsor. The Trustee is authorized to sell gold at such times and in the smallest amounts required to permit such payments as they become due, it being the intention to avoid or minimize the Trust’s holdings of assets other than gold. Accordingly, the amount of gold to be sold will vary from time to time depending on the level of the Trust’s expenses and the market price of gold. The Custodian has agreed to purchase from the Trust, at the request of the Trustee, gold needed to cover Trust expenses at a price equal to the price used by the Trustee to determine the value of the gold held by the Trust on the date of the sale.
Cash held by the Trustee pending payment of the Trust’s expenses will not bear any interest. Each sale of gold by the Trust will be a taxable event to Shareholders. See “U.S. Federal Income Tax Consequences—Taxation of U.S. Shareholders.”
Impact of Trust Expenses on the Trust’s Net Asset Value
The Trust sells gold to raise the funds needed for the payment of the Sponsor’s Fee and all Trust expenses or liabilities not assumed by the Sponsor. See “The Sponsor—The Sponsor’s Fee.” The purchase price received as consideration for such sales is the Trust’s sole source of funds to cover its liabilities. The Trust does not engage in any activity designed to derive a profit from changes in the price of gold. Gold not needed to redeem Baskets, or to cover the Sponsor’s Fee and Trust expenses or liabilities not assumed by the Trustee, will be held in physical form by the Custodian. As a result of the recurring sales of gold necessary to pay the Sponsor’s Fee and the Trust expenses or liabilities not assumed by the Sponsor, the net asset value of the Trust and, correspondingly, the fractional amount of gold represented by each Share will decrease over the life of the Trust. New deposits of gold, received in exchange for additional new Baskets issued by the Trust, do not reverse this trend.
The following table, prepared by the Sponsor, illustrates the anticipated impact of the sales of gold discussed above on the fractional amount of gold represented by each outstanding Share. It assumes that the only sales of gold will be those needed to pay the Sponsor’s Fee and that the price of gold and the number of Shares remain constant during the three-year period covered. The table does not show the impact of any extraordinary expenses the Trust may incur. Any such extraordinary expenses, if and when incurred, will accelerate the decrease in the fractional amount of gold represented by each Share.
Calculation of NAV:
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|
|
Year 1
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|
|
Year 2
|
|
|
Year 3
|
|
|
Hypothetical gold price per ounce
|
|
$
|
1,200.00
|
|
|
$
|
1,200.00
|
|
|
$
|
1,200.00
|
|
|
Sponsor’s Fee
|
|
|
0.15
|
%
|
|
|
0.15
|
%
|
|
|
0.15
|
%
|
|
Shares of Trust, beginning
|
|
|
1,000,000
|
|
|
|
1,000,000
|
|
|
|
1,000,000
|
|
|
Ounces of gold in Trust, beginning
|
|
|
10,000.00
|
|
|
|
9,985.00
|
|
|
|
9,970.02
|
|
|
Beginning net asset value of the Trust
|
|
$
|
12,000,000
|
|
|
$
|
11,982,000
|
|
|
$
|
11,964,024
|
|
|
Ounces of gold to be sold to cover the Sponsor’s Fee*
|
|
|
15.00
|
|
|
|
14.98
|
|
|
|
14.96
|
|
|
Ounces of gold in Trust, ending
|
|
|
9,985.00
|
|
|
|
9,970.02
|
|
|
|
9,955.07
|
|
|
Ending net asset value of the Trust
|
|
$
|
11,982,000
|
|
|
$
|
11,964,024
|
|
|
$
|
11,946,081
|
|
|
Ending NAV
|
|
$
|
11.98
|
|
|
$
|
11.96
|
|
|
$
|
11.95
|
|
|
*
|
The calculation assumes that the sale of gold and the payment of the Sponsor’s Fee occur only at the end of each year even though in actuality sales occur monthly to cover the Sponsor’s Fee, which is accrued daily and payable monthly in arrears.
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DESCRIPTION OF THE SHARES AND THE TRUST AGREEMENT
The Trust was formed on June 15, 2021 when the Sponsor and The Bank of New York Mellon signed the Trust Agreement and the Seed Capital Investor made the initial deposit for the issuance of ten Baskets. The purpose of the Trust is to own gold transferred to the Trust in exchange for Shares issued by the Trust. The Trust is governed by the Trust Agreement among the Sponsor, the Trustee, the registered holders and beneficial owners of Shares and all persons that deposit gold for the purpose of creating Shares. The Trust Agreement sets out the rights of depositors of gold and registered holders of Shares and the rights and obligations of the Sponsor and the Trustee. New York law governs the Trust Agreement, the Trust and the Shares. The following is a summary of material provisions of the Trust Agreement. It is qualified by reference to the entire Trust Agreement, which is filed as an exhibit to the registration statement of which the prospectus is a part.
Each Share represents a fractional undivided beneficial interest in the net assets of the Trust. Upon redemption of the Shares, the applicable Authorized Participant shall be paid solely out of the funds and property of the Trust. All Shares are transferable, fully paid and non-assessable. The assets of the Trust consist primarily of gold held by the Custodian on behalf of the Trust. However, the Trust is expected to make daily sales of gold to pay the Sponsor’s Fee and to cover expenses and liabilities not assumed by the Sponsor. Such sales result in the Trust holding cash for brief periods of time. In addition, there may be other situations where the Trust may hold cash. For example, a claim may arise against the Custodian, an Authorized Participant, or any other third party, which is settled in cash. In those situations where the Trust unexpectedly receives cash or any other assets, the Trust Agreement provides that no deposits of gold will be accepted (i.e., there will be no issuance of new Shares) until after the record date for the distribution of such cash or other property has passed. The Trustee will distribute such cash or other assets to DTC, and registered holders of Shares are entitled to receive such distributions in proportion to the number of shares owned. See "–Cash and Other Distributions." The Trust issues Shares only in Baskets of 50,000 or integral multiples thereof. Baskets may be redeemed by the Trust in exchange for the amount of gold represented by the aggregate number of Shares redeemed. The Trust is not a registered investment company under the Investment Company Act and is not required to register under such act.
Deposit of Gold; Issuance of Baskets
The Trust expects to create and redeem Shares on a continuous basis but only in Baskets of 50,000 Shares. Only Authorized Participants, which are registered broker-dealers who have entered into written agreements with the Sponsor and the Trustee, can deposit gold and receive Baskets in exchange. Upon the deposit of the corresponding amount of gold with the Custodian, and the payment of the Trustee’s applicable fee and of any expenses, taxes or charges (such as stamp taxes or stock transfer taxes or fees), the Trustee will deliver the appropriate number of Baskets to the DTC account of the depositing Authorized Participant. As of the date of this prospectus, Merrill Lynch Professional Clearing Corp., Virtu Americas LLC, and JP Morgan Securities, Inc. are the only Authorized Participants. The Sponsor and the Trustee will maintain a current list of Authorized Participants. Gold deposited with the Custodian must meet the specifications for weight, dimensions, fineness (or purity), identifying marks and appearance of gold bars and as of January 1, 2020, must be produced by refiners that meet certain throughput and tangible net worth requirements as set forth in “Good Delivery List Rules – Conditions for Listing for Good Delivery Refiners” published by the LBMA. Gold deposited must not be subject to applicable sanctions.
Before making a deposit, the Authorized Participant must deliver to the Trustee a written purchase order or submit a purchase order through the Trustee’s electronic order entry system, indicating the number of Baskets it intends to acquire and the location or locations where it expects to make the corresponding deposit of gold with the Custodian. The Trustee will acknowledge the purchase order unless it or the Sponsor decides to refuse the deposit as described below under “Requirements for Trustee Actions.” The date the Trustee receives that order will determine the Basket Gold Amount (as defined below) the Authorized Participant needs to deposit. However, orders received by the Trustee after 3:59 p.m. (New York time) on a Business Day will not be accepted and should be resubmitted on the next following Business Day. The Trustee has entered into an agreement with the Custodian which contains arrangements so that gold can be delivered to the Custodian in New York, London or at other locations that may be authorized in the future.
If the Trustee accepts the purchase order, it will transmit to the Authorized Participant, via facsimile or electronic mail message, no later than 5:00 p.m. (New York time) on the date such purchase order is received, or deemed received, a copy of the purchase order endorsed “Accepted” by the Trustee and indicating the Basket Gold Amount that the Authorized Participant must deliver to the Custodian in exchange for each Basket. In the case of purchase orders submitted via the Trustee’s electronic order system, the Authorized Participant will receive an automated email indicating the acceptance of the purchase order and the purchase order will be marked “Accepted” in the Trustee’s electronic order system. Prior to the Trustee’s acceptance as specified above, a purchase order will only represent the Authorized Participant’s unilateral offer to deposit gold in exchange for Baskets and will have no binding effect upon the Trust, the Trustee, the Custodian or any other party.
The Basket Gold Amount necessary for the creation of a Basket changes from day to day. The initial Basket Gold Amount is 500 ounces of gold. On each day that NYSE Arca is open for regular trading, the Trustee will adjust the quantity of gold constituting the Basket Gold Amount as appropriate to reflect sales of gold, any loss of gold that may occur, and accrued expenses. The computation is made by the Trustee as promptly as practicable after 4:00 p.m. (New York time). See “Business of the Trust—Valuation of Gold; Computation of Net Asset Value” for a description of how the LBMA Gold Price PM is determined, and description of how the Trustee determines the NAV. The Trustee will determine the Basket Gold Amount for a given day by multiplying the NAV by the number of Shares in each Basket (50,000) and dividing the resulting product by that day’s LBMA Gold Price PM. Fractions of a fine ounce of gold smaller than 0.001 fine ounce will be disregarded for purposes of the computation of the Basket Gold Amount. The Basket Gold Amount so determined will be communicated via facsimile or electronic mail message to all Authorized Participants, and will be made available on the Sponsor’s website for the Shares. It is expected that NYSE Arca will also publish the Basket Gold Amount determined by the Trustee as indicated above.
Because the Sponsor has assumed what are expected to be most of the Trust’s expenses, and the Sponsor’s Fee accrues daily at the same rate, in the absence of any extraordinary expenses or liabilities, the amount of gold by which the Basket Gold Amount will decrease each day will be predictable. The Trustee intends to make available on each Business Day through the same channels used to disseminate the actual Basket Gold Amount determined by the Trustee as indicated above an indicative Basket Gold Amount for the next Business Day. Authorized Participants may use that indicative Basket Gold Amount as guidance regarding the amount of gold that they may expect to have to deposit with the Custodian in respect of purchase orders placed by them on such next Business Day and accepted by the Trustee. The agreement entered into with each Authorized Participant provides, however, that once a purchase order has been accepted by the Trustee, the Authorized Participant will be required to deposit with the Custodian the Basket Gold Amount determined by the Trustee on the effective date of the purchase order.
No Shares will be issued unless and until the Custodian has informed the Trustee that it has allocated to the Trust’s account the corresponding amount of gold.
Redemption of Baskets; Withdrawal of Gold
Authorized Participants, acting on authority of the registered holder of Shares, may surrender Baskets in exchange for the corresponding Basket Gold Amount announced by the Trustee. Upon the surrender of such Shares and the payment of the Trustee’s applicable fee and of any expenses, taxes or charges (such as stamp taxes or stock transfer taxes or fees), the Trustee will deliver to the order of the redeeming Authorized Participant the amount of gold corresponding to the redeemed Baskets. Shares can only be surrendered for redemption in Baskets of 50,000 Shares each.
Before surrendering Baskets for redemption, an Authorized Participant must deliver to the Trustee a written request, or submit a redemption order through the Trustee’s electronic order entry system, indicating the number of Baskets it intends to redeem. The date the Trustee receives that order determines the Basket Gold Amount to be received in exchange. However, orders received by the Trustee after 3:59 p.m. (New York time) on a Business Day will not be accepted and should be resubmitted on the next following Business Day.
The Custodian may make the gold available for collection at its office or at the office of a sub-custodian if the gold is being held by a sub-custodian. Gold is delivered at the locations designated by the Custodian, in consultation with the Trustee. Redeeming Authorized Participants are entitled to express a preference as to where they would like to have gold delivered, but have no right to receive delivery at a specified location. All taxes incurred in connection with the delivery of gold to the Custodian in exchange for Baskets (including any applicable value added tax) will be the sole responsibility of the Authorized Participant making such delivery.
Unless otherwise agreed to by the Custodian, gold is delivered to the redeeming Authorized Participants in the form of physical bars only (except that any amount of less than 430 ounces may be transferred to an unallocated account of or as ordered by, the redeeming Authorized Participant).
Redemptions may be suspended only (1) during any period in which regular trading on NYSE Arca is suspended or restricted or the exchange is closed (other than scheduled holiday or weekend closings), or (2) during an emergency as a result of which delivery, disposal or evaluation of gold is not reasonably practicable. The Trustee shall reject any purchase order or redemption order that is not in proper form.
Certificates Evidencing the Shares
The Shares are evidenced by certificates executed and delivered by the Trustee on behalf of the Trust. It is expected that DTC will accept the Shares for settlement through its book-entry settlement system. So long as the Shares are eligible for DTC settlement, there will be only one global certificate evidencing shares that will be registered in the name of a nominee of DTC. Investors will be able to own Shares only in the form of book-entry security entitlements with DTC or direct or indirect participants in DTC. No investor will be entitled to receive a separate certificate evidencing Shares. Because Shares can only be held in the form of book-entries through DTC and its participants, investors must rely on DTC, a DTC Participant and any other financial intermediary through which they hold Shares to receive the benefits and exercise the rights described in this section. Investors should consult with their broker or financial institution to find out about the procedures and requirements for securities held in DTC book-entry form.
Cash and Other Distributions
If the Sponsor and Trustee determine that there is more cash being held in the Trust than is needed to pay the Trust’s expenses for the next month, the Trustee will distribute the extra cash to DTC.
If the Trust receives any property other than gold or cash, the Trustee will distribute that property to DTC by any means the Sponsor thinks is lawful, equitable and feasible. If it cannot make the distribution in that way, the Trustee will sell the property and distribute the net proceeds, in the same way as it does with cash. The Trustee and the Sponsor shall not be liable for any loss or depreciation resulting from any sale or other disposition of property made by the Trustee pursuant to the Sponsor’s instruction or otherwise made by the Trustee in good faith.
Registered holders of Shares are entitled to receive these distributions in proportion to the number of Shares owned. Before making a distribution, the Trustee may deduct any applicable withholding taxes and any fees and expenses of the Trust that have not been paid. The Sponsor distributes only whole U.S. dollars and cents and is not required to round fractional cents to the nearest whole cent. The Trustee is not responsible if it decides that it is unlawful or impractical to make a distribution available to registered holders.
Voting Rights
Owners of Shares do not generally have any voting rights. However, registered holders of at least 25% of the Shares have the right to require the Trustee to cure any material breach by it of the Trust Agreement, and registered holders of at least 75% of the Shares have the right to require the Trustee to terminate the Trust Agreement as described below. The Shares do not represent a traditional investment and are not similar to shares of a corporation operating a business enterprise with management and a board of directors. All Shares are of the same class with equal rights and privileges. Each Share entitles the holder to vote on the limited matters upon which Shareholders may vote under the Trust Agreement. The Shares do not entitle their holders to any conversion or pre-emptive rights or any redemption rights.
Share Splits
If the Sponsor believes that the per Share price in the secondary market for Shares has fallen outside a desirable trading price range or if the Sponsor determines that it is advisable for any reason, the Sponsor may cause the Trust to declare a split or reverse split in the number of Shares outstanding and to make a corresponding change in the number of Shares constituting a Basket.
Management of the Trust
The Trust does not have a board of directors or an audit committee but does have oversight from the Board of Directors and audit committee of the Sponsor. See “The Sponsor—Key Personnel of the Sponsor.”
Fees and Expenses of the Trustee
Each deposit of gold for the creation of Baskets and each surrender of Baskets for the purpose of withdrawing Trust property (including if the Trust Agreement terminates) must be accompanied by a payment to the Trustee of a fee of $500 (or such other fee as the Trustee, with the prior written consent of the Sponsor, may from time to time announce).
The Trustee is entitled to reimburse itself from the assets of the Trust for all expenses and disbursements incurred by it for extraordinary services it may provide to the Trust or in connection with any discretionary action the Trustee may take to protect the Trust or the interests of the holders.
Trust Expenses and Gold Sales
In addition to the fee payable to the Sponsor (See “The Sponsor—The Sponsor’s Fee”), the following expenses will be paid out of the assets of the Trust:
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any expenses or liabilities of the Trust that are not assumed by the Sponsor;
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●
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any taxes and other governmental charges that may fall on the Trust or its property;
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|
●
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expenses and costs of any action taken by the Trustee or the Sponsor to protect the Trust and the rights and interests of holders of Shares; and
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●
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any indemnification of the Sponsor as described below.
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The Trustee will, when directed by the Sponsor, and in the absence of such direction, may in its discretion, sell the Trust’s gold from time to time as necessary to permit payment of the fees and expenses that the Trust is required to pay. See “Business of the Trust—Trust Expenses.”
The Trustee is not responsible for any depreciation or loss incurred by reason of sales of gold made in compliance with the Trust Agreement.
Payment of Taxes
The Trustee may deduct the amount of any taxes owed from any distributions it makes. It may also sell trust assets, by public or private sale, to pay any taxes owed. Registered holders of Shares will remain liable if the proceeds of the sale are not enough to pay the taxes.
Evaluation of Gold and the Trust Assets
See “Business of the Trust—Valuation of Gold; Computation of Net Asset Value.”
Amendment and Termination
The Sponsor and the Trustee may agree to amend the Trust Agreement without the consent of the holders of Shares. If an amendment imposes or increases fees or charges, except for taxes and other governmental charges, or prejudices a substantial right of holders of Shares, it will not become effective for outstanding Shares until 30 days after the Trustee notifies DTC of the amendment. At the time an amendment becomes effective, by continuing to hold Shares or an interest therein, investors are deemed to agree to the amendment and to be bound by the Trust Agreement as amended.
The Trustee will terminate the Trust Agreement if:
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the Trustee is notified that the Shares are delisted from NYSE Arca and are not approved for listing on another national securities exchange within five Business Days of their delisting;
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●
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holders of at least 75% of the outstanding Shares notify the Trustee that they elect to terminate the Trust;
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●
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60 days have elapsed since the Trustee notified the Sponsor of the Trustee’s election to resign or since the Sponsor removed the Trustee and a successor trustee has not been appointed and accepted its appointment;
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●
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the SEC determines that the Trust is an investment company required to register under the Investment Company Act, and the Trustee has actual knowledge of that determination;
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●
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the aggregate market capitalization of the Trust, based on the closing price for the Shares, was less than $350 million on each of five consecutive trading days and the Trustee receives, within six months from the last of those trading days, notice that the Sponsor has decided to terminate the Trust;
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the CFTC determines that the Trust is a commodity pool under the Commodity Exchange Act and the Trustee has actual knowledge of that determination;
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●
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the Trust fails to qualify for treatment, or ceases to be treated, as a grantor trust for U.S. federal income tax purposes and the Trustee receives notice that the Sponsor has determined that the termination of the Trust is advisable;
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any sole custodian then acting resigns, is removed or otherwise ceases to act as custodian and no successor custodian has been employed prior to the effective date of such resignation, removal or cessation;
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DTC or another depositary has ceased to act as depositary with respect to the Shares and the Sponsor has not identified another depositary that is willing to act in such capacity prior to the effective date of such cessation; or
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the Sponsor fails to undertake or perform its duties pursuant to the terms of the Trust Agreement.
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The term of the Trust is perpetual (unless terminated earlier in certain circumstances). After termination, the Trustee and its agents will do the following under the Trust Agreement but nothing else: (i) collect distributions pertaining to Trust property; (ii) pay the Trust’s expenses and sell gold as necessary to meet those expenses; and (iii) deliver Trust property upon surrender and cancellation of Shares. Ninety days or more after termination, the Trustee shall sell any remaining Trust property by public or private sale pursuant to the Sponsor’s direction, or, if the Sponsor does not provide any direction, as the Trustee determines. After that, the Trustee will hold the money it received on the sale, as well as any other cash it is holding under the Trust Agreement, for the pro rata benefit of the registered holders that have not surrendered their Shares. It will not invest the money and has no liability for interest. The Trustee’s only obligations will be to account for the money and other cash, after deduction of applicable fees, Trust expenses and taxes and governmental charges. The Trustee and the Sponsor shall not be liable for any loss or depreciation resulting from any sale or other disposition of property made by the Trustee pursuant to the Sponsor’s instruction or otherwise made by the Trustee in good faith.
Limitations on Obligations and Liability
The Trust Agreement expressly limits the obligations and liabilities of the Sponsor and the Trustee. As further set out in the Trust Agreement, the Sponsor and the Trustee:
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are obligated to take only the actions specifically set forth in the Trust Agreement without negligence or bad faith;
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are not liable if either of them is prevented or delayed by law or circumstances beyond their control from performing their respective obligations under the Trust Agreement;
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are not liable if they exercise or fail to exercise discretion permitted under the Trust Agreement;
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have no obligation to prosecute a lawsuit or other proceeding related to the Shares or the Trust’s property on behalf of any holders of Shares or on behalf of any other person;
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are not liable for any loss of gold occurring prior to the delivery of gold to the Custodian or after the delivery of gold by the Custodian; and
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may rely upon any advice or information from other persons they believe in good faith to be competent to provide such advice or information.
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In addition, the Trustee:
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is not required to expend or risk any of its own funds or otherwise incur any liability, financial or otherwise, in the performance of its duties under the Trust Agreement, except as specifically provided for in the Trust Agreement.
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As further set out in the Trust Agreement, all duties, rights, privileges and liabilities of the Trustee under the Trust Agreement are subject to the following:
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the Trustee is not obligated to appear in, prosecute or defend any action that in its opinion may involve it in expense or liability, unless it shall be furnished with reasonable security and indemnity against such expense or liability;
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the Trustee is not liable for acting in accordance with or relying on any direction, instruction, notice, demand, certificate or document from or on behalf of the Sponsor, Custodian, or an Authorized Participant, which the Trustee believes is given pursuant to or is authorized by the Trust Agreement, any Custodian Agreement, or any Authorized Participant agreement, respectively;
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the Trustee is not liable for any indirect, consequential, punitive or special damages;
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the Trustee is not liable for an amount in excess of the value of the Trust;
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the Trustee may rely conclusively upon any order, judgment, certification, demand, notice, instrument or other writing delivered to it under the Agreement without being required to determine the authenticity or correctness of any fact stated therein; and
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the Trustee is not personally liable for any taxes or other governmental charges imposed upon or in respect of the gold or its custody moneys or other assets, or upon or in respect of the Trust or the Shares, that it may be required to pay under U.S. law or any other taxing authority with jurisdiction. With respect to any tax or charge or any expense that the Trustee may sustain or incur with respect to such tax or charge, the Trustee, to the extent not inconsistent with applicable law, shall be reimbursed and indemnified out of the assets of the Trust.
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In addition, under the Trust Agreement, the Trust is obligated to indemnify the Sponsor and its shareholders, directors, officers, employees, affiliates and subsidiaries for any loss, liability or expense incurred by any such person that arises out of or in connection with the performance of obligations under the Trust Agreement or any actions taken in accordance with the provisions of the Trust Agreement, absent such person’s negligence, bad faith, willful misconduct, willful malfeasance or reckless disregard of such person’s duties and obligations.
Requirements for Trustee Actions
Before the Trustee delivers or registers a transfer of Shares, makes a distribution on Shares, or permits withdrawal of Trust property, the Trustee may require:
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payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any Shares or Trust property;
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satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and
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compliance with regulations it may establish, from time to time, consistent with the Trust Agreement, including presentation of transfer documents.
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The Trustee may, and upon the direction of the Sponsor shall, suspend the acceptance of purchase orders or the delivery or registration of transfers of Shares, or may, and upon the direction of the Sponsor shall, refuse a particular purchase order, delivery or registration of shares (i) during any period when the transfer books of the Trustee are closed or (ii) at any time, if the Sponsor thinks it advisable for any reason. The Trustee may, and upon the direction of the Sponsor shall, suspend the right to surrender Shares or postpone the delivery date of gold or other Trust property generally or with respect to a particular redemption order (i) during any period in which regular trading on NYSE Arca is suspended or restricted, or the exchange is closed, or (ii) during an emergency as a result of which delivery, disposal or evaluation of gold is not reasonably practicable. The Trustee shall reject any purchase order or redemption order that is not in proper form.
THE SECURITIES DEPOSITORY; BOOK-ENTRY-ONLY SYSTEM; GLOBAL SECURITY
DTC will act as securities depository for the Shares. DTC is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities of its participants and to facilitate the clearance and settlement of transactions in those securities among DTC Participants through electronic book-entry changes. This eliminates the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations, some of whom (and/or their representatives) own DTC. Access to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly. DTC agrees with and represents to its participants that it will administer its book-entry system in accordance with its rules and by-laws and requirements of law.
Individual certificates will not be issued for the Shares. Instead, a global certificate will be signed by the Trustee on behalf of the Trust, registered in the name of Cede & Co., as nominee for DTC, and deposited with the Trustee on behalf of DTC. The global certificate represents all of the Shares outstanding at any time.
Upon the settlement date of any creation, transfer or redemption of Shares, DTC will credit or debit, on its book-entry registration and transfer system, the number of Shares so created, transferred or redeemed to the accounts of the appropriate DTC Participants. The Trustee and the DTC Participants will designate the accounts to be credited and charged in the case of creation or redemption of Shares.
Beneficial ownership of the Shares will be limited to DTC Participants, Indirect Participants and persons holding interests through DTC Participants and Indirect Participants. Owners of beneficial interests in the Shares will be shown on, and the transfer of ownership will be effected only through, records maintained by DTC, with respect to DTC Participants; the records of DTC Participants, with respect to Indirect Participants; and the records of Indirect Participants, with respect to beneficial owners that are not DTC Participants or Indirect Participants. Beneficial owners are expected to receive from or through a DTC Participant a written confirmation relating to their purchase of the Shares.
Investors may transfer Shares through DTC by instructing the DTC Participant or Indirect Participant through which they hold their Shares to transfer the Shares. Transfers will be made in accordance with standard securities industry practice.
DTC may decide to discontinue providing its service for the Shares by giving notice to the Trustee and the Sponsor. Under these circumstances, the Sponsor will either find a replacement for DTC to perform its functions at a comparable cost or, if a replacement is unavailable, deliver separate certificates for Shares to a successor authorized depositary identified by the Sponsor and available to act, or, if no successor is identified and able to act, the Trustee shall terminate the Trust.
The rights of the Shareholders generally must be exercised by DTC Participants acting on their behalf in accordance with the rules and procedures of DTC.
The Trust Agreement provides that, as long as the Shares are represented by a global certificate registered in the name of DTC or its nominee, the Trustee will be entitled to treat DTC as the holder of the Shares.
THE SPONSOR
The Sponsor of the Trust is iShares Delaware Trust Sponsor LLC, a Delaware limited liability company and an indirect subsidiary of BlackRock. The Sponsor’s principal office is located at 400 Howard Street, San Francisco, CA 94105.
The Sponsor’s Role
The Sponsor will arrange for the creation of the Trust, the registration of the Shares for their public offering in the United States and the listing of the Shares on NYSE Arca. The Sponsor has agreed to assume the marketing and the following administrative and marketing expenses incurred by the Trust: the Trustee’s Fee and reimbursement for its reasonable out-of-pocket expenses, the Custodian’s Fee, NYSE Arca listing fees, SEC registration fees, printing and mailing costs, audit fees and expenses and up to $100,000 per annum in legal fees and expenses. The Sponsor may determine in its sole discretion to assume legal fees and expenses of the Trust in excess of the $100,000 per annum required under the Trust Agreement. To the extent that the Sponsor does not voluntarily assume such fees and expenses, they will be the responsibility of the Trust. The Sponsor will also pay the costs of the Trust’s organization and the initial sale of the Shares.
The Sponsor generally oversees the performance of the Trustee and Custodian but will not exercise day-to-day oversight over the Trustee or the Custodian. The Sponsor may remove the Trustee and appoint a successor trustee if the Trustee ceases to meet certain objective requirements (including the requirement that it have capital, surplus and undivided profits of at least $150 million) or if, having received written notice of a material breach of its obligations under the Trust Agreement, the Trustee has not cured the breach within 30 days. The Sponsor also has the right to replace the Trustee during the 90 days following any merger, consolidation or conversion in which the Trustee is not the surviving entity or, in its discretion, on the fifth anniversary of the creation of the Trust or on any subsequent third anniversary thereafter. The Sponsor also has the right to approve any new or additional custodian that the Trustee may wish to appoint.
The Sponsor is responsible for preparing and filing periodic reports on behalf of the Trust with the SEC and will provide any required certification for such reports. The Sponsor will designate the independent registered public accounting firm of the Trust and may from time to time employ legal counsel for the Trust.
Key Personnel of the Sponsor
The Trust does not have any directors, officers or employees. The following persons, in their respective capacities as directors or executive officers of the Sponsor, a Delaware limited liability company, perform certain functions with respect to the Trust that, if the Trust had directors or executive officers, would typically be performed by them.
Paul Lohrey is the President and Chief Executive Officer, and Mary Cronin is the Chief Financial Officer of the Sponsor.
The Sponsor is managed by a Board of Directors composed of Mary Cronin, Philip Jensen, Peter Landini, Kimun Lee and Paul Lohrey.
Paul Lohrey, CFA, 59, has served as President and Chief Executive Officer of the Sponsor since November 2015. Mr. Lohrey joined BlackRock, Inc. a global asset management firm, as a Managing Director, performing supervisory and managerial functions, in June 2010. Prior to joining BlackRock, Mr. Lohrey served as Chief Investment Officer, Europe, performing supervisory and managerial functions, for The Vanguard Group, an asset management firm, from October 2008 to May 2010. He also held various positions in equity and fixed income portfolio management while at Vanguard from August 1994. Mr. Lohrey earned a Bachelor of Arts in economics from Duke University in 1984 and an MBA in finance from the University of Chicago in 1986.
Mary Cronin (formerly, Miley), 43, became a principal of the Sponsor in April 2019 and serves as its Director and Chief Financial Officer. Since May 2012, Ms. Cronin has served as a Director of BlackRock, Inc., performing supervisory and managerial functions. Prior to joining BlackRock, Inc., Ms. Cronin served in an accounting operations and financial reporting function supporting the registered funds and UCITS funds at Dodge & Cox, an asset management firm, from November 2008 to April 2012. Prior to that, Ms. Cronin was an audit Senior Manager at PricewaterhouseCoopers, LLP where she focused on the audits of registered investment companies from September 1999 to October 2008. Ms. Cronin earned a Bachelor of Science in business administration from California Polytechnic State University, San Luis Obispo, in 1999, and is a certified public accountant (inactive).
Philip Jensen, 62, is Chairman of the Sponsor’s audit committee. In June 2001, Mr. Jensen joined Paul Capital Partners, an investment firm focusing on the secondary private equity and healthcare markets, for which he presently serves as Partner and previously served as Chief Operating Officer from 2002 to 2020. Mr. Jensen received his Bachelor of Science from San Francisco State University and is a certified public accountant (inactive).
Peter Landini, 70, is a member of the Sponsor’s audit committee. In January 2003, Mr. Landini joined RBP Investment Advisors, Inc., a financial planning consultancy firm, for which he presently serves as Partner and Wealth Manager. Mr. Landini received his Bachelor of Science in accounting from Santa Clara University and an MBA in finance from Golden Gate University. Mr. Landini is a certified financial planner and is a member of the Financial Planning Association.
Kimun Lee, 75, is a member of the Sponsor’s audit committee. Mr. Lee is a California-registered investment adviser and has conducted his consulting business under the name Resources Consolidated since January 1980. Since September 2010, Mr. Lee has served as a member of the board of directors of Firsthand Technology Value Fund, Inc., a mutual fund company. Since April 2013, Mr. Lee has served as a member of the board of trustees of Firsthand Funds, a mutual fund company. Since April 2014, Mr. Lee has served as a member of the board of trustees of FundX Investment Trust, a mutual fund company. Until January 2005, Mr. Lee also served as a member of the board of directors of Fremont Mutual Funds, Inc., a mutual fund company. Mr. Lee received his Bachelor of Arts from the University of the Pacific and an MBA from University of Nevada, Reno. He also completed the executive education program on corporate governance at Stanford Graduate School of Business.
The Sponsor has a code of ethics (the “Code of Ethics”) that applies to its executive officers, including its Chief Executive Officer, President, Chief Financial Officer and Treasurer, who perform certain functions with respect to the Trust that, if the Trust had executive officers would typically be performed by them. The Code of Ethics is available by writing the Sponsor at 400 Howard Street, San Francisco, CA 94105 or calling the Sponsor at (415) 670-2000. The Sponsor’s Code of Ethics is intended to be a codification of the business and ethical principles that guide the Sponsor, and to deter wrongdoing, to promote (1) honest and ethical conduct (including the ethical handling of actual or apparent conflicts of interest), (2) full, fair, accurate, timely and understandable disclosure in public reports, documents and communications, (3) compliance with applicable laws and governmental rules and regulations, (4) the prompt internal reporting of violations of the Code of Ethics and (5) accountability for adherence to the Code of Ethics.
The Sponsor’s Fee
The Sponsor’s Fee accrues daily and is paid monthly in arrears at an annualized rate equal to 0.15% of the net asset value of the Trust. The Sponsor may, at its discretion and from time to time, waive all or a portion of the Sponsor’s Fee for stated periods of time. The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during any period not covered by the waiver. Effective on the date the Shares are listed for trading on NYSE Arca, the Sponsor has voluntarily agreed to waive a portion of the Sponsor's Fee so that the Sponsor's Fee after the fee waiver will not exceed 0.07% through June 30, 2024.
THE TRUSTEE
The Bank of New York Mellon, a banking corporation organized under the laws of the State of New York with trust powers, serves as the Trustee. The Bank of New York Mellon has a trust office at 240 Greenwich Street, 8th Floor, New York, New York 10286. The Bank of New York Mellon is subject to supervision by the New York State Department of Financial Services and the Board of Governors of the Federal Reserve System. Information regarding creation and redemption Basket Gold Amount, NAV of the Trust, transaction fees and the names of the parties that have each executed an Authorized Participant Agreement may be obtained from The Bank of New York Mellon by calling the following number: (718) 315-7500. A copy of the Trust Agreement is available for inspection at The Bank of New York Mellon’s trust office identified above. The Bank of New York Mellon had at least $500 million in capital and retained earnings as of December 31, 2020.
The Trustee’s Role
The Trustee is responsible for the day-to-day administration of the Trust. This includes (i) processing orders for the creation and redemption of Baskets; (ii) coordinating with the Custodian the receipt and delivery of gold transferred to, or by, the Trust in connection with each issuance and redemption of Baskets; (iii) calculating the net asset value of the Trust on each Business Day; and (iv) selling the Trust’s gold as needed to cover the Trust’s expenses. In addition, the Trustee will prepare the financial statements of the Trust. The Trustee will also act as transfer agent for the Trust.
The Trustee’s Fees and the Trustee’s reasonable out-of-pocket expenses are paid by the Sponsor.
The Trustee and any of its affiliates may from time to time purchase or sell Shares for their own account, as agent for their customers and for accounts over which they exercise investment discretion.
The Trustee has not signed the registration statement of which this prospectus is a part, and is not subject to issuer liability under the federal securities laws for the information contained in this prospectus and under federal securities laws with respect to the issuance and sale of the Shares. Under such laws, neither the Trustee, either in its capacity as Trustee or in its individual capacity, nor any director, officer or controlling person of the Trustee is, or has any liability as, the issuer or a director, officer or controlling person of the Issuer of the Shares. The Trustee’s liability in connection with the issuance and sale of the Shares is limited solely to the express obligations of the Trustee set forth in the Trust Agreement.
The Trustee has no duty or liability to supervise or monitor the performance of the service providers to the Trust, nor does the Trustee have any liability for the acts or omissions of such service providers. The Shareholders have no voice in the day-to-day management of the business and operations of the Trust.
THE CUSTODIAN
JPMorgan Chase Bank N.A., a national banking association acting through its London branch, serves as the Custodian of the Trust’s gold.
The Custodian’s Role
The Custodian is responsible for safekeeping the gold deposited with it in connection with the creation of Baskets. The Custodian is appointed by the Trustee and is responsible to the Trustee only.
The Custodian is responsible for conducting certain limited inspections of the gold delivered by an Authorized Participant and exercising a level of care similar to that used for its own account. However, the Custodian is not responsible for conducting any chemical or other tests designed to verify that such gold meets the purity requirements referred to in the Trust Agreement.
The Custodian’s Fees are paid by the Sponsor.
The Custodian has agreed to purchase from the Trust, at the request of the Trustee, gold needed to cover Trust expenses at a price equal to the price used by the Trustee to determine the value of the gold held by the Trust on the date of the sale.
The Custodian and any of its subsidiaries and affiliates may from time to time purchase or sell Shares for their own account, as agent for their customers and for accounts over which they exercise investment discretion.
Custody of the Trust’s Gold
The following is a description of the material provisions of the Custodian Agreement between the Trustee and JPMorgan Chase Bank N.A., London branch, as the Custodian, under which the Custodian will hold the gold that belongs to the Trust. For additional information, see the Custodian Agreement incorporated by reference as an exhibit to the registration statement of which this prospectus is a part. The Custodian’s registered office is 125 London Wall, London, EC2Y 5AJ, England. English law governs the Custodian Agreement.
The Custodian will receive and hold gold that is deposited for the account of the Trust. The Custodian will release gold from the Trust’s account when instructed in writing by the Trustee, and not otherwise.
The Custodian may keep the Trust’s gold at its vault premises in New York or London or at the vaults of any subcustodian in England, United States or Canada, unless otherwise agreed between the Custodian and the Trustee (with the Sponsor’s approval). The Custodian may use subcustodians to discharge its obligations to the Trust under the Custodian Agreement. The Custodian is required to use reasonable care in the appointment of any subcustodians. Any subcustodian must be a member of the LBMA. The use of subcustodians does not affect the Custodian’s liability to the Trustee under the Custodian Agreement.
The Custodian has agreed to use reasonable care in the performance of its duties to the Trust, and will only be responsible for any loss or damage suffered by the Trust as a direct result of the Custodian’s negligence, fraud or willful default in the performance of its duties. The Custodian’s liability to the Trust, if any, will be limited to the market value of any gold lost, or the amount of any balance held on an unallocated basis, at the time of the Custodian’s negligence, fraud or willful default.
None of the Custodian, its directors, employees, agents or affiliates will incur any liability to the Trust if, by reason of any law or regulation, or of an act of God or war, terrorism or other circumstance beyond the Custodian’s control, the Custodian is prevented or forbidden from, or would be subject to any civil or criminal penalty on account of, or is delayed in, performing its obligations under the Custodian Agreement. The Custodian has agreed to indemnify the Trustee for any loss or liability directly resulting from a breach of the Custodian’s covenants, representations, representations and warranties in the Custodian Agreement, a failure of the Custodian to act in accordance with the Trustee’s instructions or any physical loss, destruction or damage to the gold held for the Trust’s account, except for losses due to nuclear accidents, terrorism, riots, acts of God, insurrections, strikes and similar cause beyond the control of the Custodian for which the Custodian will not be responsible to the Trust. The Custodian will be responsible for the Trust’s gold held at subcustodians to the same extent as if that gold were in the Custodian’s own vault.
The Trustee, solely from and to the extent of the assets of the Trust, shall indemnify and keep indemnified the Custodian (on an after tax basis) on demand against all costs and expenses, damages, liabilities and losses (including but not limited to reasonable legal fees and expenses) which the Custodian may suffer or incur directly in connection with the Custodian Agreement, except to the extent that such losses are due directly to the Custodian’s negligence, willful default or fraud.
The Custodian may hold gold for the account of the Trust on an unallocated basis. However, the Custodian must allocate gold bars to the account of the Trust so that no gold is held for the Trust’s account on an unallocated basis at the end of each Business Day of the Custodian.
The Custodian has agreed to maintain insurance in support of its custodial obligations under the Custodian Agreement, including covering any loss of gold. The Custodian has the right to reduce, cancel or allow to expire without replacement such insurance coverage, provided that it gives prior written notice to the Trustee. In the case of a reduction, the Custodian will seek to provide notice 30 days prior to the effective date of the reduction. In the case of a cancellation or expiration without replacement, the required notice must be at least 30 days prior to the last day of coverage. As of the date of this Prospectus, the Trustee has not received from the Custodian any notice of reduction, cancellation or expiration of its insurance coverage. The insurance is held for the benefit of the Custodian, not for the benefit of the Trust or the Trustee, and the Trustee may not submit a claim under the insurance maintained by the Custodian.
The Custodian has agreed to grant to the officers and properly designated representatives of the Trustee and to the independent public accountants for the Trust access to the Custodian’s records for the purpose of confirming the content of those records. Upon at least ten days’ prior notice, any such officer or properly designated representative, the independent public accountants for the Trust and any person designated by any regulatory authority having jurisdiction over the Trustee or the Trust is entitled to examine on the Custodian’s premises the gold held by the Custodian and the records regarding the gold held for the account of the Custodian at a subcustodian. The Custodian has agreed that it will only retain subcustodians if they agree to grant to the Trustee and the independent registered public accounting firm of the Trust access to records and inspection rights similar to those set forth above.
Either the Trustee or the Custodian may terminate the Custodian Agreement by giving not less than 180 Business Days written notice to the other party.
The Trustee has agreed to submit to the non-exclusive jurisdiction of English courts in connection with any dispute arising under the Custodian Agreement. This submission to jurisdiction by the Trustee does not affect any right that the holders of the Shares may otherwise have to institute proceedings against the Trust, the Trustee or the Custodian before any other court of competent jurisdiction.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the material U.S. federal income tax consequences that generally will apply to the purchase, ownership and disposition of Shares by a U.S. Shareholder (as defined below), and certain U.S. federal income consequences that may apply to an investment in Shares by a Non-U.S. Shareholder (as defined below), represents, insofar as it describes conclusions as to U.S. federal income tax law and subject to the limitations and qualifications described therein, the opinion of Clifford Chance US LLP, special U.S. federal income tax counsel to the Sponsor. The discussion below is based on the Code, the tax regulations issued by the IRS (“Treasury Regulations”) promulgated thereunder and judicial and administrative interpretations of the Code, all as in effect on the date of this prospectus and all of which are subject to change either prospectively or retroactively. The tax treatment of Shareholders may vary depending upon their own particular circumstances. Certain Shareholders (including banks, financial institutions, insurance companies, tax-exempt organizations, broker- dealers, traders, Shareholders that are partnerships for U.S. federal income tax purposes, persons holding Shares as a position in a “hedging,” “straddle,” “conversion,” or “constructive sale” transaction for U.S. federal income tax purposes, persons whose “functional currency” is not the U.S. dollar, or other investors with special circumstances) may be subject to special rules not discussed below. In addition, the following discussion applies only to investors who will hold Shares as “capital assets” within the meaning of Section 1221 of the Code. Moreover, the discussion below does not address the effect of any state, local or foreign tax law on an owner of Shares. Purchasers of Shares are urged to consult their own tax advisers with respect to all federal, state, local and foreign tax law considerations potentially applicable to their investment in Shares.
For purposes of this discussion, a “U.S. Shareholder” is a Shareholder that is:
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an individual who is treated as a citizen or resident of the United States for U.S. federal income tax purposes;
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a corporation (or entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
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an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or
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a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or a trust that has made a valid election under applicable Treasury Regulations to be treated as a domestic trust.
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A Shareholder that is not (1) a U.S. Shareholder as defined above or (2) a partnership for U.S. federal income tax purposes is considered a “Non-U.S. Shareholder” for purposes of this discussion.
Taxation of the Trust
The Sponsor and the Trustee will treat the Trust as a grantor trust for U.S. federal income tax purposes. In the opinion of Clifford Chance US LLP, special U.S. federal income tax counsel to the Sponsor, the Trust will be classified as a grantor trust for U.S. federal income tax purposes. As a result, the Trust itself will not be subject to U.S. federal income tax. Instead, the Trust’s income and expenses will flow through to the Shareholders, and the Trustee will report the Trust’s income, gains, losses and deductions to the IRS on that basis. The opinion of Clifford Chance US LLP represents only its best legal judgment and is not binding on the IRS or any court. Accordingly, there can be no assurance that the IRS will agree with the conclusions of counsel’s opinion and it is possible that the IRS or another tax authority could assert a position contrary to one or all of those conclusions and that a court could sustain that contrary position. Neither the Sponsor nor the Trustee will request a ruling from the IRS with respect to the classification of the Trust for U.S. federal income tax purposes. If the IRS were to assert successfully that the Trust is not classified as a grantor trust, the Trust would be classified as a partnership for U.S. federal income tax purposes, which may affect timing and other tax consequences to the Shareholders.
The following discussion assumes that the Trust will be classified as a grantor trust for U.S. federal income tax purposes.
Taxation of U.S. Shareholders
Shareholders will be treated, for U.S. federal income tax purposes, as if they directly owned a pro rata share of the underlying assets held in the Trust. Shareholders also will be treated as if they directly received their respective pro rata shares of the Trust’s income, if any, and as if they directly incurred their respective pro rata shares of the Trust’s expenses. In the case of a Shareholder that purchases Shares for cash, its initial tax basis in its pro rata share of the assets held in the Trust at the time it acquires its Shares will be equal to its cost of acquiring the Shares. In the case of a Shareholder that acquires its Shares as part of a creation of a Basket, the delivery of gold to the Trust in exchange for the underlying gold represented by the Shares will not be a taxable event to the Shareholder, and the Shareholder’s tax basis and holding period for the Shareholder’s pro rata share of the gold held in the Trust will be the same as its tax basis and holding period for the gold delivered in exchange therefor. For purposes of this discussion, and unless stated otherwise, it is assumed that all of a Shareholder’s Shares are acquired on the same date and at the same price per Share. Shareholders that hold multiple lots of Shares, or that are contemplating acquiring multiple lots of Shares, should consult their own tax advisers as to the determination of the tax basis and holding period for the underlying gold related to such Shares.
When the Trust sells gold, for example to pay expenses, a Shareholder will recognize gain or loss in an amount equal to the difference between (1) the Shareholder’s pro rata share of the amount realized by the Trust upon the sale and (2) the Shareholder’s tax basis for its pro rata share of the gold that was sold. A Shareholder’s tax basis for its share of any gold sold by the Trust generally will be determined by multiplying the Shareholder’s total basis for its share of all of the gold held in the Trust immediately prior to the sale, by a fraction the numerator of which is the amount of gold sold, and the denominator of which is the total amount of the gold held in the Trust immediately prior to the sale. After any such sale, a Shareholder’s tax basis for its pro rata share of the gold remaining in the Trust will be equal to its tax basis for its share of the total amount of the gold held in the Trust immediately prior to the sale, less the portion of such basis allocable to its share of the gold that was sold. The delivery to the Trust of gold in specified denominations (e.g., LBMA gold in denominations of 400 ounces) and the subsequent delivery by the Trust of gold in different denominations will not constitute a taxable event.
Upon a Shareholder’s sale of some or all of its Shares, the Shareholder will be treated as having sold the portion of its pro rata share of the gold held in the Trust at the time of the sale that is attributable to the Shares sold. Accordingly, the Shareholder generally will recognize gain or loss on the sale in an amount equal to the difference between (1) the amount realized pursuant to the sale of the Shares, and (2) the Shareholder’s tax basis for the portion of its pro rata share of the gold held in the Trust at the time of sale that is attributable to the Shares sold, as determined in the manner described in the preceding paragraph.
A redemption of some or all of a Shareholder’s Shares in exchange for the underlying gold represented by the Shares redeemed generally will not be a taxable event to the Shareholder. In addition, a Shareholder that acquires its Shares as part of a creation of a Basket by the delivery to the Trust of gold in specified denominations (e.g., LBMA gold in denominations of 400 ounces), the subsequent redemption of its Shares for gold delivered by the Trust in different denominations will not constitute a taxable event, provided that the amount of gold received upon redemption contains the equivalent metallic content of the gold delivered upon creation, less amounts accrued or sold to pay the Trust’s expenses and other charges. The Shareholder’s tax basis for the gold received in the redemption generally will be the same as the Shareholder’s tax basis for the portion of its pro rata share of the gold held in the Trust immediately prior to the redemption that is attributable to the Shares redeemed. The Shareholder’s holding period with respect to the gold received should include the period during which the Shareholder held the Shares redeemed. A subsequent sale of the gold received by the Shareholder will be a taxable event.
After any sale or redemption of less than all of a Shareholder’s Shares, the Shareholder’s tax basis for its pro rata share of the gold held in the Trust immediately after such sale or redemption generally will be equal to its tax basis for its share of the total amount of the gold held in the Trust immediately prior to the sale or redemption, less the portion of such basis which is taken into account in determining the amount of gain or loss recognized by the Shareholder upon such sale or, in the case of a redemption, is treated as the basis of the gold received by the Shareholder in the redemption.
Maximum 28% Long-Term Capital Gains Tax Rate for U.S. Shareholders Who Are Individuals
Under current law, gains recognized by individuals from the sale of “collectibles,” including gold, held for more than one year are taxed at a maximum rate of 28%, rather than the current maximum 20% rate applicable to most other long-term capital gains. For these purposes, gain recognized by an individual upon the sale of an interest in a trust that holds collectibles is treated as gain recognized on the sale of collectibles, to the extent that the gain is attributable to unrealized appreciation in value of the collectibles held by the Trust. Therefore, any gain recognized by an individual U.S. Shareholder attributable to a sale of Shares held for more than one year, or attributable to the Trust’s sale of any gold which the Shareholder is treated (through its ownership of Shares) as having held for more than one year, generally will be taxed at a maximum rate of 28%. The tax rates for capital gains recognized upon the sale of assets held by an individual U.S. Shareholder for one year or less or by a taxpayer other than an individual U.S. taxpayer are generally the same as those at which ordinary income is taxed.
3.8% Tax on Net Investment Income
Certain U.S. Shareholders who are individuals are required to pay a 3.8% tax on the lesser of the excess of their modified adjusted gross income over a threshold amount ($250,000 for married persons filing jointly and $200,000 for single taxpayers) or their “net investment income,” which generally includes capital gains from the disposition of property. This tax is in addition to any capital gains taxes due on such investment income. A similar tax will apply to estates and trusts. U.S. Shareholders should consult their own tax advisers regarding the effect, if any, this law may have on their investment in the Shares.
Brokerage Fees and Trust Expenses
Any brokerage or other transaction fee incurred by a Shareholder in purchasing Shares will be treated as part of the Shareholder’s tax basis in the underlying assets of the Trust. Similarly, any brokerage fee incurred by a Shareholder in selling Shares will reduce the amount realized by the Shareholder with respect to the sale.
Shareholders will be required to recognize the full amount of gain or loss upon a sale of gold by the Trust (as discussed above), even though some or all of the proceeds of such sale are used by the Trustee to pay Trust expenses. Shareholders may deduct their respective pro rata shares of each expense incurred by the Trust to the same extent as if they directly incurred the expense. Shareholders who are individuals, estates or trusts, or certain closely held corporations, however, may be subject to various limitations on their ability to use their allocable share of the Trust’s deductions and losses. Prospective Shareholders should consult their own tax advisers regarding the U.S. federal income tax consequences of holding Shares in light of their particular circumstance.
Investment by U.S. Tax-Exempt Shareholders
Certain U.S. Shareholders (“U.S. Tax-Exempt Shareholders”) are subject to U.S. federal income tax only on their unrelated business taxable income (“UBTI”). Unless they incur debt in order to purchase Shares, it is expected that U.S. Tax-Exempt Shareholders should not realize UBTI in respect of income or gains from the Shares. U.S. Tax-Exempt Shareholders should consult their own independent tax advisers regarding the U.S. federal income tax consequences of holding Shares in light of their particular circumstances.
Investment by Regulated Investment Companies
Mutual funds and other investment vehicles which are “regulated investment companies” within the meaning of Code Section 851 should consult with their tax advisers concerning (1) the likelihood that an investment in Shares, although they are a “security” within the meaning of the Investment Company Act, may be considered an investment in the underlying gold for purposes of Code Section 851(b), and (2) the extent to which an investment in Shares might nevertheless be consistent with preservation of their qualification under Code Section 851.
Investment by Certain Retirement Plans
Section 408(m) of the Code provides that the purchase of a “collectible” as an investment for an individual retirement account (“IRA”), or for a participant directed account maintained under any plan that is tax-qualified under Section 401(a) of the Code, is treated as a taxable distribution from the account to the owner of the IRA, or to the participant for whom the plan account is maintained, of an amount equal to the cost to the account of acquiring the collectible. The IRS has issued private letter rulings to taxpayers, including an affiliate of the Sponsor, providing that the purchase of Shares by an IRA or a participant-directed account maintained under a plan that is tax-qualified under Section 401(a) of the Code, will not constitute the acquisition of a collectible or be treated as resulting in a taxable distribution to the IRA owner or plan participant under Code Section 408(m). However, in the event any redemption of Shares results in the distribution of gold bullion to an IRA or a participant-directed account maintained under a plan that is tax-qualified under Section 401(a) of the Code, such distribution would constitute the acquisition of a collectible to the extent provided under Section 408(m) of the Code. Private letter rulings are only binding on the IRS with respect to the taxpayer to which they are issued. The Trust has neither requested nor obtained such a private letter ruling and there can be no assurance that the IRS would rule favorably with respect to the Trust if asked. Owners of IRAs or participants for whom the plan account is maintained are strongly urged to consult with their tax advisors before directing any such accounts to invest in the Shares since the acquisition of Shares may be considered a taxable distribution from the IRA. See “ERISA and Related Considerations.”
Taxation of Non-U.S. Shareholders
A Non-U.S. Shareholder generally will not be subject to U.S. federal income tax with respect to gain recognized upon the sale or other disposition of Shares, or upon the sale of gold by the Trust, unless (1) the Non-U.S. Shareholder is an individual and is present in the United States for 183 days or more during the taxable year of the sale or other disposition, and the gain is treated as being from U.S. sources or (2) the gain is effectively connected with the conduct by the Non-U.S. Shareholder of a trade or business in the United States and certain other conditions are met.
United States Information Reporting and Backup Withholding
The Trustee will file certain information returns with the IRS, and provide certain tax-related information to Shareholders, in connection with the Trust. Each Shareholder will be provided with information regarding its allocable portion of the Trust’s annual income (if any) and expenses. A U.S. Shareholder may be subject to U.S. backup withholding tax in certain circumstances unless it provides its taxpayer identification number and complies with certain certification procedures. Non-U.S. Shareholders may have to comply with certification procedures to establish that they are not a U.S. person in order to avoid the information reporting and backup withholding tax requirements.
The amount of any backup withholding will be allowed as a credit against a Shareholder’s U.S. federal income tax liability and may entitle such a Shareholder to a refund, provided that the required information is furnished to the IRS in a timely manner.
Taxation in Jurisdictions Other Than the United States
Prospective purchasers of Shares that are based in or acting out of a jurisdiction other than the United States are advised to consult their own tax advisers as to the tax consequences, under the laws of such jurisdiction (or any other jurisdiction other than the United States to which they are subject), of their purchase, holding, sale and redemption of or any other dealing in Shares and, in particular, as to whether any value added tax, other consumption tax or transfer tax is payable in relation to such purchase, holding, sale, redemption or other dealing.
ERISA AND RELATED CONSIDERATIONS
The Employee Retirement Income Security Act of 1974 (“ERISA”) and/or Section 4975 of the Code impose certain requirements on: (i) employee benefit plans and certain other plans and arrangements, including individual retirement accounts and annuities, Keogh plans and certain collective investment funds or insurance company general or separate accounts in which such plans or arrangements are invested, that are subject to Title I of ERISA and/or Section 4975 of the Code (collectively, “Plans”); and (ii) persons who are fiduciaries with respect to the investment of assets treated as “plan assets” within the meaning of U.S. Department of Labor (the “DOL”) regulation 29 C.F.R. § 2510.3-101, as modified by Section 3(42) of ERISA (the “Plan Assets Regulation”), of a Plan. Investments by Plans are subject to the fiduciary requirements and the applicability of prohibited transaction restrictions under ERISA and the Code.
“Governmental plans” within the meaning of Section 3(32) of ERISA, certain “church plans” within the meaning of Section 3(33) of ERISA and “non-U.S. plans” described in Section 4(b)(4) of ERISA, while not subject to the fiduciary responsibility and prohibited transaction provisions of Title I of ERISA or Section 4975 of the Code, may be subject to any federal, state, local, non-U.S. or other law or regulation that is substantially similar to the foregoing provisions of ERISA and the Code. Fiduciaries of any such plans are advised to consult with their counsel prior to an investment in the Shares.
In contemplating an investment of a portion of Plan assets in the Shares, the Plan fiduciary responsible for making such investment should carefully consider, taking into account the facts and circumstances of the Plan, the “Risk Factors” discussed above and whether such investment is consistent with its fiduciary responsibilities. The Plan fiduciary should consider, among other issues, whether: (1) the fiduciary has the authority to make the investment under the appropriate governing plan instrument; (2) the investment would constitute a direct or indirect non-exempt prohibited transaction with a “party in interest” or “disqualified person” within the meaning of ERISA and Section 4975 of the Code respectively; (3) the investment is in accordance with the Plan’s funding objectives; and (4) such investment is appropriate for the Plan under the general fiduciary standards of investment prudence and diversification , taking into account the overall investment policy of the Plan, the composition of the Plan’s investment portfolio and the Plan’s need for sufficient liquidity to pay benefits when due. When evaluating the prudence of an investment in the Shares, the Plan fiduciary should consider the DOL’s regulation on investment duties, which can be found at 29 C.F.R. § 2550.404a-1.
It is intended that (a) none of the Sponsor, the Trustee, the Custodian or any of their respective affiliates (the “Transaction Parties”) has through this prospectus and related materials provided any investment advice within the meaning of Section 3(21) of ERISA to the Plan in connection with the decision to purchase or acquire such Shares and (b) the information provided in this prospectus and related materials will not make a Transaction Party a fiduciary to the Plan.
SEED CAPITAL INVESTOR
The Seed Capital Investor agreed to purchase $9,325,500 in Shares on June 15, 2021, and on June 17, 2021 took delivery of, 500,000 Shares at a per-Share price of $18.651 (the “Seed Creation Baskets”). The per-Share price on June 15, 2021 was equal to 1/100th of an ounce of gold determined using the LBMA Gold Price PM. The LBMA Gold Price PM on June 15, 2021 was $1,865.10. As of the date of this prospectus, these 500,000 Shares represent all of the outstanding Shares. The Seed Capital Investor may offer all of the Shares comprising the Seed Creation Baskets to the public pursuant to this prospectus.
The Seed Capital Investor will not receive from the Trust, the Sponsor or any of their affiliates any fee or other compensation in connection with the sale of the Seed Creation Baskets. The Seed Capital Investor will be acting as underwriter with respect to the Seed Creation Baskets.
The Sponsor and the Trust have agreed to indemnify the Seed Capital Investor against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the Seed Capital Investor may be required to make in respect thereof.
PLAN OF DISTRIBUTION
In addition to, and independent of the initial purchase by the Seed Capital Investor (described above), the Trust issues Shares in Baskets to Authorized Participants in exchange for deposits of gold on a continuous basis. As of the date of this prospectus, the Authorized Participants are Merrill Lynch Professional Clearing Corp., Virtu Americas LLC, and JP Morgan Securities, Inc.. Because new Shares can be created and issued on an ongoing basis, at any point during the life of the Trust, a “distribution,” as such term is used in the Securities Act, will be occurring. The Seed Capital Investor will be deemed to be a statutory underwriter. Authorized Participants, other broker-dealers and other persons are cautioned that some of their activities will result in their being deemed participants in a distribution in a manner which would render them statutory underwriters and subject them to the prospectus-delivery and liability provisions of the Securities Act. For example, an Authorized Participant, other broker-dealer firm or its client will be deemed a statutory underwriter if it purchases a Basket from the Trust, breaks the Basket down into the constituent Shares and sells the Shares to its customers; or if it chooses to couple the creation of a supply of new Shares with an active selling effort involving solicitation of secondary market demand for the Shares. A determination of whether a particular market participant is an underwriter must take into account all the facts and circumstances pertaining to the activities of the broker-dealer or its client in the particular case, and the examples mentioned above should not be considered a complete description of all the activities that would lead to designation as an underwriter.
By executing an Authorized Participant Agreement, an Authorized Participant becomes part of the group of parties eligible to purchase Baskets from, and put Baskets for redemption to, the Trust. An Authorized Participant is under no obligation to create or redeem Baskets, and an Authorized Participant is under no obligation to offer to the public Shares of any Baskets it does create.
Investors that purchase Shares through a commission/fee-based brokerage account may pay commissions/fees charged by the brokerage account. We recommend that investors review the terms of their brokerage accounts for details on applicable charges. Dealers that are not “underwriters” but are participating in a distribution (as contrasted to ordinary secondary trading transactions), and thus dealing with Shares that are part of an “unsold allotment” within the meaning of Section 4(a)(3)(C) of the Securities Act, would be unable to take advantage of the prospectus- delivery exemption provided by Section 4(a)(3) of the Securities Act.
The Sponsor intends to qualify the Shares in states selected by the Sponsor and that sales be made through broker-dealers who are members of Financial Industry Regulatory Authority, Inc. (“FINRA”). Investors intending to create or redeem Baskets through Authorized Participants in transactions not involving a broker-dealer registered in such investor’s state of domicile or residence should consult their legal advisor regarding applicable broker-dealer or securities regulatory requirements under the state securities laws prior to such creation or redemption.
Because FINRA views the Shares as interests in a direct participation program, no FINRA-member, or person associated with a member, will participate in a public offering of Shares except in compliance with Rule 2310 of the FINRA Rules. The Authorized Participants do not receive from the Trust or the Sponsor any compensation in connection with an offering of the Shares.
The Seed Capital Investor will not act as an Authorized Participant with respect to the Seed Creation Baskets, and its activities with respect to the Seed Creation Baskets will be distinct from those of an Authorized Participant. Unlike most Authorized Participants, the Seed Capital Investor is not in the business of purchasing and selling securities for its own account or the accounts of others. The Seed Capital Investor will not act as an Authorized Participant to purchase (or redeem) Baskets in the future.
The Shares will be listed and traded on NYSE Arca under the ticker symbol “IAUM.”
CONFLICTS OF INTEREST
General
Prospective investors should be aware that the Sponsor and the Trustee intend to assert that Shareholders have, by purchasing Shares, consented to the following conflicts of interest in the event of any proceeding alleging that such conflicts violated any duty owed by the Sponsor or the Trustee to the Shareholders.
The Sponsor and the Trustee want you to know that there are certain entities with which the Sponsor or the Trustee may have relationships that may give rise to conflicts of interest, or the appearance of conflicts of interest. These entities include the following: affiliates of the Sponsor and the Trustee (including BlackRock, Inc., each of its affiliates, directors, partners, trustees, managing members, officers and employees, collectively, the “Affiliates”).
The activities of the Sponsor, the Trustee and the Affiliates in the management of, or their interest in, their own accounts and other accounts they manage, may present conflicts of interest that could disadvantage the Trust and its Shareholders. One or more of the Sponsor, the Trustee or the Affiliates provide investment management services to other investment vehicles, funds and discretionary managed accounts that may follow an investment program similar to that of the Trust. The Sponsor the Trustee and the Affiliates collectively are involved worldwide with a broad spectrum of financial services and asset management activities and may engage in the ordinary course of business in activities in which their interests or the interests of their clients may conflict with those of the Trust and its Shareholders. One or more of the Sponsor, the Trustee or the Affiliates act or may act as an investor, investment banker, research provider, investment manager, financier, underwriter, advisor, market maker, trader, prime broker, lender, agent and principal, and have other direct and indirect interests, in assets in which the Trust directly and indirectly invest.
Thus, it is likely that the Trust will have multiple business relationships with and will engage in transactions with or obtain services from entities for which the Sponsor, the Trustee or an Affiliate performs or seeks to perform investment banking or other services.
Resolution of Certain Conflicts
The Trust Agreement provides that in the case of a conflict of interest between the Trustee, the Sponsor and their affiliates, on the one hand, and the holders of Shares, on the other, the Trustee and the Sponsor will use commercially reasonable efforts to resolve such conflict considering the relevant interests of each party (including their own interests) and related benefits and burdens, any customary or accepted industry practices, and any applicable generally accepted accounting practices or principles. The Trust Agreement provides that in the absence of bad faith by the Sponsor or Trustee, such a resolution will not constitute a breach of the Trust Agreement or any duty or obligation of the Sponsor or Trustee. Notwithstanding the foregoing, in no event will the Sponsor or the Trustee or their respective affiliates be required to divest themselves of, or restrict their services or other activities with respect to, any assets they currently or may hold, manage or control on their own behalf or on behalf of any customer, client or any other person.
LEGAL MATTERS
The validity of the Shares has been passed upon for the Sponsor by Clifford Chance US LLP, New York, New York, who, as special U.S. tax counsel to the Sponsor, has also rendered an opinion regarding the material federal income tax consequences relating to the Shares.
License Agreement
On January 29, 2004, The Bank of New York Mellon granted to an affiliate of the Sponsor of the Trust (the “Licensee”) a perpetual, worldwide, non-exclusive, non-transferable license under The Bank of New York Mellon’s patents and patent applications that cover securitized gold products (the “Licensor Patent Rights”) solely for the purpose of establishing, operating and marketing any securitized gold financial product that is sold, sponsored or issued by the Licensee.
On June 15, 2021, the Licensee granted to the Trust a sublicense to use the Licensor Patent Rights solely for the purpose of establishing, operating and marketing any securitized gold financial product that is sold, sponsored or issued by the Trust.
LBMA Gold Price
All references to LBMA Gold Price are used with the permission of IBA and have been provided for information purposes only. IBA accepts no liability or responsibility for the accuracy of the prices or the underlying product to which the prices may be referenced.
THE LBMA GOLD PRICE, WHICH IS ADMINISTERED AND PUBLISHED BY IBA, SERVES AS, OR AS PART OF, AN INPUT OR UNDERLYING REFERENCE FOR iSHARES GOLD TRUST MICRO.
LBMA GOLD PRICE IS A TRADE MARK OF PRECIOUS METALS PRICES LIMITED, AND IS LICENSED TO IBA AS THE ADMINISTRATOR OF THE LBMA GOLD PRICE. IBA IS A TRADE MARK OF IBA AND/OR ITS AFFILIATES. THE LBMA GOLD PRICE AM, LBMA GOLD PRICE PM, AND THE TRADE MARKS LBMA GOLD PRICE AND IBA, ARE USED BY BLACKROCK WITH PERMISSION UNDER LICENCE BY IBA.
IBA AND ITS AFFILIATES MAKE NO CLAIM, PREDICATION, WARRANTY OR REPRESENTATION WHATSOEVER, EXPRESS OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED FROM ANY USE OF THE LBMA GOLD PRICE, OR THE APPROPRIATENESS OR SUITABILITY OF THE LBMA GOLD PRICE FOR ANY PARTICULAR PURPOSE TO WHICH IT MIGHT BE PUT, INCLUDING WITH RESPECT TO iSHARES GOLD TRUST MICRO. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ALL IMPLIED TERMS, CONDITIONS AND WARRANTIES, INCLUDING, WITHOUT LIMITATION, AS TO QUALITY, MERCHANTABILITY, FITNESS FOR PURPOSE, TITLE OR NON-INFRINGEMENT, IN RELATION TO THE LBMA GOLD PRICE, ARE HEREBY EXCLUDED, AND NONE OF IBA OR ANY OF ITS AFFILIATES WILL BE LIABLE IN CONTRACT OR TORT (INCLUDING NEGLIGENCE), FOR BREACH OF STATUTORY DUTY OR NUISANCE, OR UNDER ANTITRUST LAWS OR OTHERWISE, IN RESPECT OF ANY INACCURACIES, ERRORS, OMISSIONS, DELAYS, FAILURES, CESSATIONS OR CHANGES (MATERIAL OR OTHERWISE) IN THE LBMA GOLD PRICE, OR FOR ANY DAMAGE, EXPENSE OR OTHER LOSS (WHETHER DIRECT OR INDIRECT) YOU MAY SUFFER ARISING OUT OF OR IN CONNECTION WITH THE LBMA GOLD PRICE OR ANY RELIANCE YOU MAY PLACE UPON IT.
EXPERTS
The financial statements as of June 15, 2021 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent registered public accounting firm, given on the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Sponsor has filed on behalf of the Trust a registration statement on Form S-1 with the SEC under the Securities Act. This prospectus does not contain all of the information set forth in the registration statement (including the exhibits to the registration statement), parts of which have been omitted in accordance with the rules and regulations of the SEC. For further information about the Trust or the Shares, please refer to the registration statement, which you may inspect, without charge, online at www.sec.gov. Information about the Trust or the Shares can also be obtained from the Sponsor’s website at http://www.iShares.com. This Internet address is only provided here as a convenience to you, and the information contained on or connected to the Trust’s website is not considered part of this prospectus. We will make available, free of charge, on our website our Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K (including any amendments thereto), proxy statements and other information filed with, or furnished to, the SEC, as soon as reasonably practicable after such documents are so filed or furnished.
The Trust will be subject to the informational requirements of the Exchange Act and the Sponsor will, on behalf of the Trust, file certain reports and other information with the SEC. These filings will contain certain important information that does not appear in this prospectus. For further information about the Trust, you may read and copy these filings at the SEC’s Internet site (www.sec.gov), which also contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.
The SEC allows the “incorporation by reference” of information into this prospectus, which means that information may be disclosed to you by referring you to other documents filed or which will be filed with the SEC. Unless otherwise provided therein, any reports filed by the Trust with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus and before the termination or completion of this offering shall be deemed to be incorporated by reference in this prospectus and to be a part of it from the filing dates of such documents and shall automatically update or supersede, as applicable, any information included in, or incorporated by reference into this prospectus. The statements in or portions of a future document incorporated by reference in this prospectus may update and replace statements in and portions of this prospectus or the above listed documents.
The Sponsor will provide you without charge, upon your written or oral request, a copy of any or all of the information that has been incorporated by reference into this prospectus but not delivered with the prospectus. Please direct your written or telephone requests to iShares Delaware Trust Sponsor LLC, 400 Howard Street, San Francisco, CA 94105, Attention: Product Management Team, iShares Product Research & Development (Tel: 1-800-474-2737). You may also obtain information about the Trust by visiting its website at www.iShares.com. Information contained in the Trust’s website is not part of this prospectus.
GLOSSARY
In this prospectus, each of the following terms has the meaning set forth below:
“Authorized Participant” — A person who, at the time of submitting to the Trustee an order to create or redeem one or more Baskets (i) is a registered broker-dealer, (ii) is a DTC Participant or an Indirect Participant, and (iii) has in effect a valid Authorized Participant Agreement.
“Authorized Participant Agreement” — An agreement entered into by an Authorized Participant, the Sponsor and the Trustee that provides the procedures for the creation and redemption of Baskets.
“Basket” — A block of 50,000 Shares (as such number may be increased or decreased pursuant to the Trust Agreement).
“Basket Gold Amount” — The amount of gold (measured in Fine Ounces), determined on each Business Day by the Trustee, which Authorized Participants must transfer to the Trust in exchange for a Basket, or will receive in exchange for each Basket surrendered for redemption.
“Blackrock” — Blackrock, Inc.
“Business Day” — Any day other than: (1) a Saturday or a Sunday, or (2) a day on which NYSE Arca is closed for regular trading.
“CFTC” — U.S. Commodity Futures Trading Commission, an independent agency with the mandate to regulate commodity futures and option markets in the United States, or any successor governmental agency in the United States.
“Code” — The United States Internal Revenue Code of 1986, as amended.
“COMEX” — The exchange market on gold futures contracts operated by Commodity Exchange, Inc., a subsidiary of NYMEX.
“Commodity Exchange Act” or “CEA” — The United States Commodity Exchange Act of 1936, as amended.
“Custodian” — JPMorgan Chase Bank, N.A., a national banking association acting through its London branch.
“Custodian Agreement” — The agreement, governed by English law, between the Trustee and the Custodian regarding the custody of the Trust’s gold.
“DOL” — U.S. Department of Labor
“DTC” — The Depository Trust Company, a limited purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the United States Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934.
“DTC Participant” — An entity that has an account with DTC.
“ERISA” — The Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” — The United States Securities Exchange Act of 1934, as amended.
“FCA” — Financial Conduct Authority of the United Kingdom.
“Fine Ounce” — An Ounce of 100% pure gold. The number of Fine Ounces in a gold bar may be calculated by multiplying the gross weight in Ounces by the fineness, expressed as a fraction of the fine metal content in parts per 1000.
“FINRA” — Financial Industry Regulatory Authority, Inc.
“Gold Bullion” — (a) gold bullion meeting the requirements of London Good Delivery Standards or (b) credit to an Unallocated account representing the right to receive gold bullion meeting the requirements of London Good Delivery Standards.
“IBA” — ICE Benchmark Administration, a specialist benchmark administrator appointed by the LBMA.
“Indirect Participant” — An entity that has access to the DTC clearing system by clearing securities through, or maintaining a custodial relationship with, a DTC Participant.
“Investment Company Act” — The United States Investment Company Act of 1940, as amended.
“IRA” — Individual retirement account.
“IRS” — The United States Internal Revenue Service.
“JOBS Act”— The Jumpstart Our Business Startups Act.
“LBMA” — The London Bullion Market Association, a trade association that acts as the coordinator for activities conducted on behalf of its members and other participants in the London bullion market.
“LBMA Gold Price AM” — As of any day, the price of gold determined in an auction hosted by IBA in the morning of such day (London time).
“LBMA Gold Price PM” — As of any day, the price of gold determined in an auction hosted by IBA in the afternoon of such day (London time).
“Licensee” — An affiliate of the Sponsor that was granted Licensor Patent Rights under the License Agreement.
“London Good Delivery Bar” — A bar of gold meeting the London Good Delivery Standards.
“London Good Delivery Standards” — The specifications for weight, dimensions, fineness (or purity), identifying marks and appearance of gold bars as set forth in “The Good Delivery Rules for Gold and Silver Bars” published by the LBMA.
“London PM Fix” — As of any day, the price of gold fixed in the afternoon of such day (London time) by the London Gold Market Fixing Ltd.
“NAV” — Net asset value per Share. See “Business of the Trust — Valuation of Gold; Computation of Net Asset Value” for a description of how the net asset value of the Trust and the NAV are calculated.
“Non-U.S. Shareholder” — A shareholder that is not a U.S. Shareholder.
“NYMEX” — New York Mercantile Exchange, Inc.
“NYSE Arca” — The NYSE Arca Marketplace operated by NYSE Arca Equities, Inc.
“OTC” — The global over-the-counter market for the trading of gold which consists of transactions in spot, forwards, and options and other derivatives.
“Ounce” — A troy ounce, equal to 1.0971428 ounces avoirdupois. “Avoirdupois” is the system of weights used in the United States and Great Britain for goods other than precious metals, gems and drugs. In that system, a pound has 16 ounces and an ounce has 16 drams.
“Plan” — Any (a) employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the fiduciary responsibility provisions of ERISA, as set forth in Title I thereof, (b) plan described in Section 4975(e)(1) of the Code that is subject to Section 4975 of the Code, including individual retirement accounts and Keogh plans, (c) entity whose underlying assets include plan assets by reason of a plan’s investment in such entity.
“SEC” — The Securities and Exchange Commission of the United States, or any successor governmental agency in the United States.
“Securities Act” — The United States Securities Act of 1933, as amended.
“Seed Capital Investor” - BlackRock Financial Management, Inc.
“Seed Creation Baskets” - ten Baskets delivered to the Seed Capital Investor on June 17, 2021 in exchange for 5,000 fine ounces of gold.
“Shareholders” — Owners of beneficial interests in the Shares.
“Shares” — Units of fractional undivided beneficial interest in the net assets of the Trust which are issued by the Trust.
“Sponsor” — iShares Delaware Trust Sponsor LLC, an indirect subsidiary of BlackRock, Inc.
“Sponsor’s Fee” — the fees of the Sponsor, which accrues daily and is paid monthly in arrears at an annualized rate equal to 0.15% of the net asset value of the Trust. The Sponsor may, at its discretion and from time to time, waive all or a portion of the Sponsor’s Fee for stated periods of time. The Sponsor is under no obligation to waive any portion of its fees and any such waiver shall create no obligation to waive any such fees during any period not covered by the waiver. Effective on the date the Shares are listed for trading on NYSE Arca, the Sponsor has voluntarily agreed to waive a portion of the Sponsor's Fee so that the Sponsor's Fee after the fee waiver will not exceed 0.07% through June 30, 2024.
“TOCOM” — The Tokyo Commodity Exchange.
“Tonne” — One metric ton which is equivalent to 1,000 kilograms or 32,150.7465 troy ounces.
“Treasury Regulations” — Tax regulations issued by the IRS.
“Trust” — iShares Gold Trust Micro, a New York trust formed pursuant to the Trust Agreement.
“Trust Agreement” — The Depositary Trust Agreement dated as of June 15, 2021, among the Sponsor, The Bank of New York Mellon, as Trustee, the registered and beneficial owners from time to time of Shares and all persons that deposit gold for creation of Shares under which the Trust is governed.
“Trustee” — The Bank of New York Mellon, a banking corporation organized under the laws of the State of New York with trust powers.
“UBTI” — Unrelated business taxable income.
“Unallocated” — Gold is said to be held in unallocated form at a custodian when the person in whose name gold is so held is entitled to receive delivery of gold in the amount standing to the credit of that person’s account, but that person has no ownership interest in any particular gold that the custodian maintaining the account owns or holds. In contrast, gold is held in “allocated” form when specific bars of gold held by the custodian are identified as the property of the person holding the “allocated” account.
“U.S. Shareholder” — A Shareholder that is (1) an individual who is treated as a citizen or resident of the United States for U.S. federal income tax purposes; (2) a corporation (or an entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any political subdivision thereof; (3) an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or (4) a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or a trust that has made a valid election under applicable Treasury Regulations to be treated as a domestic trust.
Report of Independent Registered Public Accounting Firm
To the Sponsor and Shareholders of iShares® Gold Trust Micro
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of iShares® Gold Trust Micro (the “Trust”) as of June 15, 2021, including the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Trust as of June 15, 2021 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Sponsor’s management. Our responsibility is to express an opinion on the Trust’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
June 18, 2021
We have served as the Trust's auditor since 2021.
iShares Gold Trust Micro
STATEMENT OF ASSETS AND LIABILITIES
At June 15, 2021
|
ASSETS:
|
|
|
|
|
Investment in gold bullion, at fair value(a)
|
$
|
9,325,500
|
|
|
Total Assets
|
|
9,325,500
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Total Liabilities
|
|
-
|
|
|
|
|
|
|
|
Commitments and contingent liabilities (Note 6)
|
|
-
|
|
|
|
|
|
|
|
Net Assets
|
$
|
9,325,500
|
|
|
|
|
|
|
|
Shares issued and outstanding(b)
|
|
500,000
|
|
|
Net asset value per Share (Note 2C)
|
$
|
18.65
|
|
|
(a) Cost of investment in gold bullion: $9,325,500
|
|
(b) No par value, unlimited amount authorized.
|
See Notes to Financial Statements
iShares Gold Trust Micro
SCHEDULE OF INVESTMENTS
At June 15, 2021
|
Description
|
|
Ounces
|
|
|
Cost
|
|
|
Fair Value
|
|
|
Gold bullion
|
|
|
5,000
|
|
|
$
|
9,325,500
|
|
|
$
|
9,325,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment – 100.00%
|
|
|
|
|
|
|
|
|
|
|
9,325,500
|
|
|
Less Liabilities – (0.00)%
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
Net Assets – 100.00%
|
|
|
|
|
|
|
|
|
|
$
|
9,325,500
|
|
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization:
The iShares Gold Trust Micro (the “Trust”) was organized on June 15, 2021 as a New York trust. The trustee is The Bank of New York Mellon (the “Trustee”), which is responsible for the day-to-day administration of the Trust. The Trust’s sponsor is iShares Delaware Trust Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The Trust is governed by the provisions of the Depositary Trust Agreement (the "Trust Agreement") executed by the Trustee and the Sponsor as June 15, 2021. The Trust issues units of beneficial interest (“Shares”) representing fractional undivided beneficial interests in its net assets.
BlackRock Financial Management, Inc., the Seed Capital Investor, contributed 5,000 ounces of Gold in exchange for 500,000 shares on June 15, 2021 for the benefit of BlackRock Financial Management, Inc. At contribution, the value of the gold deposited with the Trust was based on the price of an ounce of gold of $1,865.10. The Seed Capital Investor is an affiliate of the Sponsor. Seed Capital Investor will not receive from the Trust, the Sponsor or any of their affiliates any fee or other compensation in connection with the sale of the Seed Creation Baskets.
The Trust seeks to reflect generally the performance of the price of gold. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. The Shares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in gold.
The Trust qualifies as an investment company solely for accounting purposes and not for any other purpose and follows the accounting and reporting guidance under the Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services - Investment Companies, but is not registered, and is not required to be registered, as an investment company under the Investment Company Act of 1940, as amended.
Note 2. Significant Accounting Policies:
The following significant accounting policies are consistently followed by the Trust in the preparation of its financial statements in conformity with generally accepted accounting principles in the United States ("U.S. GAAP"). The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
JPMorgan Chase Bank N.A., London branch (the “Custodian”), is responsible for the safekeeping of gold bullion owned by the Trust.
Fair value of the gold bullion held by the Trust is based on that day's London Bullion Market Association ("LBMA") Gold Price PM. "LBMA Gold Price PM" is the price per fine troy ounce of gold, stated in U.S. dollars, determined by ICE Benchmark Administration (“IBA”) following an electronic auction consisting of one or more 30-second rounds starting at 3:00 p.m. (London time), on each day that the London gold market is open for business, and published shortly thereafter. If there is no LBMA Gold Price PM on any day, the Trustee is authorized to use the most recently announced price of gold determined in an electronic auction hosted by IBA that begins at 10:30 a.m. (London time) (the “LBMA Gold Price AM”), unless the Trustee, in consultation with the Sponsor, determines that such price is inappropriate as a basis for evaluation.
Gain or loss on sales of gold bullion is calculated on a trade date basis using the average cost method.
The following tables summarize activity in gold bullion during the period covered by this financial statement:
|
June 15, 2021
|
|
Ounces
|
|
|
Cost
|
|
|
Fair
Value
|
|
|
Realized
Gain (Loss)
|
|
|
Beginning balance
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Gold bullion contributed
|
|
|
5,000
|
|
|
|
9,325,500
|
|
|
|
9,325,500
|
|
|
|
—
|
|
|
Gold bullion distributed
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Gold bullion sold to pay expenses
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net realized gain
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net change in unrealized appreciation/depreciation
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Ending balance
|
|
|
5,000
|
|
|
$
|
9,325,500
|
|
|
$
|
9,325,500
|
|
|
$
|
—
|
|
|
C.
|
Calculation of Net Asset Value
|
On each business day, as soon as practicable after 4:00 p.m. (New York time), the net asset value of the Trust is obtained by subtracting all accrued fees, expenses and other liabilities of the Trust from the fair value of the gold and other assets held by the Trust. The Trustee computes the net asset value per Share by dividing the net asset value of the Trust by the number of Shares outstanding on the date the computation is made.
|
D.
|
Offering of the Shares
|
Trust Shares are issued and redeemed continuously in aggregations of 50,000 Shares in exchange for gold bullion rather than cash. Individual investors cannot purchase or redeem Shares in direct transactions with the Trust. The Trust only transacts with registered broker-dealers that are eligible to settle securities transactions through the book-entry facilities of the Depository Trust Company and that have entered into a contractual arrangement with the Trustee and the Sponsor governing, among other matters, the creation and redemption of Shares (such broker-dealers, the “Authorized Participants”). Holders of Shares of the Trust may redeem their Shares at any time acting through an Authorized Participant and in the prescribed aggregations of 50,000 Shares; provided, that redemptions of Shares may be suspended during any period while regular trading on NYSE Arca, Inc. (“NYSE Arca”) is suspended or restricted, or in which an emergency exists as a result of which delivery, disposal or evaluation of gold is not reasonably practicable.
The per Share amount of gold exchanged for a purchase or redemption represents the per Share amount of gold held by the Trust, after giving effect to its liabilities.
When gold bullion is exchanged in settlement of a redemption, it is considered a sale of gold bullion for accounting purposes.
Share activity is as follows:
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares issued
|
|
|
500,000
|
|
|
$
|
9,325,500
|
|
|
Shares redeemed
|
|
|
—
|
|
|
|
—
|
|
|
Net increase
|
|
|
500,000
|
|
|
$
|
9,325,500
|
|
The Trust is treated as a grantor trust for federal income tax purposes and, therefore, no provision for federal income taxes is required. Any interest, expenses, gains and losses are passed through to the holders of Shares of the Trust. The Sponsor has reviewed the tax positions as of June 15, 2021 and has determined that no provision for income tax is required in the Trust’s financial statements.
3 - Trust Expenses
The Trust will pay to the Sponsor a Sponsor's fee that will accrue daily at an annualized rate equal to 0.15% of the adjusted daily net asset value of the Trust, paid in arrears. The Sponsor has agreed to assume the following administrative and marketing expenses incurred by the Trust: the Trustee's monthly fee, the Custodian's fee, NYSE Arca listing fees, SEC registration fees, printing and mailing costs, audit fees and expenses, and up to $100,000 per annum in legal fees and expenses. The Sponsor has also paid the costs of the Trust's organization and the initial sales of the Shares, including applicable SEC registration fees.
4 - Related Parties
The Sponsor and the Trustee are considered to be related parties to the Trust. The Trustee’s fee is paid by the Sponsor and is not a separate expense of the Trust.
As of June 15, 2021 BlackRock Financial Management, Inc., an affiliate of the Sponsor, owned 500,000 Shares of the Trust.
5 - Indemnification
The Trust Agreement provides that the Sponsor and its shareholders, directors, officers, employees, affiliates and subsidiaries shall be indemnified by the Trust for any loss, liability or expense incurred by any such person that arises out of or in connection with the performance of obligations under the Trust Agreement or any actions taken in accordance with the provisions of the Trust Agreement, absent such person's negligence, bad faith, willful misconduct, willful malfeasance or reckless disregard of such person's duties and obligations.
The Trust has agreed that the Custodian will only be responsible for any loss or damage suffered by the Trust as a direct result of the Custodian's negligence, fraud or willful default in the performance of its duties.
6 - Commitments and Contingent Liabilities
In the normal course of business, the Trust may enter into contracts with service providers that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred.
7 - Concentration Risk
Substantially all of the Trust’s assets are holdings of gold bullion, which creates a concentration risk associated with fluctuations in the price of gold. Accordingly, a decline in the price of gold will have an adverse effect on the value of the Shares of the Trust. Factors that may have the effect of causing a decline in the price of gold include large sales by the official sector (governments, central banks, and related institutions), an increase in the hedging activities of gold producers, and changes in the attitude of speculators, investors and other market participants towards gold.
8 - Investment Valuation
U.S. GAAP defines fair value as the price the Trust would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Trust’s policy is to value its investment at fair value.
Various inputs are used in determining the fair value of assets and liabilities. Inputs may be based on independent market data (“observable inputs”) or they may be internally developed (“unobservable inputs”). These inputs are categorized into a disclosure hierarchy consisting of three broad levels for financial reporting purposes. The level of a value determined for an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are as follows:
|
Level 1 –
|
Unadjusted quoted prices in active markets for identical assets or liabilities;
|
|
Level 2 –
|
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not considered to be active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and
|
|
Level 3 –
|
Unobservable inputs that are unobservable for the asset or liability, including the Trust’s assumptions used in determining the fair value of investments.
|
At June 15, 2021, the value of the gold bullion held by the Trust is categorized as Level 1.
iShares Gold Trust Micro
120,000,000 Shares
PROSPECTUS
, 2021
PART II—INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.*
The Trust shall not bear any expenses incurred in connection with the issuance and distribution of the securities being registered. These expenses shall be paid by the Sponsor. Except for the Securities and Exchange Commission Registration Fee and NYSE Arca Listing Fee, all such expenses are estimated:
|
Securities and Exchange Commission Registration Fee
|
|
$
|
247,229.33
|
|
|
NYSE Arca Listing Fee
|
|
$
|
5,062.50
|
|
|
Printing and engraving expenses
|
|
$
|
5,210
|
|
|
Legal fees and expenses
|
|
$
|
250,000
|
|
|
Accounting fees and expenses
|
|
$
|
5,000
|
|
|
Total
|
|
$
|
512,501.83
|
|
|
*
|
Subject to revision upon completion of the offering.
|
Item 14. Indemnification of Directors and Officers.
Section 5.6(b) of the Trust Agreement provides that the Trustee shall indemnify the Sponsor, its directors, officers, employees and agents against, and hold each of them harmless from, any loss, liability, cost, expense or judgment (including reasonable fees and expenses of counsel) (i) caused by the negligence or bad faith of the Trustee or (ii) arising out of any information furnished in writing to the Sponsor by the Trustee expressly for use in the registration statement, or any amendment thereto or periodic or other report, filed with the SEC relating to the Shares that is not materially altered by the Sponsor.
Section 5.6(d) of the Trust Agreement provides that the Sponsor and its members, managers, directors, officers, employees, affiliates (as such term is defined under the Securities Act) and subsidiaries shall be indemnified from the Trust and held harmless against any loss, liability or expense incurred without (1) negligence, bad faith, willful misconduct or willful malfeasance arising out of or in connection with the performance of its obligations under the Trust Agreement or any actions taken in accordance with the provisions of the Trust Agreement or (2) reckless disregard of their obligations and duties under the Trust Agreement.
Item 15. Recent Sales of Unregistered Securities.
None.
Item 16. Exhibits.
(a) Exhibits
|
*
|
Filed herewith.
|
|
**
|
Filed previously.
|
(b) Financial Statement Schedules
Not applicable.
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
Provided, however, That:
Paragraphs (1)(i), (ii), and (iii) of this section do not apply if the registration statement is on Form S-1 and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) that are incorporated by reference in the registration statement; and
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i) If the registrant is relying on Rule 430B:
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or
(ii) If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
|
|
(b)
|
The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
|
|
(c)
|
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
|
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets the requirements for filing on Form S-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Francisco, California, on June 21, 2021.
|
|
iShares Delaware Trust Sponsor LLC
Sponsor of iShares Gold Trust Micro*
|
|
|
|
|
|
|
By:
|
/s/ Paul Lohrey
|
|
|
|
Paul Lohrey
|
|
|
|
Director, President and Chief
Executive Officer
|
|
|
|
(Principal executive officer)
|
|
|
|
|
|
|
By:
|
/s/ Mary Cronin
|
|
|
|
Mary Cronin
|
|
|
|
Director and Chief Financial Officer
|
|
|
|
(Principal financial and accounting
officer)
|
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities* and on the dates indicated.
|
Signature
|
|
Title
|
|
Date
|
|
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/s/ Paul Lohrey
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Director, President and Chief Executive Officer
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June 21, 2021
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Paul Lohrey
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(Principal executive officer)
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/s/ Mary Cronin
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Director and Chief Financial Officer
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June 21, 2021
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Mary Cronin
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(Principal financial and accounting officer)
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**
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Director
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June 21, 2021
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Philip Jensen
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**
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Director
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June 21, 2021
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Peter Landini
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**
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Director
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June 21, 2021
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Kimun Lee
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**/s/ Paul Lohrey
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June 21, 2021
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Paul Lohrey, Attorney-in-fact
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* The Registrant is a trust and the persons are signing in their capacities as officers or directors of iShares Delaware Trust Sponsor LLC, the sponsor of the Registrant.
Exhibit 1.1
SEED CAPITAL INVESTOR AGREEMENT
for
iSHARES® GOLD TRUST MICRO
Sponsored by iSHARES DELAWARE TRUST SPONSOR LLC
June 15, 2021
iSHARES DELAWARE TRUST SPONSOR LLC, a Delaware limited liability company (the "Sponsor"), has sponsored the formation of iSHARES GOLD TRUST MICRO (the "Trust"), a New York trust, for which The Bank of New York Mellon, a New York banking corporation, acts as trustee (the "Trustee").
Upon the basis of the representations and warranties set forth in Section 1 hereof and subject to the applicable terms and conditions set forth herein, on the date hereof the Trust agrees to issue and sell to BLACKROCK FINANCIAL MANAGEMENT, INC. (the "Seed Capital Investor"), and the Seed Capital Investor agrees to purchase the aggregate number of shares representing fractional undivided beneficial interests in the Trust's net assets (the "Shares") as are set forth in Schedule A hereto (such Shares being referred to herein as the "Seed Creation Baskets") in consideration of the payment of the amount for the Shares (the "Purchase Price") set forth in Schedule A. The Seed Capital Investor agrees to purchase the Seed Creation Baskets and agrees not to redeem, transfer or otherwise dispose of such Seed Creation Baskets except as contemplated under Section 2(b) hereto.
1. The Sponsor, on its own behalf and in its capacity as Sponsor of the Trust, represents and warrants to, and agrees with, the Seed Capital Investor that:
(a) A registration statement on Form S-1 (File No. 333-253614) (the "Initial Registration Statement") in respect of the Shares has been filed with the Securities and Exchange Commission (the "Commission"); the various parts of the Initial Registration Statement, including all exhibits thereto and including the information contained in the form of final prospectus when filed with the Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the "Act") in accordance with Section 3(a) hereof and deemed by virtue of Rule 430A under the Act to be part of the Initial Registration Statement, each as amended as of the date hereof, are hereinafter collectively called the "Registration Statement"; and such final prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is hereinafter called the "Prospectus");
(b) Each of the Shares comprising the Seed Creation Baskets shall be duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued and fully paid and non-assessable and as of the time of payment of the Purchase Price by the Seed Capital Investor (the "Closing Time") will conform in all material respects to the description of the Shares comprising the Seed Creation Baskets contained in the Prospectus;
(c) The issue and sale of the Shares comprising the Seed Creation Baskets by the Trust and the compliance by the Sponsor and the Trust with all of the provisions of this Agreement and the consummation of the transactions herein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Sponsor or the Trust is a party or by which the Sponsor, or the Trust is bound or to which any of the property or assets of the Sponsor or the Trust is subject, except where such conflict, breach or violation, as the case may be, would not have a material adverse effect on the ability of the Sponsor or the Trust to perform its obligations under this Agreement, nor will such action result in any violation of the provisions of the constitutive documents of the Sponsor, the Trust, or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Sponsor, or the Trust or any of their respective properties, except where such violation would not have a material adverse effect on the ability of the Sponsor to perform its obligations under this Agreement; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Shares comprising the Seed Creation Baskets hereunder or the consummation by the Sponsor or the Trust of the transactions contemplated by this Agreement, except such consents, approvals, authorizations, registrations or qualifications as may be required under the rules of the Financial Industry Regulatory Authority ("FINRA"), state securities, commodities or Blue Sky laws in connection with the purchase and distribution by the Seed Capital Investor of the Shares comprising the Seed Creation Baskets;
2. The Seed Capital Investor represents and warrants to, and agrees with, the Sponsor, on its own behalf and in its capacity as Sponsor of the Trust, that:
(a) On the date of this Agreement, the Seed Capital Investor shall pay the Purchase Price as set forth on Schedule A, attached hereto, and the Trust shall cause the Shares comprising the Seed Creation Baskets to be delivered to the Seed Capital Investor or its designee through the facilities of The Depository Trust Company ("DTC") for the account of the Seed Capital Investor or its designee.
(b) The Seed Capital Investor agrees that any sales of any Shares comprising the Seed Creation Baskets will be effected in a manner consistent with the Plan of Distribution contained in the Prospectus and that it shall deliver a Prospectus with any such sales when required by law.
3. The Sponsor agrees with the Seed Capital Investor:
(a) To prepare the Prospectus and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the second business day following the day on which the Initial Registration Statement is declared effective, or, if applicable, such earlier time as may be required by Rule 424(b) or Rule 430A(a)(3) under the Act; to advise the Seed Capital Investor, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish the Seed Capital Investor, upon written request, with copies thereof; to advise the Seed Capital Investor, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any prospectus, of the suspension of the qualification of the Shares comprising the Seed Creation Baskets for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any prospectus or suspending any such qualification, promptly to use its reasonable best efforts to obtain the withdrawal of such order;
(b) To use its reasonable best efforts to list, subject to notice of issuance, the Shares on the NYSE Arca (the "Exchange");
(c) To file promptly all reports and any information statement required to be filed by the Trust with the Commission in order to comply with the Securities Exchange Act of 1934, as amended, subsequent to the date of the Prospectus and for so long as the delivery of a prospectus is required in connection with the offering or sale of the Shares; and
(d) To maintain an orderly procedure for the transfer and register of the Shares comprising the Seed Creation Baskets.
(e) To cause the Shares comprising the Seed Creation Baskets to be delivered to the Seed Capital Investor or its designee through the facilities of The Depository Trust Company ("DTC") as of the date of this Agreement, subject to the payment by the Seed Capital Investor of the Purchase Price.
4. Indemnification and Contribution.
(a) The Sponsor and the Trust will jointly and severally indemnify and hold harmless the Seed Capital Investor against any losses, claims, damages or liabilities, joint or several, to which the Seed Capital Investor may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and will reimburse the Seed Capital Investor for any legal or other expenses reasonably incurred by the Seed Capital Investor in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that neither the Sponsor nor the Trust shall be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement or the Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Sponsor by the Seed Capital Investor expressly for use therein.
(b) The Seed Capital Investor will indemnify and hold harmless the Sponsor and the Trust against any losses, claims, damages or liabilities to which the Sponsor or the Trust may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein, in the light of the circumstances under which they were made, a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement or the Prospectus or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Sponsor by the Seed Capital Investor expressly for use therein; and will reimburse the Sponsor and the Trust for any legal or other expenses reasonably incurred by the Sponsor in connection with investigating or defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 4 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Sponsor and the Trust on the one hand and the Seed Capital Investor on the other from the offering of the Shares in controversy comprising the Seed Creation Baskets. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Sponsor and the Trust on the one hand and the Seed Capital Investor on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Sponsor or the Trust on the one hand or the Seed Capital Investor on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Sponsor, the Trust and the Seed Capital Investor agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), the Seed Capital Investor shall not be required to contribute any amount in excess of the amount by which the total price at which the Shares in controversy comprising the Seed Creation Baskets purchased by it and distributed to the public were offered to the public exceeds the amount of any damages which the Seed Capital Investor has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
(e) The obligations of the Sponsor under this Section 4 shall be in addition to any liability which the Sponsor may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls the Seed Capital Investor within the meaning of the Act; and the obligations of the Seed Capital Investor under this Section 4 shall be in addition to any liability which the Seed Capital Investor may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Sponsor and to each person, if any, who controls the Sponsor within the meaning of the Act.
5. The respective indemnities, agreements, representations, warranties and other statements of the Sponsor and the Seed Capital Investor, as set forth in this Agreement or made by them pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of the Seed Capital Investor or any controlling person of the Seed Capital Investor, or the Sponsor, or any officer or director or controlling person of the Sponsor, and shall survive delivery of and payment for the Shares comprising the Seed Creation Baskets.
6. If the Shares comprising the Seed Creation Baskets are not delivered by or on behalf of the Sponsor or the Trust as provided herein, the Sponsor and the Trust will reimburse the Seed Capital Investor for all out-of-pocket expenses, including fees and disbursements of counsel, reasonably incurred by the Seed Capital Investor in making preparations for the purchase, sale and delivery of the Shares comprising the Seed Creation Baskets, but the Sponsor and the Trust shall then be under no further liability to the Seed Capital Investor except as provided in Section 5 hereof.
7. All statements, requests, notices and agreements hereunder shall be in writing, and if to the Seed Capital Investor shall be delivered or sent by mail, telex or facsimile transmission to the Seed Capital Investor at 55 E. 52nd St. New York, NY 10055 and if to the Sponsor or the Trust shall be delivered or sent by mail to the address of the Sponsor set forth in the Registration Statement, Attention: Product Management Team, iShares Product Research & Development. Any such statements, requests, notices or agreements shall take effect upon receipt thereof.
8. This Agreement shall be binding upon, and inure solely to the benefit of, the Seed Capital Investor, the Sponsor, the Trust and, to the extent provided in Sections 5 and 6 hereof, the officers and directors of the Sponsor and the Trust and each person who controls the Sponsor or the Seed Capital Investor, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Shares comprising the Seed Creation Baskets from the Seed Capital Investor shall be deemed a successor or assign by reason merely of such purchase.
9. As used herein, the term "business day" shall mean any day when the Commission's office in Washington, D.C. is open for business.
10. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
11. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.
12. The Sponsor and the Trust are authorized, subject to applicable law, to disclose any and all aspects of this potential transaction that are necessary to support any U.S. federal income tax benefits expected to be claimed with respect to such transaction, and all materials of any kind (including tax opinions and other tax analyses) related to those benefits, without the Seed Capital Investor imposing any limitation of any kind.
[Remainder of page left blank intentionally. Signature page follows.]
If the foregoing is in accordance with the Seed Capital Investor's understanding, please sign and return to us four counterparts hereof, and upon the acceptance hereof by the Seed Capital Investor, this letter and such acceptance hereof shall constitute a binding agreement between the Seed Capital Investor and the Sponsor.
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Very truly yours,
iSHARES GOLD TRUST MICRO
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By:
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iSHARES DELAWARE TRUST
SPONSOR LLC, as Sponsor
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By:
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/s/ Paul C. Lohrey
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Name: Paul C. Lohrey
Title: President & CEO
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iSHARES DELAWARE TRUST SPONSOR
LLC
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By:
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/s/ Paul C. Lohrey
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Name: Paul C. Lohrey
Title: President & CEO
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BLACKROCK FINANCIAL MANAGEMENT,
INC.
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By:
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/s/ Rachel Aguirre
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Name: Rachel Aguirre
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Title: Managing Director
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SCHEDULE A
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iSHARES GOLD TRUST
MICRO
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share
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Shares
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500,000
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Purchase Price
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$18.651
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Exhibit 4.1
iSHARES® DELAWARE TRUST SPONSOR LLC,
as Sponsor
and
THE BANK OF NEW YORK MELLON,
as Trustee
Depositary Trust Agreement
iShares® Gold Trust Micro
Dated as of June 15, 2021
TABLE OF CONTENTS
Page
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ARTICLE 1. DEFINITIONS AND RULES OF CONSTRUCTION
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1
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Section 1.1.
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Definitions
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1
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Section 1.2.
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Rules of Construction
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5
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ARTICLE 2. CREATION AND DECLARATION OF TRUST; FORM OF CERTIFICATES; DEPOSIT OF GOLD; DELIVERY, REGISTRATION OF TRANSFER AND SURRENDER OF SHARES
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5
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Section 2.1.
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Creation and Declaration of Trust; Business of the Trust
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5
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Section 2.2.
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Form of Certificates; Book-Entry System; Transferability of Shares
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6
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Section 2.3.
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Deposit of Gold
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7
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Section 2.4.
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Delivery of Shares
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8
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Section 2.5.
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Registration and Registration of Transfer of Shares; Combination and Split-up of Certificates
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8
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Section 2.6.
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Surrender of Shares and Withdrawal of Trust Property
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9
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Section 2.7.
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Limitations on Delivery, Registration of Transfer and Surrender of Shares
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10
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Section 2.8.
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Lost Certificates, Etc
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11
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Section 2.9.
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Cancellation and Destruction of Surrendered Certificates
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11
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Section 2.10.
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Splits and Reverse Splits of Shares
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11
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ARTICLE 3. CERTAIN OBLIGATIONS OF AUTHORIZED PARTICIPANTS
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11
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Section 3.1.
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Liability of Authorized Participants for Taxes and Other Governmental Charges
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11
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Section 3.2.
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Warranties on Deposit of Gold
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12
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ARTICLE 4. ADMINISTRATION OF THE TRUST
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12
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Section 4.1.
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Evaluation of Gold
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12
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Section 4.2.
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Responsibility of the Trustee for Evaluations
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12
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Section 4.3.
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Trust Evaluation
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13
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Section 4.4.
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Cash Distributions
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13
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Section 4.5.
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Other Distributions
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13
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Section 4.6.
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Fixing of Record Date
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14
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Section 4.7.
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Payment of Expenses; Gold Sales
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14
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Section 4.8.
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Statements and Reports; Fiscal Year
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14
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Section 4.9.
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Further Provisions for Gold Sales
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15
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Section 4.10.
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Counsel
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15
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TABLE OF CONTENTS
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(continued)
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Page
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Section 4.11.
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Grantor Trust
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15
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ARTICLE 5. THE TRUSTEE AND THE SPONSOR
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16
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Section 5.1.
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Maintenance of Office and Transfer Books by the Trustee
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16
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Section 5.2.
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Prevention or Delay in Performance by the Sponsor or the Trustee
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16
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Section 5.3.
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Obligations of the Sponsor and the Trustee
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16
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Section 5.4.
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Resignation or Removal of the Trustee; Appointment of Successor Trustee
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19
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Section 5.5.
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The Custodian
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20
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Section 5.6.
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Indemnification
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21
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Section 5.7.
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Charges of Trustee
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23
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Section 5.8.
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Charges of Sponsor
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24
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Section 5.9.
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Retention of Trust Documents
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24
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Section 5.10.
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Federal Securities Law Filings
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24
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Section 5.11.
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Prospectus Delivery
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25
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Section 5.12.
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Discretionary Actions by Trustee; Consultation
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25
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Section 5.13.
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Conflicts of Interest
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26
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ARTICLE 6. AMENDMENT AND TERMINATION
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26
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Section 6.1.
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Amendment
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26
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Section 6.2.
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Termination
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26
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ARTICLE 7. MISCELLANEOUS
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28
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Section 7.1.
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Counterparts
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28
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Section 7.2.
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Third-Party Beneficiaries
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29
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Section 7.3.
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Severability
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29
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Section 7.4.
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Registered Owners, Beneficial Owners and Authorized Participants as Parties; Binding Effect
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29
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Section 7.5.
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Notices
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29
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Section 7.6.
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Agent for Service; Submission to Jurisdiction
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30
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Section 7.7.
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Governing Law
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31
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EXHIBIT A FORM OF CERTIFICATE EVIDENCING SHARES
This DEPOSITARY TRUST AGREEMENT dated as of June 15, 2021 between iSHARES® DELAWARE TRUST SPONSOR LLC, a Delaware limited liability company, as sponsor, THE BANK OF NEW YORK MELLON, a New York banking corporation, as trustee, all Registered Owners and Beneficial Owners from time to time of Shares issued hereunder and all Depositors.
W I T N E S S E T H :
WHEREAS, the Sponsor desires to establish a trust, to be known as the “iShares® Gold Trust Micro,” pursuant to the laws of the State of New York; and
WHEREAS, the Sponsor desires to establish the terms on which gold may be deposited in the trust; provide for the creation and redemption of shares representing fractional undivided beneficial interests in the net assets of the trust; and the execution and delivery of certificates evidencing such shares; and
WHEREAS, the Sponsor desires to provide for other terms and conditions on which the trust shall be established and administered, as hereinafter provided.
NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE 1.
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1. Definitions. Except as otherwise specified in this Agreement or as the context may otherwise require, the following terms have the respective meanings set forth below for all purposes of this Depositary Trust Agreement.
“Agreement” means this Depositary Trust Agreement, as amended or supplemented in accordance with its terms.
“Authorized Participant” means a Person that, at the time of submitting a Purchase Order or a Redemption Order (i) is a registered broker-dealer, (ii) is a DTC Participant or an Indirect Participant and (iii) has in effect a valid Authorized Participant Agreement. The Trustee has no duty or liability to any Person on account of the selection of any Authorized Participant.
“Authorized Participant Agreement” means an agreement among the Trustee, the Sponsor and an Authorized Participant that authorizes the Authorized Participant to submit Purchase Orders and Redemption Orders under this Agreement. The Trustee has no duty or liability to any Person on account of the negotiation of the terms of any Authorized Participant Agreement or the form of any Authorized Participant Agreement (other than the Trustee’s due execution, delivery and performance thereof).
“Basket” means 50,000 Shares, except that the Trustee, in consultation with the Sponsor, may from time to time increase or decrease the number of Shares comprising a Basket.
“Basket Gold Amount” is the amount of Gold that must be deposited for issuance of one Basket or that is deliverable upon Surrender of one Basket. The Basket Gold Amount will be determined as provided in Section 2.3(b).
“Beneficial Owner” means any Person owning a beneficial interest in any Shares.
“Business Day” means any day other than (i) a Saturday or Sunday or (ii) a day on which the Exchange is not open for regular trading.
“Certificate” means a certificate that is executed and delivered by the Trustee under this Agreement evidencing Shares.
“CFTC” means the Commodity Futures Trading Commission or any successor governmental agency in the United States.
“Code” means the Internal Revenue Code of 1986, as amended, or any successor code.
“Commission” means the Securities and Exchange Commission of the United States or any successor governmental agency in the United States.
“Corporate Trust Office” means the office of the Trustee at which its exchange traded fund administration business that relates to this Agreement is administered, which, at the date of this Agreement, is located at 240 Greenwich Street, 8th Floor, New York, New York 10286.
“Custodian” means the Initial Custodian and any substitute or additional custodian of the Trust’s assets appointed by the Trustee at the direction of the Sponsor as provided in Section 5.5 and, where the context permits, any sub-custodians employed by the Initial Custodian or any such substitute or additional custodian.
“Custodian Agreement” means the custodian agreement entered into between the Trustee and the Initial Custodian and any custodian or custody agreement entered into pursuant to Section 5.5(a) with a substitute or additional Custodian.
“Deliver” means (a) when used with respect to Gold, (i) physically delivering that Gold to, or making that Gold available for collection by, the Person entitled to the delivery at the specified location, (ii) obtaining evidence that ownership of that Gold has been transferred to, and the Gold is being duly held by a custodian for the account of, the Person entitled to that delivery or (iii) obtaining an acknowledgement from a custodian of a credit of Gold on an Unallocated Basis to the account of the Person entitled to that delivery and (b) when used with respect to Shares, either (i) one or more book-entry transfers of those Shares to an account or accounts at DTC designated by the Person entitled to such delivery for further credit as specified by that Person or (ii) in the circumstances specified in Section 2.2(e), execution and delivery at the Corporate Trust Office of the Trustee of one or more Certificates evidencing those Shares.
“Depositor” means any Authorized Participant that deposits Gold into the Trust, either for its own account or on behalf of another Person that is the owner or beneficial owner of that Gold.
“DTC” means The Depository Trust Company, its nominees and their respective successors.
“DTC Participant” means a Person that, pursuant to DTC’s governing documents, is entitled to deposit securities with DTC in its capacity as a “participant”.
“Exchange” means the exchange or other securities market on which the Shares are principally traded, as specified from time to time by the Sponsor.
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.
“Fine Ounce” means an Ounce of 100% pure gold. The number of Fine Ounces in a gold bar may be calculated by multiplying the gross weight in Ounces by the fineness, expressed as a fraction of the fine metal content in parts per 1000, in accordance with the “good delivery” rules of the London Bullion Market Association.
“Gold” means (i) gold that meets the requirements of “good delivery” under the rules of the London Bullion Market Association and (ii) credit to an account on an Unallocated Basis representing the right to receive gold that meets the requirements of part (i) of this definition.
“Indemnified Amounts” is defined in Section 5.6(a).
“Indemnitee” is defined in Section 5.6(e).
“Indemnitor” is defined in Section 5.6(e).
“Indirect Participant” means a Person that, by clearing securities through, or maintaining a custodial relationship with, a DTC Participant, has access to the DTC clearing system.
“Initial Custodian” means, as of the date of this Agreement, JPMorgan Chase Bank, N.A., London Branch, as custodian under the Custodian Agreement.
“Internal Control Over Financial Reporting” has the meaning ascribed to such term in Rules 13a-15(f) and 15(d)-15(f) adopted by the Commission under the Exchange Act.
“Net Asset Value” means the net value of the Trust determined under Section 4.3.
“Net Asset Value per Basket” means the value of a Basket as determined under Section 2.3(b).
“Net Asset Value per Share” means the value of a Share determined under Section 4.3.
“Order Cutoff Time” means, with respect to any Business Day, (i) 3:59:59 p.m. (New York time) on such Business Day or (ii) another time agreed to by the Sponsor and the Trustee and of which Registered Owners and all existing Authorized Participants have been notified by the Trustee.
“Order Date” means, with respect to a Purchase Order, the date specified in Section 2.3(a) and, with respect to a Redemption Order, the date specified in Section 2.6(a).
“Ounce” means a troy ounce, equal to 1.0971428 ounces avoirdupois.
“Person” means any natural person or any limited liability company, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
“Proceeding” is defined in Section 5.6(e).
“Purchase Order” is defined in Section 2.3.
“Qualified Bank” means a bank, trust company, corporation or national banking association organized and doing business under the laws of the United States or any State of the United States that is authorized under those laws to exercise corporate trust powers and that (i) is a DTC Participant or a participant in such other securities depository as is then acting with respect to the Shares, (ii) unless counsel to the Sponsor, the appointment of which is acceptable to the Trustee, determines that the following requirement is not necessary for the exception under Section 408(m) of the Code to apply, is a banking institution as defined in Section 408(n) of the Code and (iii) had, as of the date of its most recent annual financial statements, an aggregate capital, surplus and undivided profits of at least $150,000,000.
“Redemption Order” is defined in Section 2.6(a).
“Registered Owner” means the Person in whose name Shares are registered on the books of the Trustee maintained for that purpose.
“Registrar” means any bank or trust company that is appointed to register Shares and transfers of Shares as herein provided.
“Shares” means shares issued under this Agreement, each representing a fractional undivided beneficial interest in the net assets of the Trust, which interest shall equal a fraction, the numerator of which is 1 and the denominator of which is the total number of Shares outstanding.
“Sponsor” means iShares® Delaware Trust Sponsor LLC, a Delaware limited liability company, or its successors.
“Sponsor Indemnifying Party” is defined in Section 5.6(d).
“Sponsor’s Fee” is defined in Section 5.8(a).
“Surrender” means, when used with respect to Shares, (i) one or more book-entry transfers of Shares to the DTC account of the Trustee or (ii) surrender to the Trustee at its Corporate Trust Office of one or more Certificates evidencing Shares.
“Trust” means the iShares® Gold Trust Micro, the trust entity governed by this Agreement.
“Trustee” means The Bank of New York Mellon, a New York banking corporation, in its capacity as trustee under this Agreement, or any successor as trustee under this Agreement.
“Trustee Indemnified Persons” is defined in Section 5.6(a).
“Trust Property” means the Gold deposited under this Agreement and any cash or other property that is received by the Trustee in respect of Trust Property or that is otherwise being held by or for the Trust under this Agreement.
“Unallocated Basis” means that the Person in whose name Gold is so held is entitled to receive delivery of Gold standing to the credit of that Person’s account, but that Person has no ownership interest in any particular Gold that the custodian maintaining that account owns or holds.
“Valuation Relevant Price” means, as of any day, such price regularly announced by a domestic or foreign entity (including an exchange, trade or industry association, or similar organization) as the Sponsor shall have from time to time determined that fairly represents the commercial value of Gold held by the Trust as of such day; provided, that a price so determined by the Sponsor shall be effective upon the Trustee’s notice to the Sponsor that it has sufficient access to pricing information to make the valuations required hereunder.
Section 1.2. Rules of Construction. Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles as in effect in the United States;
(iii) “or” is not exclusive;
(iv) the words “herein”, “hereof”,“hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision;
(v) “including” means including without limitation; and
(vi) words in the singular include the plural and words in the plural include the singular.
ARTICLE 2.
CREATION AND DECLARATION OF TRUST; FORM OF CERTIFICATES; DEPOSIT OF GOLD; DELIVERY, REGISTRATION OF TRANSFER AND SURRENDER OF SHARES
Section 2.1. Creation and Declaration of Trust; Business of the Trust.
(a) The Trustee acknowledges that it has received confirmation from the Custodian that the Initial Custodian has received an initial deposit of Gold in accordance with this Agreement from BlackRock Financial Management, Inc. The Trustee declares that it holds and will hold all Trust Property as trustee for the benefit of the Registered Owners for the purposes of, and subject to and limited by the terms and conditions set forth in, this Agreement. The trust created by this Agreement shall be known as the “iShares® Gold Trust Micro”.
(b) The Trust shall not engage in any business or activities other than those authorized by this Agreement or incidental and necessary to carry out the duties and responsibilities set forth in this Agreement. Other than issuance of the Shares, the Trust shall not issue or sell any certificates or other obligations or, except as provided in this Agreement, otherwise incur, assume or guarantee any indebtedness for money borrowed.
Section 2.2. Form of Certificates; Book-Entry System; Transferability of Shares.
(a) The Certificates evidencing Shares shall be substantially in the form set forth in Exhibit A annexed to this Agreement, with appropriate insertions, modifications and omissions, as hereinafter provided. No Shares shall be entitled to any benefits under this Agreement or be valid or obligatory for any purpose unless a Certificate evidencing those Shares has been executed by the Trustee by the manual or facsimile signature of a duly authorized signatory of the Trustee and, if a Registrar (other than the Trustee) for the Shares shall have been appointed, countersigned by the manual signature of a duly authorized officer of the Registrar. The Trustee shall maintain books on which the registered ownership of each Share and transfers, if any, of such registered ownership shall be recorded. Certificates evidencing Shares bearing the manual or facsimile signature of a duly authorized signatory of the Trustee and the manual signature of a duly authorized officer of the Registrar, if applicable, who was, at the time such Certificates were executed, a proper signatory of the Trustee or Registrar, if applicable, shall bind the Trustee, notwithstanding that such signatory has ceased to hold such office prior to the delivery of such Certificates.
(b) The Certificates may be endorsed with or have incorporated in the text thereof such legends or recitals or modifications not inconsistent with the provisions of this Agreement as may be required by the Trustee or required to comply with any applicable law or regulations thereunder or with the rules and regulations of any securities exchange upon which Shares may be listed or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which the Shares evidenced by a particular Certificate are subject.
(c) The Sponsor and the Trustee will apply to DTC for acceptance of the Shares in its book-entry settlement system. Shares deposited with DTC shall be evidenced by one or more global Certificates which shall be registered in the name of Cede & Co., as nominee for DTC, and shall bear the following legend:
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UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE AGENT AUTHORIZED BY THE ISSUER FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
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(d) So long as the Shares are eligible for book-entry settlement with DTC and such settlement is available, unless otherwise required by law, notwithstanding the provisions of Sections 2.2(a) and (b), all Shares shall be evidenced by one or more global Certificates the Registered Owner of which is DTC or a nominee of DTC and (i) no Beneficial Owner of Shares will be entitled to receive a separate Certificate evidencing those Shares, (ii) the interest of a Beneficial Owner in Shares represented by a global Certificate will be shown only on, and transfer of that interest will be effected only through, records maintained by DTC or a DTC Participant or Indirect Participant through which the Beneficial Owner holds that interest and (iii) the rights of a Beneficial Owner with respect to Shares represented by a global Certificate will be exercised only to the extent allowed by, and in compliance with, the arrangements in effect between such Beneficial Owner and DTC or the DTC Participant or Indirect Participant through which that Beneficial Owner holds an interest in Shares.
(e) If, at any time when Shares are evidenced by a global Certificate, DTC ceases to make its book-entry settlement system available for such Shares, the Trustee shall execute and deliver separate Certificates evidencing Shares to a successor authorized depository identified by the Sponsor and available to act, or, if no successor depository is identified and able to act, the Trustee shall terminate the Trust in accordance with Section 6.2.
(f) Title to a Certificate evidencing Shares (and to the Shares evidenced thereby), when properly endorsed or accompanied by proper instruments of transfer, shall be transferable by delivery with the same effect as in the case of a negotiable instrument under the laws of New York; provided, however, that the Trustee, notwithstanding any notice to the contrary, may treat the Registered Owner of Shares as the absolute owner thereof for the purpose of determining the Person entitled to any distribution or to any notice provided for in this Agreement and for all other purposes.
Section 2.3. Deposit of Gold.
(a) After the initial deposit of Gold in the Trust, the issuance and Delivery of Shares will take place only in integral numbers of Baskets and in compliance with the provisions of this Agreement, as supplemented by any procedures attached to an applicable Authorized Participant Agreement, to the extent those procedures are not inconsistent with this Agreement. Authorized Participants wishing to acquire from the Trustee one or more Baskets must place an order with the Trustee (a “Purchase Order”) on any Business Day. Purchase Orders received by the Trustee prior to the Order Cutoff Time on a Business Day will have that Business Day as the Order Date. Purchase Orders received by the Trustee on or after the Order Cutoff Time on a Business Day will not be accepted. As consideration for each Basket acquired, Authorized Participants must deposit with the Custodian the Basket Gold Amount determined by the Trustee on the Order Date of the corresponding Purchase Order. Gold must be Delivered to the Custodian in the form of Gold bars only, except that an amount of Gold not exceeding 430 Ounces may be Delivered to the Custodian on an Unallocated Basis. The Sponsor, the Trustee and Trust shall have no liability for any loss of Gold occurring prior to the Delivery of the Basket Gold Amount to the Custodian.
(b) The Trustee shall determine the Basket Gold Amount for each Business Day. The “Basket Gold Amount” shall be an amount of Gold equal to the result obtained by dividing the Net Asset Value per Basket on the date on which the determination is being made by the price used by the Trustee to evaluate Gold held by the Trust on such date in compliance with Section 4.1. For purposes of this computation, “Net Asset Value per Basket” is the result obtained by multiplying
(x) the Net Asset Value per Share determined in compliance with Section 4.3, by (y) the number of Shares which constitute a Basket on the date on which the determination is being made. Fractions of a Fine Ounce included in the Basket Gold Amount smaller than .001 Fine Ounce shall be disregarded. The Sponsor intends to publish, or may designate other Persons to publish, for each Business Day, the Basket Gold Amount.
(c) If the Trust Property includes money or any property other than Gold, no deposits of Gold will be accepted until after a record date for distribution of that money or property, or proceeds of that property, has passed.
(d) All deposited Gold shall be owned by the Trust and held for the Trust by the Custodian. The Trustee shall require the Custodian to agree that the Custodian will use reasonable efforts to minimize the amount of Gold held for the Trust on an Unallocated Basis at all times including, if so agreed to by the Custodian, by allocating from time to time to the Trust one or more Gold bars with an aggregate weight in excess of the amount owned by the Trust (in which case, such Gold bar or bars will be co-owned with the Custodian to the extent of such excess). Cash and any assets of the Trust other than Gold, if any, shall be held by the Trustee at such place and in such manner as the Trustee shall determine.
Section 2.4. Delivery of Shares. Upon receipt by the Trustee of a Purchase Order and the other documents required as above specified, if any, and a confirmation from the Custodian that the Basket Gold Amount has been Delivered to the Custodian for each Basket and the Custodian is holding that Gold for the account of the Trust, the Trustee, subject to the terms and conditions of this Agreement, as supplemented by any procedures attached to the applicable Authorized Participant Agreement, to the extent those procedures are not inconsistent with this Agreement, and the practices of DTC, shall Deliver to the Depositor the number of Baskets issuable in respect of such deposit as requested in the corresponding Purchase Order, but only upon payment to the Trustee of the fees and expenses of the Trustee as provided in Section 5.7 and of all taxes and governmental charges and fees payable in connection with such deposit, the transfer of the Gold and the issuance and Delivery of the Shares, including any transfer tax, sales or use tax, recording tax, value added tax or similar tax or other governmental charge applicable to such deposit, the transfer of Gold and the issuance and Delivery of Shares, regardless of whether such tax or charge is imposed directly on the Authorized Participant.
Section 2.5. Registration and Registration of Transfer of Shares; Combination and Split- up of Certificates.
(a) The Trustee shall keep or cause to be kept a register of Registered Owners of Shares and shall provide for the registration of Shares and the registration of transfers of Shares.
(b) The Trustee, subject to the terms and conditions of this Agreement, shall register transfers of ownership of Shares on its transfer books from time to time, upon any Surrender of a Certificate evidencing such Shares, by the Registered Owner in person or by a duly authorized attorney, properly endorsed or accompanied by proper instruments of transfer, and duly stamped as may be required by the laws of the State of New York and of the United States of America. Thereupon, the Trustee shall execute a new Certificate or Certificates evidencing such Shares and deliver the same to or upon the order of the Person entitled thereto.
(c) The Trustee, subject to the terms and conditions of this Agreement, shall, upon Surrender of a Certificate or Certificates evidencing Shares for the purposes of effecting a split-up or combination of that Certificate or Certificates, execute and deliver one or more new Certificates evidencing those Shares.
(d) The Trustee may, with the written approval of the Sponsor (which approval shall not be unreasonably withheld), appoint one or more co-transfer agents for the purpose of effecting registration of transfers of Shares and combinations and split-ups of Certificates at designated transfer offices on behalf of the Trustee. In carrying out its functions, a co-transfer agent may require evidence of authority and compliance with applicable laws and other requirements by Registered Owners or Persons entitled to Shares and will be entitled to protection and indemnity to the same extent as the Trustee.
Section 2.6. Surrender of Shares and Withdrawal of Trust Property.
(a) Upon Surrender of any integral number of Baskets for the purpose of withdrawal of the amount of Trust Property represented thereby, and upon payment of the fees and expenses of the Trustee in connection with the Surrender of Shares as provided in Section 5.7 and payment of all taxes and governmental charges and fees payable in connection with such Surrender and withdrawal of Trust Property, and subject to the terms and conditions of this Agreement, an Authorized Participant acting or on authority of the Beneficial Owner of those Shares will be entitled to Delivery, in accordance with the provisions of this Agreement, as supplemented by any procedures attached to an applicable Authorized Participant Agreement, to the extent those procedures are not inconsistent with this Agreement, and the practices of DTC, of the amount of Trust Property at the time represented by such Baskets, including the Basket Gold Amounts corresponding to such Baskets on the applicable Order Date (determined as provided below). Authorized Participants wishing to redeem one or more Baskets must place an order with the Trustee (a “Redemption Order”) on any Business Day. Redemption Orders received by the Trustee prior to the Order Cutoff Time on a Business Day will have that Business Day as the Order Date. Redemption Orders received by the Trustee on or after the Order Cutoff Time on any Business Day will not be accepted. Unless otherwise agreed to by the Custodian, Gold will be Delivered by the Custodian in the form of Gold bars only, except that an amount of Gold not exceeding 430 Ounces may be Delivered by the Custodian on an Unallocated Basis. While a redeeming Authorized Participant will be entitled to express a preference as to the city where it would like to have the Basket Gold Amount delivered, the Custodian, in consultation with the Trustee, will have final authority to decide where such Delivery will take place.
(b) Upon a Surrender of an integral number of Baskets and satisfaction of all the conditions for withdrawal of Trust Property, the Trustee shall instruct the Custodian to Deliver, at the Custodian’s office or at another location at which Trust Property is then being held, to or to the order of the Surrendering Authorized Participant the amount of Gold represented by the Surrendered Baskets and the Trustee shall pay or deliver to or to the order of the Surrendering Authorized Participant the amount of any other Trust Property represented by the Surrendered Baskets. Any Delivery of Gold other than at the office of the Custodian or a sub-custodian designated by the Custodian will be at the expense and risk of the Authorized Participant. The Sponsor, the Trustee and Trust shall have no liability for any loss of Gold occurring after the Delivery of Gold by the Custodian to the Authorized Participant. The Trustee will not be responsible to any Person if it is not practical for the Custodian to make Delivery of Gold in the city requested or if the Trustee determines to effect Delivery in a city other than the city requested by the Surrendering Authorized Participant. The Trustee is not required to effect any physical movement of Gold from one custody location to another to meet any request by a Surrendering Authorized Participant as to where Gold will be Delivered.
(c) The Trustee may require that a Certificate evidencing Shares Surrendered for the purpose of withdrawal is properly endorsed in blank or accompanied by proper instruments of transfer in blank.
Section 2.7. Limitations on Delivery, Registration of Transfer and Surrender of Shares.
(a) As a condition precedent to the issuance, Delivery, registration of transfer, split-up, combination or Surrender of any Shares or withdrawal of any Trust Property, the Trustee or Registrar (i) may require payment from the applicable Authorized Participant of a sum sufficient to reimburse it for any tax or other governmental charge and any stock transfer or registration fee with respect thereto (including any such tax or charge and fee with respect to any securities being withdrawn) and payment of any applicable fees as herein provided, (ii) may require the production of proof satisfactory to it as to the identity and genuineness of any signature and (iii) may also require compliance with any regulations the Trustee may establish consistent with the provisions of this Agreement, including this Section 2.7.
(b) The acceptance of Purchase Orders, the Delivery of Shares against deposits of Gold or the registration of transfer of Shares may, and upon direction of the Sponsor shall, be suspended generally, or refused with respect to a particular Purchase Order, Delivery of Shares or registration, by the Trustee (i) during any period when the transfer books of the Trustee are closed or (ii) if any such action is deemed necessary or advisable by the Sponsor for any reason at any time or from time to time. The Trustee shall reject any Purchase Order that is not in proper form. Neither the Trustee nor the Sponsor shall be liable to any Person by reason of any suspension, refusal or rejection provided for in this Section 2.7(b).
(c) Except as otherwise provided elsewhere in this Agreement, the Trustee may, in its sole discretion and will, when so directed by the Sponsor, suspend the right to Surrender Shares, or postpone the date of Delivery of Gold or other Trust Property, generally or with respect to a particular Redemption Order (i) during any period in which the Exchange is closed (other than scheduled holiday or weekend closings) or regular trading thereon is suspended or restricted or (ii) during an emergency as a result of which Delivery, disposal or evaluation of Gold is not reasonably practicable. The Trustee shall reject any Redemption Order that is not in proper form. Neither the Trustee nor the Sponsor shall be liable to any Person by reason of any suspension, postponement or rejection provided for under this Section 2.7(c).
Section 2.8. Lost Certificates, Etc. The Trustee shall execute and deliver a new Certificate of like tenor in exchange and substitution for a mutilated Certificate upon cancellation thereof, or in lieu of and in substitution for a destroyed, lost or stolen Certificate, if the Registered Owner of the Shares represented thereby has (a) filed with the Trustee (i) a request for such execution and delivery before the Trustee has notice that the Shares evidenced by the Certificate have been acquired by a protected purchaser and (ii) a sufficient indemnity bond, and (b) satisfied any other reasonable requirements imposed by the Trustee.
Section 2.9. Cancellation and Destruction of Surrendered Certificates. All Certificates Surrendered to the Trustee shall be canceled by the Trustee. The Trustee is authorized to destroy Certificates so canceled.
Section 2.10. Splits and Reverse Splits of Shares. If requested in writing by the Sponsor, the Trustee shall effect a split or reverse split of the Shares as of a record date set by the Trustee in accordance with procedures determined by the Trustee and DTC.
Unless directed by the Sponsor and subject to the capabilities of the depository for the Shares, the Trustee shall not distribute any fraction of a Share in connection with a split or reverse split of the Shares. The Trustee may sell the aggregated fractions of Shares that would otherwise be distributed in a split or reverse split of the Shares or the amount of Trust Property that would be represented by those Shares and distribute the net proceeds of those Shares or that Trust Property to the Registered Owners entitled to them.
The amount of Trust Property represented by each Share and the Basket Gold Amount shall be adjusted as appropriate as of the open of business on the Business Day following the record date for a split or reverse split of the Shares.
ARTICLE 3.
CERTAIN OBLIGATIONS OF AUTHORIZED PARTICIPANTS
Section 3.1. Liability of Authorized Participants for Taxes and Other Governmental Charges. An Authorized Participant is responsible for any transfer tax, sales or use tax, recording tax, value added tax or similar tax or other governmental charge applicable to the redemption of Shares or the transfer of Shares or Gold in connection therewith, regardless of whether such tax or charge is imposed directly on the Authorized Participant. If any such tax or other governmental charge shall become payable by the Trustee with respect to any redemption of Shares or the transfer of Shares or Gold in connection therewith, (a) such tax or other governmental charge shall be payable by the Authorized Participant redeeming Shares to the Trustee, (b) the Trustee (i) shall refuse to effect any registration of transfer of such Shares or any withdrawal of Trust Property represented by such Shares, as the case may be, until such payment is made, (ii) may withhold any distributions or sell for the account of such Authorized Participant such Trust Property or Shares, and (iii) may apply such distributions or the proceeds of any such sale in payment of such tax or other governmental charge, and (c) the Authorized Participant redeeming such Shares shall remain liable for any deficiency. The Trustee shall distribute any net proceeds of a sale made under the preceding sentence that remain, after payment of the tax or other governmental charge, to the Authorized Participant entitled thereto as in the case of a distribution in cash through the procedures of the depository for the Shares.
Section 3.2. Warranties on Deposit of Gold. Every Person depositing Gold under this Agreement shall be deemed thereby to represent and warrant that (i) the Gold meets the requirements to be Gold and contains the required number of Fine Ounces to be deposited, (ii) that the Person making such deposit is duly authorized to do so and (iii) that, at the time of delivery, the Gold is free and clear of any lien, pledge, encumbrance, right, charge or claim (other than the rights created by this Agreement). All representations and warranties deemed made under this Section 3.2 shall survive the deposit of Gold, Delivery or Surrender of Shares or termination of this Agreement.
ARTICLE 4.
ADMINISTRATION OF THE TRUST
Section 4.1. Evaluation of Gold. As promptly as practicable after 4:00 p.m. (New York time), on each Business Day, the Trustee shall determine the value of the Gold held by the Trust on the basis of the Valuation Relevant Price for that day. If no Valuation Relevant Price is announced on a Business Day, the Trustee shall determine the value of the Gold held by the Trust for that day on the basis of the most recently announced Valuation Relevant Price. However, if the Sponsor determines that the price specified in the two preceding sentences is inappropriate as a basis for evaluation, the Sponsor shall identify an alternative basis for evaluation to be employed by the Trustee. Gold deliverable under a Purchase Order shall be included in the amount of Gold held for the purposes of this Section 4.1 beginning on the first Business Day following the Order Date. Gold deliverable under a Redemption Order shall be excluded from the amount of Gold held for the purposes of this Section 4.1 beginning on the first Business Day following the Order Date. Neither the Trustee nor the Sponsor shall be liable to any Person for the determination that the most recently announced Valuation Relevant Price is not appropriate as a basis for evaluation of the Gold held by the Trust or for any determination as to the alternative basis for evaluation, provided that such determination is made in good faith. If the Sponsor shall determine from time to time that a given price will be the "Valuation Relevant Price", public notice of that determination shall be given prior to the first Business Day on which such price is used to value the Gold held by the Trust.
Section 4.2. Responsibility of the Trustee for Evaluations. The Sponsor, Authorized Participants, Registered Owners and Beneficial Owners may rely on any evaluation or determination of any amount made by the Trustee, and the Sponsor shall have no responsibility for the accuracy thereof. The determinations made by the Trustee under this Agreement shall be made in good faith upon the basis of, and the Trustee shall not be liable for any errors contained in, information reasonably available to it. The Trustee shall be under no liability to the Sponsor, or to Authorized Participant, Registered Owners or Beneficial Owners, for errors in judgment; provided, however, that this provision shall not protect the Trustee against any liability to which it would otherwise be subject by reason of negligence or bad faith in the performance of its duties.
Section 4.3. Trust Evaluation. As promptly as practicable after completion of the evaluation required under Section 4.1 on each Business Day, the Trustee shall subtract all accrued fees, expenses and other liabilities of the Trust from the total value of the Gold held by the Trust determined by the Trustee pursuant to Section 4.1 and all other assets of the Trust. The resulting figure is the “Net Asset Value” of the Trust. The Trustee shall also divide the Net Asset Value of the Trust by the number of Shares outstanding as of the close of business on the date of the evaluation then being made, which figure is the “Net Asset Value per Share.” Shares deliverable under a Purchase Order shall be considered to be outstanding for purposes of this Section 4.3 beginning on the first Business Day following the Order Date. Shares deliverable under a Redemption Order shall not be considered to be outstanding for purposes of this Section 4.3 beginning on the first Business Day following the Order Date. Fractions smaller than $0.01 shall be disregarded is such evaluations. Any estimate of the accrued fees, expenses and other liabilities of the Trust for purposes of the computations required by this Section 4.3 made by the Trustee in good faith shall be conclusive upon all Persons interested in the Trust, and no revision or correction in any computation made under this Agreement will be required by reason of any difference in amounts estimated from those actually paid.
Section 4.4. Cash Distributions. Whenever the Trustee distributes any cash, the Trustee shall distribute the amount available for the distribution to the Registered Owners entitled thereto, in proportion to the number of Shares held by them respectively; provided, however, that, in the event that the Trustee shall be required to withhold and does withhold from such cash an amount on account of taxes, the amount distributed to the Registered Owners shall be reduced accordingly. The Trustee shall distribute only such amount, however, as can be distributed without attributing to any Registered Owner a fraction of one cent. Any such fractional amounts shall be rounded down to the nearest whole cent.
Section 4.5. Other Distributions. Whenever the Trustee receives any property in respect of Trust Property other than cash proceeds of a sale of Trust Property (including any claim that accrues in favor of the Trust on account of any loss of deposited Gold or other Trust Property), the Trustee shall cause the securities or other property received by it to be distributed to the Registered Owners entitled thereto, in proportion to the number of Shares held by them respectively, after deduction or upon payment of the expenses of the Trustee, in any manner that the Sponsor may deem lawful, equitable and feasible for accomplishing such distribution; provided, however, that if in the opinion of the Sponsor such distribution cannot be made proportionately among the Registered Owners entitled thereto, or if for any other reason (including any requirement that the Trustee withhold an amount on account of taxes or other governmental charges or that securities must be registered under the Securities Act of 1933 in order to be distributed to Registered Owners) the Sponsor deems such distribution not to be lawful and feasible, the Trustee shall adopt such method as the Sponsor deems lawful, equitable and feasible for the purpose of effecting such distribution, after deduction or upon payment of the expenses of the Trustee, including the public or private sale of the securities or property thus received, or any part thereof, and the net proceeds of any such sale shall be distributed by the Trustee to the Registered Owners entitled thereto as in the case of a distribution received in cash. The Trustee and the Sponsor shall not be liable for any loss or depreciation resulting from any sale or other disposition of property made by the Trustee pursuant to the Sponsor’s instruction or otherwise made by the Trustee in good faith.
Section 4.6. Fixing of Record Date. Whenever any distribution will be made, or whenever the Trustee receives notice of any solicitation of proxies or consents from Registered Owners, or whenever for any reason there is a split, reverse split or other change in the outstanding Shares, or whenever the Trustee shall find it necessary or convenient in respect of any matter, the Trustee, in consultation with the Sponsor, shall fix a record date for the determination of the Registered Owners who shall be entitled to (i) to receive such distribution or the net proceeds of the sale thereof, (ii) give such proxies or consents in respect of any such solicitation, (iii) receive Shares as a result of any such split, reverse split or other change or (iv) entitled to act in respect of any other matter for which the record date was set.
Section 4.7. Payment of Expenses; Gold Sales.
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(a)
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The following charges shall or may be accrued and paid by the Trust:
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(1) the service fee payable to the Sponsor as set forth in Section 5.8;
(2) expenses of the Trust not assumed by the Sponsor pursuant to Section 5.3(g) and the Trustee’s expenses not reimbursed by the Sponsor pursuant to Section 5.7(b);
(3) taxes and other governmental charges;
(4) expenses and costs of any extraordinary services performed by the Trustee or the Sponsor on behalf of the Trust or action taken by the Trustee or the Sponsor to protect the Trust or the interests of Registered Owners or Beneficial Owners, including expenses, costs and disbursements the Sponsor incurs pursuant to the last sentence of Section 5.6(d) and expenses, costs and disbursements the Trustee incurs pursuant to Section 5.12(a);
(5) indemnification of the Trustee as provided in Section 5.3(f)(vi); and
(6) indemnification of the Sponsor as provided in Section 5.6(d).
The Trustee shall, when directed by the Sponsor, and, in the absence of such direction, may, in its discretion, sell Gold in such quantity and at such times as may be necessary to permit payment of expenses under this Agreement. The Trustee is authorized to sell Gold at such times and in the smallest amounts required to permit payment of expenses as they come due, it being the intention to avoid or minimize the Trust’s holdings of assets other than Gold. Neither the Trustee nor the Sponsor shall have any liability for loss or depreciation resulting from sales of Gold so made. The Trustee shall not be liable or responsible in any way for depreciation or loss incurred by reason of any sale made pursuant to the Sponsor’s direction or otherwise in accordance with this Section 4.7.
(b) If at any time and from time to time, the Trustee and the Sponsor determine that the amount of cash included in the Trust Property exceeds the anticipated expenses of the Trust for the following month, the Trustee shall distribute the excess to the Registered Owners under Section 4.4.
Section 4.8. Statements and Reports; Fiscal Year.
(a) After the end of each fiscal year and within the time period required by applicable laws, rules and regulations, at the Sponsor’s expense, the Trustee shall send to the Registered Owners at the end of such fiscal year, an annual report of the Trust containing financial statements that will be prepared by the Trustee and audited by independent accountants designated by the Sponsor and such other information as may be required by such laws, rules and regulations or otherwise, or which the Sponsor determines shall be included. The Trustee may distribute the annual report by any means permitted to the Registered Owners.
(b) The Trustee shall provide the Sponsor with such certifications, supporting documents and other evidence regarding the Internal Control Over Financial Reporting established and maintained by the Trust, and used by the Trustee in connection with its preparation of the financial statements of the Trust, as may be reasonably necessary in order to enable the Sponsor to prepare and file or furnish to the Commission any certifications regarding such matters which may be required to be included with the Trust’s periodic reports under the Exchange Act.
(c) The fiscal year of the Trust shall initially be the period ending December 31 of each year. The Sponsor shall have the continuing right to select an alternate fiscal year permitted by the Code and other applicable law.
Section 4.9. Further Provisions for Gold Sales. In addition to selling Gold in accordance with Section 4.7, the Trustee shall sell Gold or other Trust Property, if any, whenever any one or more of the following conditions exist:
(a) the Sponsor has notified the Trustee that such sale is required by applicable law or regulation; or
(b) this Agreement has been terminated and the Trust Property is to be liquidated in accordance with Section 6.2.
When selling gold, the Trustee shall endeavor to place orders with dealers (which may include the Custodian) as directed by the Sponsor or, in the absence of such direction, with the Custodian or, if the Custodian is unable or unwilling to execute such orders, with dealers through which the Trustee may reasonably expect to obtain a favorable price and good execution of orders. The Trustee and the Sponsor shall not be liable or responsible in any way for depreciation or loss incurred by reason of any sale made pursuant to this Section 4.9.
Section 4.10. Counsel. The Sponsor may from time to time employ counsel to act on behalf of the Trust and perform any legal services in connection with the Gold and the Trust, including any legal matters relating to the possible disposition or acquisition of any Gold. The fees and expenses of such counsel shall be paid by the Sponsor in accordance with Section 5.3(g).
Section 4.11. Grantor Trust. Nothing in this Agreement, any agreement with a Custodian, or otherwise, shall be construed to give the Trustee the power to vary the investment of the Beneficial Owners within the meaning of Section 301.7701-4(c) under the Code or any similar or successor provision of the regulations under the Code, nor shall the Sponsor give the Trustee any direction that would vary the investment of the Beneficial Owners. However, the Trustee shall not be liable to any Person for any failure of the Trust to qualify as a grantor trust under the Code or any comparable provision of the laws of any State or other jurisdiction where that treatment is sought, except that this sentence shall not limit the Trustee’s responsibility for the administration of the Trust in accordance with this Agreement.
ARTICLE 5.
THE TRUSTEE AND THE SPONSOR
Section 5.1. Maintenance of Office and Transfer Books by the Trustee.
(a) Until termination of this Agreement in accordance with its terms, the Trustee shall maintain facilities for the execution and Delivery, registration, registration of transfers and Surrender of Shares in accordance with the provisions of this Agreement.
(b) The Trustee shall keep books for the registration of Shares and registration of transfers of Shares which at all reasonable times shall be open for inspection by the Registered Owners.
(c) The Trustee may, and at the reasonable written request of the Sponsor shall, close the transfer books at any time or from time to time if such action is deemed necessary or advisable in the reasonable judgment of the Trustee or the Sponsor.
(d) If any Shares are listed on one or more stock exchanges in the United States, the Trustee shall act as Registrar or, with the written approval of the Sponsor (which approval shall not be unreasonably withheld), appoint a registrar or one or more co-registrars for registry of such Shares in accordance with any requirements of such exchange or exchanges.
Section 5.2. Prevention or Delay in Performance by the Sponsor or the Trustee. Neither the Sponsor nor the Trustee nor any of their respective directors, officers, managers, members, employees, agents or affiliates shall incur any liability to any Registered Owner, Beneficial Owner or Authorized Participant if, by reason of any provision of any present or future law or regulation of the United States or any other country, or of any governmental or regulatory authority or stock exchange, or by reason of any act of God or war or terrorism or other circumstances beyond its control, the Sponsor or the Trustee is prevented or forbidden from, or would be subject to any civil or criminal penalty on account of, or is delayed in, doing or performing any act or thing which by the terms of this Agreement it is provided shall be done or performed and accordingly the Sponsor or the Trustee does not do that thing or does that thing at a later time than would otherwise be required. The Sponsor and the Trustee will not incur any liability to any Registered Owner, Beneficial Owner or Authorized Participant by reason of any exercise of, or failure to exercise, any discretion provided for in this Agreement.
Section 5.3. Obligations of the Sponsor and the Trustee.
(a) Neither the Sponsor nor the Trustee assumes any obligation nor shall either of them be subject to any liability under this Agreement to any Registered Owner, Beneficial Owner, Authorized Participant or any other Person (including, without limitation, liability with respect to the worth of the Trust Property), except that each of them agrees to perform its obligations specifically set forth in this Agreement without negligence or bad faith.
(b) Neither the Sponsor nor the Trustee shall be under any obligation to prosecute any action, suit or other proceeding in respect of any Trust Property or in respect of the Shares on behalf of a Registered Owner, Beneficial Owner, Authorized Participant or other Person.
(c) Neither the Sponsor nor the Trustee shall be liable for any action or non-action by it in reliance upon the advice of or information from legal counsel, accountants, any Authorized Participant, any Registered Owner, any Beneficial Owner or any other Person believed by it in good faith to be competent to give such advice or information.
(d) The Trustee shall not be liable for any acts or omissions made by a successor Trustee whether in connection with a previous act or omission of the Trustee or in connection with any matter arising wholly after the resignation or removal of the Trustee, provided that, in connection with the issue out of which such potential liability arises, the Trustee performed its obligations without negligence or bad faith while it acted as Trustee.
(e) The Trustee and the Sponsor shall have no obligation to comply with any direction or instruction from any Registered Owner, Beneficial Owner or Authorized Participant regarding Shares except to the extent specifically provided for in this Agreement.
(f) The Trustee shall be a fiduciary under this Agreement; provided, however, that the fiduciary duties and responsibilities and liabilities of the Trustee shall be limited by, and shall be only those specifically set forth in, this Agreement. The Trustee shall not be required to expend or risk any of its own funds or otherwise incur any liability, financial or otherwise, in the performance of any of its duties under this Agreement, except as may be specifically provided for herein. Without limiting the foregoing, all duties, rights, privileges and liabilities of the Trustee set forth in this Agreement shall be subject to the following:
(i) The Trustee may, in its sole discretion, take such actions as are provided for in Section 5.12(a).
(ii) In no event shall the Trustee be liable (A) for acting in accordance with or conclusively relying upon any, direction, instruction, notice, demand, certificate or document (I) from the Sponsor or the Custodian, or any entity acting on behalf of either, that the Trustee believes is given pursuant to or is authorized by this Agreement or any Custodian Agreement, respectively, or (II) from or on behalf of any Authorized Participant that the Trustee believes is given pursuant to or is authorized by an Authorized Participant Agreement (provided that the Trustee has complied with the verification procedures specified in the Authorized Participant Agreement); (B) for any indirect, consequential, punitive or special damages, regardless of the form of action and whether or not any such damages were foreseeable or contemplated; or (C) for an amount in excess of the value of the assets of the Trust.
(iii) The Trustee may consult with legal counsel of its own choosing as to any matter relating to this Agreement. The reasonable expense of such counsel shall be paid as provided in Section 5.7(c).
(iv) The Trustee may act in conclusive relianceupon any instrument or signature believed by it to be genuine and may assume that any Person purporting to give receipt or advice or to make any statement or execute any document in connection with the provisions of this Agreement, any Custodian Agreement or any Authorized Participant Agreement has been duly authorized to do so; provided, however, that where a list of authorized officials of a person and their signatures are on file with the Trustee, the Trustee shall compare such manual signatures to the signature on any such documents. Such requirement shall not apply to “personal identification numbers” or “PINS” or other forms of electronic security devices that function as a proxy for a manual signature.
(v) In the event of any ambiguity or inconsistency or any other uncertainty concerning this Agreement or in any notice, instruction or other communication received by the Trustee under this Agreement, the Trustee shall notify the Sponsor and the giver thereof and may, in its sole discretion, refrain from taking any action other than to retain possession of the Trust Property, unless the Trustee receives such further written instructions, from the Sponsor or otherwise, that eliminate such ambiguity, inconsistency or uncertainty.
(vi) In no event shall the Trustee be personally liable for any taxes or other governmental charges imposed upon or in respect of the Gold or its custody, moneys or other assets from time to time held hereunder, or on the income therefrom or the sale or proceeds of sale thereof, or upon it as Trustee hereunder (except that it shall be personally liable for any income or other taxes on the amounts it receives from the Sponsor pursuant to Section 5.7(b)) or upon or in respect of the Trust or the Shares, that it may be required to pay under any present or future law of the United States or of any other taxing authority having jurisdiction in the premises. For all such taxes and charges and for any expenses, including reasonable counsel’s fees, that the Trustee may sustain or incur with respect to such taxes or charges, the Trustee shall, to the extent not inconsistent with applicable law, be reimbursed and indemnified out of the assets of the Trust. This paragraph shall survive notwithstanding any termination of this Agreement and the Trust or the resignation or removal of the Trustee.
(vii) The Trustee may employ custodians for Trust assets other than Gold, agents, attorneys, accountants, auditors and other professionals (including any affiliate of the Trustee or of the Sponsor) and shall not be answerable for the default or misconduct of any such custodians, agents, attorneys, accountants, auditors or other professionals if such custodians, agents, attorneys, accountants, auditors or other professionals were selected with reasonable care. The fees and expenses charged by such custodians, agents, attorneys, accountants, auditors or other professionals, exclusive of fees for services to be performed by the Trustee, shall be paid as provided in Section 5.7(c), without reduction of the compensation due the Trustee for its services as such hereunder.
(viii) The Trustee or any of its affiliates may from time to time purchase, hold or sell Shares for their own account, as agent for their customers and for accounts over which they exercise investment discretion.
(g) The Sponsor shall be responsible for all organizational expenses of the Trust, and for the marketing and the following administrative expenses of the Trust: the Trustee’s monthly fee and reimbursement for its reasonable out-of-pocket expenses as provided in Section 5.7(b), the Custodian’s fee, listing fees of the Exchange, registration fees charged by the Commission, printing and mailing costs, audit fees and expenses and legal fees and expenses not in excess of
$100,000 per year.
Section 5.4. Resignation or Removal of the Trustee; Appointment of Successor Trustee.
(a) The Trustee may at any time resign as Trustee hereunder by written notice of its election so to do, delivered to the Sponsor, and, subject to Section 6.2, such resignation shall take effect upon the appointment of a successor Trustee and its acceptance of such appointment as hereinafter provided.
(b) The Sponsor may remove the Trustee in its discretion by written notice delivered to the Trustee in the manner provided in Section 7.5 at least 90 days prior to the fifth anniversary of this Agreement or, thereafter, by written notice delivered to the Trustee at least 90 days prior to the last day of any subsequent three-year period. Subject to Section 6.2, such removal shall take effect upon the appointment of a successor trustee and its acceptance of such appointment as hereinafter provided.
(c) If at any time the Trustee
(i) ceases to be a Qualified Bank,
(ii) is in material breach of its obligations under this Agreement and fails to cure such breach within 30 days after receipt of written notice from the Sponsor or Registered Owners acting on behalf of at least 25% of the outstanding Shares specifying such breach and requiring the Trustee to cure such breach, or
(iii) fails to consent to the implementation of an amendment to the Trust’s initial Internal Control Over Financial Reporting deemed necessary by the Sponsor and, after consultations with the Sponsor, the Sponsor and the Trustee fail to resolve their differences regarding such proposed amendment,
the Sponsor, acting on behalf of the Registered Owners, may remove the Trustee by written notice delivered to the Trustee in the manner provided in Section 7.5, and such removal shall take effect upon the appointment of a successor Trustee and its acceptance of such appointment as hereinafter provided.
(d) If the Trustee acting hereunder resigns or is removed, the Sponsor, acting on behalf of the Registered Owners, shall use its reasonable efforts to appoint a successor Trustee, which shall be a Qualified Bank. Every successor Trustee shall execute and deliver to its predecessor and to the Sponsor, acting on behalf of the Registered Owners, an instrument in writing accepting its appointment hereunder, and thereupon such successor Trustee, without any further act or deed, shall become fully vested with all the rights, powers, duties and obligations of its predecessor; but such predecessor, nevertheless, upon payment of all sums due it and on the written request of the Sponsor, acting on behalf of the Registered Owners, shall execute and deliver an instrument transferring to such successor all rights and powers of such predecessor hereunder, shall duly assign, transfer and deliver all right, title and interest in the Trust Property to such successor, and shall deliver to such successor a list of the Registered Owners of all outstanding Shares. Upon effective resignation or removal hereunder, the resigning or removed Trustee shall be discharged from all duties and responsibilities under this Agreement and shall no longer be liable in any manner hereunder except as to acts or omissions occurring prior to such resignation or removal, and the successor Trustee shall thereupon undertake and perform all duties and responsibilities and be entitled to all rights and compensation as Trustee under this Agreement. The successor Trustee shall not be under any liability hereunder for acts or omissions occurring prior to execution of an instrument accepting its appointment as Trustee. The Sponsor or any such successor Trustee shall promptly give notice of the appointment of such successor Trustee to the Registered Owners.
(e) Any corporation or other entity into which the Trustee may be merged, consolidated or converted in a transaction in which the Trustee is not the surviving corporation or any corporation or other entity otherwise succeeding to substantially all of the business of the Trustee shall be the successor Trustee without the execution or filing of any document or any further act. During the 90-day period following the effectiveness of a merger, consolidation or conversion or other transaction described in the preceding sentence, the Sponsor may, by written notice to the successor Trustee, remove such successor Trustee and designate another successor Trustee in compliance with the provisions of subsection (d) above.
Section 5.5. The Custodian.
(a) The Trustee is hereby directed to enter into the Custodian Agreement with the Initial Custodian, and the Trustee shall have no liability for the terms thereof. If, upon the resignation of any Custodian, there would be no Custodian acting hereunder, the Trustee shall, promptly after receiving notice of such resignation, at the direction of the Sponsor appoint a substitute custodian or custodians selected by the Sponsor, each of which shall thereafter be a Custodian hereunder. When directed by the Sponsor, and to the extent permitted by, and in the manner provided by, the relevant Custodian Agreement, the Trustee shall remove the Custodian and appoint a substitute custodian or appoint an additional custodian or custodians selected by the Sponsor, each of which shall thereafter be a Custodian hereunder. Each such substitute or additional custodian shall, forthwith upon its appointment, enter into one or more Custodian Agreements in form and substance approved by the Sponsor (provided, however, that the rights and duties of the Trustee hereunder and under the then-existing Custodian Agreements shall not be materially altered by such new Custodian Agreements without its consent). After the date of this Agreement, the Trustee shall not enter into or amend any Custodian Agreement with a Custodian without the written approval of the Sponsor (which approval shall not be unreasonably withheld or delayed). When instructed by the Sponsor, the Trustee shall demand that a Custodian deliver such of the Gold held by it as is requested of it to any other Custodian or such substitute or additional Custodian or Custodians selected by the Sponsor. In connection with such delivery, the Trustee will, solely if and in the manner directed by the Sponsor, cause the physical Gold to be weighed or assayed and any such weighing and assay shall be an expense of the Trust pursuant to Section 4.7(a)(2). The Trustee shall have no liability for any delivery of Gold or weighing or assaying of delivered physical Gold directed by the Sponsor pursuant to the preceding provisions of this paragraph and, in the absence of such direction from the Sponsor, shall have no obligation to effect such a delivery or to cause the delivered physical Gold to be weighed, assayed or otherwise validated.
(b) The Trustee shall have no obligation to monitor the activities of any Custodian other than (i) to receive and review such reports of the Gold held for the Trust by such Custodian and of transactions in Gold held for the account of the Trust made by such Custodian pursuant to the Custodian Agreement and (ii) to send a form of annual questionnaire for such Custodian to the Sponsor for the Sponsor’s review and approval, to send the annual questionnaire as approved by the Sponsor to such Custodian and, upon receipt of such Custodian’s responses to the annual questionnaire, to forward such responses to the Sponsor and to facilitate any further inquiry of such Custodian regarding such responses which may be specified by the Sponsor. The accounts and operations of, and the Gold held for the Trust by, each Custodian shall be audited or examined by accountants, auditors or other inspectors selected by the Sponsor at such times as directed by the Sponsor and as permitted by the Custodian Agreements. In no event shall the Trustee be liable for (i) any loss or damage resulting from the actions or omissions of, or the insolvency of, any Custodian or loss or damage to the Gold while in the possession of, or in transit to or from, any Custodian, (ii) the amount, validity or adequacy of insurance maintained by any Custodian, (iii) any defect in Gold held by any Custodian, (iv) any failure of the Gold to conform to the requirements of “good delivery” under the rules of the London Bullion Market Association or (v) any failure of the Gold to conform to a description thereof provided by any Custodian to the Trustee.
(c) Upon the appointment of any successor Trustee hereunder, each Custodian then acting under Custodian Agreements with the predecessor of such Trustee shall forthwith become, without any further act or writing, the agent hereunder of such successor Trustee, and the appointment of such successor Trustee shall in no way impair the authority of each such Custodian; but the successor Trustee so appointed shall, nevertheless, on the written request of any Custodian, execute and deliver to such Custodian all such instruments as may be proper to give to such Custodian full and complete power and authority as agent hereunder of such successor Trustee.
(d) Upon such terms, if any, as may be provided for in a Custodian Agreement, the applicable Custodian may reject a deposit of Gold made by an Authorized Participant in connection with a Purchase Order which includes any Gold which is subject to governmental sanctions applicable to brands of gold, including, without limitation, sanctions of The Office of Foreign Asset Control of the Department of Treasury of the United States applicable to brands of gold.
Section 5.6. Indemnification.
(a) The Sponsor shall indemnify the Trustee, its directors, officers, employees and agents (the “Trustee Indemnified Persons”) against, and hold each of them harmless from, any loss, liability, cost, expense or judgment (including, the reasonable fees and expenses of counsel) (collectively “Indemnified Amounts”) that is incurred by any of them and that arises out of or is related to (i) any offer or sale by the Trust of Baskets under this Agreement, (ii) acts performed or omitted pursuant to the provisions of this Agreement as the same may be amended, modified or supplemented from time to time, (A) by a Trustee Indemnified Person or (B) by the Sponsor, (iii) any filings with or submissions to the Commission in connection with or with respect to the Shares (which by way of illustration and not by way of limitation, include any registration statement and any amendments or supplements thereto filed with the Commission or any periodic reports or updates that may be filed under the Exchange Act, or any failure to make any filings with or submissions to the Commission which are required to be made in connection with or with respect to the Shares) or (iv) otherwise by reason of the Trustee’s acceptance or administration of the Trust, except that the Sponsor shall not have any obligations under this Section 5.6(a) to pay Indemnified Amounts incurred as a result of and attributable to (x) the negligence or bad faith of, or material breach of the terms of this Agreement by, the Trustee, or (y) written information furnished in writing by the Trustee to the Sponsor expressly for use in the registration statement, or any amendment thereto, or periodic or other report filed with the Commission relating to the Shares, that is not materially altered by the Sponsor. The provisions of this paragraph do not limit the rights and obligations of the Trustee under applicable trust law.
(b) The Trustee shall indemnify the Sponsor, its directors, officers, employees and agents against, and hold each of them harmless from, any Indemnified Amounts (i) caused by the negligence or bad faith of the Trustee or (ii) arising out of any information furnished in writing to the Sponsor by the Trustee expressly for use in the registration statement, or any amendment thereto or periodic or other report, filed with the Commission relating to the Shares that is not materially altered by the Sponsor.
(c) If the indemnification provided for in Section 5.6(a) or (b) is unavailable or insufficient to hold harmless the indemnified party under subsection (a) or (b) above, then the indemnifying party shall contribute to the Indemnified Amounts referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Sponsor on the one hand and the Trustee on the other hand from the offering of the Shares, to the extent such offering is the subject of the action, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Sponsor on the one hand and the Trustee on the other hand in connection with the action, statement or omission which resulted in such Indemnified Amount as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact from which the action arises relates to information supplied by the Sponsor or the Trustee and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission or the act or omission from which the action arises. The amount of Indemnified Amounts referred to in the first sentence of this subsection (c) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (c).
(d) The Sponsor and its members, managers, directors, officers, employees, affiliates (as such term is defined under the Securities Act of 1933, as amended) and subsidiaries (each a “Sponsor Indemnified Party”) shall be indemnified from the Trust and held harmless against any loss, liability or expense incurred without (1) negligence, bad faith, willful misconduct or willful malfeasance on the part of such Sponsor Indemnified Party arising out of or in connection with the performance of its obligations under this Agreement or any actions taken in accordance with the provisions of this Agreement or (2) reckless disregard on the part of such Sponsor Indemnified Party of its obligations and duties under this Agreement. Such indemnity shall include payment from the Trust of the costs and expenses incurred by such Sponsor Indemnified Party in defending itself against any claim or liability in its capacity as Sponsor. Any amounts payable to a Sponsor Indemnified Party under this Section 5.6(d) may be payable in advance or shall be secured by a lien on the Trust. The Sponsor may, in its discretion, undertake any action which it may deem necessary or desirable in respect of this Agreement and the rights and duties of the parties hereto and the interests of the Registered Owners and, in such event, the reasonable legal expenses and costs of any such actions shall be expenses and costs of the Trust and the Sponsor shall be entitled to be reimbursed therefor by the Trust as provided in Section 5.8(b).
(e) If an action, proceeding (including, but not limited to, any governmental investigation), claim or dispute (collectively, a “Proceeding”) in respect of which indemnity may be sought by either party is brought or asserted against the other party, the party seeking indemnification (the “Indemnitee”) shall promptly (and in no event more than seven (7) days after receipt of notice of such Proceeding) notify the party obligated to provide such indemnification (the “Indemnitor”) of such Proceeding. The failure of the Indemnitee to so notify the Indemnitor shall not impair the Indemnitee’s ability to seek indemnification from the Indemnitor (but only for costs, expenses and liabilities incurred after such notice) unless such failure adversely affects the Indemnitor’s ability to adequately oppose or defend such Proceeding. Upon receipt of such notice from the Indemnitee, the Indemnitor shall be entitled to participate in such Proceeding and, to the extent that it shall so desire and provided no conflict of interest exists as specified in clause (i) below and there are no other defenses available to Indemnitee as specified in clause (iii) below, to assume the defense thereof with counsel reasonably satisfactory to the Indemnitee (in which case all attorney’s fees and expenses shall be borne by the Indemnitor and the Indemnitor shall in good faith defend the Indemnitee). The Indemnitee shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but, in such case, no fees and expenses of such counsel shall be borne by the Indemnitor unless such fees and expenses are otherwise required to be indemnified under Section 5.06(a), (b) or (d), as applicable, and (i) there is such a conflict of interest between the Indemnitor and the Indemnitee as would preclude, in compliance with the ethical rules in effect in the jurisdiction in which the Proceeding was brought, one lawyer from representing both parties simultaneously, (ii) the Indemnitor fails, within the earlier of (x) twenty (20) days following receipt of notice of the Proceeding from the Indemnitee or (y) seven (7) days prior to the date the first response or appearance is required to be made in such Proceeding, to assume the defense of such Proceeding with counsel reasonably satisfactory to the Indemnitee or (iii) there are legal defenses available to Indemnitee that are different from or are in addition to those available to the Indemnitor. No compromise or settlement of such Proceeding may be effected by either party without the other party’s consent unless (m) there is no finding or admission of any violation of law and no effect on any other claims that may be made against such other party and (n) the sole relief provided is monetary damages that are paid in full by the party seeking the settlement. Neither party shall have any liability with respect to any compromise or settlement effected without its consent, which shall not be unreasonably withheld. The Indemnitor shall have no obligation to indemnify and hold harmless the Indemnitee from any loss, expense or liability incurred by the Indemnitee as a result of a default judgment entered against the Indemnitee unless such judgment was entered after the Indemnitor agreed, in writing, to assume the defense of such Proceeding.
Section 5.7. Charges of Trustee.
(a) Each Depositor, and each Person surrendering Shares for the purpose of withdrawing Trust Property, shall pay to the Trustee a fee of $500 per transaction for the Delivery of Shares pursuant to Section 2.4 and the Surrender of Baskets pursuant to Sections 2.6 or 6.2 (or such other fee as the Trustee, with the prior written consent of the Sponsor, may from time to time announce).
(b) The Trustee is entitled to receive from the Sponsor fees for its services and reimbursement for its reasonable out-of-pocket expenses in accordance with written agreements between the Sponsor and the Trustee.
(c) The Trustee is entitled to charge the Trust for all expenses and disbursements incurred by it under Section 5.12(a) or that are of the type described in Sections 4.7(a)(2) or (3) of this Agreement (including the reasonable fees and disbursements of its legal counsel and amounts identified in any Custodian Agreement or Authorized Participant Agreement as payable by the Trustee, including any payments arising from any indemnification obligations of the Trustee thereunder), except that the Trustee is not entitled to charge the Trust for (i) expenses and disbursements incurred by it prior to the commencement of trading of Shares on the Exchange and (ii) fees of agents for performing services the Trustee is required to perform under this Agreement.
Section 5.8. Charges of Sponsor.
(a) The Sponsor is entitled to receive from the Trust, as an expense of the Trust, a fee for services at an annualized rate of 0.15% of Net Asset Value (the “Sponsor’s Fee”), computed and accrued on a daily basis in the manner instructed by the Sponsor and paid monthly in arrears in U.S. dollars. The Sponsor may, at its sole discretion and fromtime to time, waive all or a portion of the Sponsor's Fee for such period(s) of time it specifies in a notice of such fee waiver to the Trustee. The Sponsor is under no obligation to waive any portion of its fees hereunder or reimbursements pursuant to Section 5.8(a) and (b), and any such waiver shall create no obligation to waive any such fees or reimbursements during any period not covered by the waiver. Any fee or reimbursement waiver by the Sponsor shall not operate to reduce the Sponsor’s obligations hereunder, including its obligations under Section 5.3(g). The Sponsor may instruct the Trustee from time to time to withhold a portion of the Sponsor’s Fee otherwise payable to the Sponsor and to pay such withheld portion to Persons identified by the Sponsor for the purpose of satisfying certain expenses of the Trust for which the Sponsor is responsible under Section 5.3(g).
(b) The Sponsor is entitled to receive reimbursement from the Trust for all expenses and disbursements incurred by it under the last sentence of Section 5.6(d) or that are of the type described in Sections 4.7(a)(2), (3) or (4), except that the Sponsor is not entitled to charge the Trust for (i) expenses and disbursements incurred by it prior to the commencement of trading of Shares on the Exchange and (ii) fees of agents for performing services the Sponsor is required to perform under this Agreement.
Section 5.9. Retention of Trust Documents. The Trustee is authorized to destroy those documents, records, bills and other data compiled during the term of this Agreement at the times permitted by the laws or regulations governing the Trustee, unless the Sponsor reasonably requests the Trustee in writing to retain those items for a longer period.
Section 5.10. Federal Securities Law Filings.
(a) The Sponsor shall (i) prepare and file a registration statement with the Commission and take such action as is necessary from time to time to qualify the Shares for offering and sale under the federal securities laws of the United States, including the preparation and filing of amendments and supplements to such registration statement, (ii) promptly notify the Trustee of any amendment or supplement to the registration statement or prospectus, of any order preventing or suspending the use of any prospectus, of any request for the amending or supplementing of the registration statement or prospectus or if any event or circumstance occurs which is known to the Sponsor as a result of which the registration statement or prospectus, as then amended or supplemented, would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (iii) provide the Trustee from time to time with copies, including copies in electronic form, of the prospectus, as amended and supplemented, in such quantities as the Trustee may reasonably request and (iv) prepare and file any periodic reports or updates that may be required under the Exchange Act. The Trustee shall furnish to the Sponsor any information from the records of the Trust that the Sponsor reasonably requests in writing that is needed to prepare any filing or submission that the Sponsor or the Trust is required to make under the federal securities laws of the United States.
(b) The Sponsor shall have all necessary and exclusive power and authority to (i) from time to time adopt, implement or amend such disclosure controls and procedures as are necessary or desirable, in the Sponsor’s reasonable judgment, to ensure compliance with the disclosure and ongoing reporting obligations under any applicable securities laws, (ii) appoint and remove the auditors of the Trust, and (iii) seek from the relevant securities or other regulatory authorities such relief, clarification or other action as the Sponsor shall deem necessary or desirable regarding the disclosure or financial reporting obligations of the Trust.
(c) The policies and procedures comprising the Trust’s initial Internal Control Over Financial Reporting have been adopted as of the date of this Agreement and copies thereof have been delivered to the appropriate officers of the Sponsor and the Trustee. Amendments to such initial Internal Control Over Financial Reporting may be proposed from time to time by the Sponsor, but such amendments may not be adopted in connection with the preparation of the Trust’s financial statements without the Trustee’s consent (which consent will not be unreasonably withheld or delayed).
Section 5.11. Prospectus Delivery. The Trustee shall, if required by the federal securities laws of the United States, in any manner permitted by such laws, deliver at the time of issuance of Shares, an electronic or other copy of the relevant prospectus, as most recently furnished to the Trustee by the Sponsor, to each Depositor.
Section 5.12. Discretionary Actions by Trustee; Consultation.
(a) The Trustee may, in its discretion, undertake any action that it considers necessary or desirable to protect the Trust or the interests of the Registered Owners or the Beneficial Owners, including the Trustee’s appearance in, prosecution of or defense of any action suit or proceeding. The expenses incurred by the Trustee in connection with taking any action under the preceding sentence (including the reasonable fees and disbursements of legal counsel) shall be expenses of the Trust, and the Trustee shall be entitled to be reimbursed for those expenses by the Trust.
(b) The Trustee shall notify and consult with the Sponsor beforeundertaking any action under subsection (a) above or if the Trustee becomes aware of any development or event that affects the administration of the Trust but is not contemplated or provided for in this Agreement.
(c) The Sponsor shall notify and consult with the Trustee beforeundertaking any action under the last sentence of Section 5.6(d) or if the Sponsor becomes aware of any development or event that affects the administration of the Trust but is not contemplated or provided for in this Agreement.
Section 5.13. Conflicts of Interest. In the case of a conflict of interest between each of the Sponsor or the Trustee and any of their respective affiliates, on the one hand, and the Registered Owners or the Beneficial Owners, on the other hand, each of the Trustee or the Sponsor shall use its commercially reasonableefforts to resolve such conflict of interest and, in connection therewith, may consider, among other things, the relevant interests of each party (including its own interests) and related benefits and burdens, any customary or accepted industry practices and any applicable generally accepted accounting practices or principles. In the absence of bad faith by the Sponsor or the Trustee, any resolution of a conflict of interest determined by the Sponsor or the Trustee, as applicable, will not constitute a breach of this Agreement or any duty or obligation of the Sponsor or the Trustee. Notwithstanding the foregoing, in no event will the Sponsor or the Trustee or their respective affiliates be required to divest themselves of, or restrict their services or other activities with respect to, any assets they currently or may hold, manage or control on their own behalf or on behalf of any customer, client or any other Person.
ARTICLE 6.
AMENDMENT AND TERMINATION
Section 6.1. Amendment. The Trustee and the Sponsor may amend any provision of this Agreement without the consent of any Person, including any Registered Owner or Beneficial Owner. The Sponsor shall determine the contents and manner of delivery of any notice of any amendment. Any amendment that imposes or increases any fees or charges (other than taxes and other governmental charges, registration fees or other such expenses), or that otherwise prejudices any substantial existing right of the Registered Owners or the Beneficial Owner will not become effective as to outstanding Shares until 30 days after notice of such amendment is given to the Registered Owners. Every Registered Owner and Beneficial Owner, at the time any amendment so becomes effective, shall be deemed, by continuing to hold any Shares or an interest therein, to consent and agree to such amendment and to be bound by this Agreement as amended thereby. Notwithstanding the foregoing, in no event shall any amendment impair the right of the Authorized Participants to Surrender Baskets and receive therefor the amount of Trust Property represented thereby pursuant to Section 2.6(a), except in order to comply with mandatory provisions of applicable law.
Section 6.2. Termination.
(a) The Trustee shall set a date on which this Agreement and the Trust will terminate and mail notice of that termination to the Registered Owners at least 30 days prior to the date set for termination if any of the following occurs
(i) The Trustee is notified that the Shares are delisted from a national securities exchange and are not approved for listing on another national securities exchange within five Business Days of their delisting;
(ii) Registered Owners acting in respect of at least 75% of the outstanding Shares notify the Trustee that they elect to terminate the Trust;
(iii) 60 days have elapsed since the Trustee notified the Sponsor of the Trustee’s election to resign or since the Sponsor removed the Trustee and a successor trustee has not been appointed and accepted its appointment as provided in Section 5.4;
(iv) the Commission determines that the Trust is an investment company required to register under the Investment Company Act of 1940, as amended, and the Trustee has actual knowledge of such Commission determination;
(v) the aggregate market capitalization of the Trust, based on the closing price for the Shares, was less than $350 million for five consecutive trading days and the Trustee receives, within six months after the last of those trading days, notice from the Sponsor of its decision to terminate the Trust;
(vi) the CFTC determines that the Trust is a commodity pool under the Commodity Exchange Act of 1936, as amended, and the Trustee has actual knowledge of that determination;
(vii) the Trust fails to qualify for treatment, or ceases to be treated, for United States federal income tax purposes, as a grantor trust, and the Trustee receives notice from the Sponsor that the Sponsor has determined that, because of that tax treatment or change in tax treatment, termination of the Trust is advisable;
(viii) any sole Custodian then acting resigns, is removed or otherwise ceases to act as Custodian and no successor Custodian has been employed pursuant to Section 5.5 prior to the effective date of such resignation, removal or cessation;
(ix) DTC or another depository has ceased to act as depository with respect to the Shares and the Sponsor has not identified another depository that is willing to act in such capacity prior to the effective date of such cessation; or
(x) as provided in Section 6.2(c).
(b) On and after the date of termination of this Agreement, the Trustee shall discontinue the registration of transfers of Shares, shall not make any distributions to Registered Owners, and shall not give any further notices or perform any further acts under this Agreement, except that the Trustee shall continue to collect distributions pertaining to Trust Property and hold the same uninvested and without liability for interest, shall pay the Trust’s expenses and sell Gold as necessary to meet those expenses and shall continue to deliver Trust Property, together with any distributions received with respect thereto and the net proceeds of the sale of any other property, in exchange for Shares Surrendered to the Trustee by Authorized Participants in accordance with Section 2.6(a) (after deducting or upon payment of, in each case, the fee of the Trustee set forth in Section 5.7 for the Surrender of Shares, any expenses for the account of the Registered Owner of such Shares in accordance with the terms and conditions of this Agreement, and any applicable taxes or other governmental charges). At any time after the expiration of 90 days following the date of termination of this Agreement, the Trustee shall sell the Trust Property then held under this Agreement pursuant to the Sponsor’s direction, or, if the Sponsor does not provide any direction, as the Trustee determines, and may thereafter hold uninvested the net proceeds of any such sale, together with any other cash then held by it under this Agreement, unsegregated and without liability for interest, for the pro rata benefit of the Registered Owners of Shares that have not theretofore been Surrendered, such Registered Owners thereupon becoming general creditors of the Trustee with respect to such net proceeds. The Trustee and the Sponsor shall have no liability for any such sale or any loss or depreciation resulting from any such sale made pursuant to the Sponsor’s direction or otherwise made by the Trustee in good faith. After making such sale, the Trustee shall be discharged from all obligations under this Agreement, except to account for such net proceeds and other cash (after deducting, in each case, any fees, expenses, taxes or other governmental charges payable by the Trust, the fee of the Trustee for the Surrender of Shares and any expenses for the account of the Registered Owner of such Shares in accordance with the terms and conditions of this Agreement, and any applicable taxes or other governmental charges). Upon the termination of this Agreement, the Sponsor shall be discharged from all obligations under this Agreement except for its obligations to the Trustee under Sections 5.6 and 5.7 shall survive termination of this Agreement and the Trust, the resignation or removal of the Trustee or the resignation of the Sponsor.
(c) If the Sponsor fails to undertake or perform, or becomes incapable of undertaking or performing, any of the duties that by the terms of this Agreement are required to be undertaken or performed by it, and such failure or incapacity is not cured within 60 days following receipt of notice from the Trustee of such failure or incapacity, or if the Sponsor is adjudged bankrupt or insolvent, or a receiver of the Sponsor or of its property is appointed, or a trustee or liquidator or any public officer takes charge or control of the Sponsor or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then in any such case the Sponsor shall be deemed conclusively to have resigned effective immediately upon the occurrence of any of the specified events, or if the Sponsor has been dissolved or has ceased to exist as a legal entity for any reason or if the Sponsor resigns by sending notice of resignation to the Trustee without the appointment by the resigning Sponsor of a succeeding Sponsor (which appointment is subject to the prior written consent of the Trustee, which shall not be unreasonably withheld), the Trustee shall terminate and liquidate the Trust and distribute its remaining assets pursuant to this Section 6.2.
ARTICLE 7.
MISCELLANEOUS
Section 7.1. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of such counterparts shall constitute one and the same instrument. Copies of this Agreement shall be filed with the Trustee and shall be open to inspection by any Registered Owner during the Trustee’s business hours.
Section 7.2. Third-Party Beneficiaries. This Agreement is for the exclusive benefit of the parties hereto and shall not be deemed to give any legal or equitable right, remedy or claim whatsoever to any other Person.
Section 7.3. Severability. In case any one or more of the provisions contained in this Agreement should be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall in no way be affected, prejudiced or disturbed thereby.
Section 7.4. Registered Owners, Beneficial Owners and Authorized Participants as Parties; Binding Effect.
(a) The Registered Owners, Beneficial Owners and Authorized Participants from time to time shall be parties to this Agreement and shall be bound by all of the terms and conditions hereof by their acceptance of Shares or any interest therein or by their depositing Gold, as the case may be.
(b) Except in connection with Sections 5.4(c)(ii) or 6.2(a)(ii), no Beneficial Owner shall have any right to vote or in any manner otherwise to control the operation or management of the Trust or the obligations of the parties hereto. Nothing set forth in this Agreement shall be construed so as to constitute the Beneficial Owners from time to time as partners or members of an association; nor shall any Beneficial Owner ever be liable to any third Person by reason of any action taken by the parties to this Agreement or for any other cause whatsoever.
(c) Each Beneficial Owner expressly waives any right such Beneficial Owner may have under any rule of law, or the provisions of any statute, or otherwise, to require the Trustee at any time to account, in any manner other than as expressly provided in the Agreement, in respect of the Trust Property from time to time received, held and applied by the Trustee hereunder.
Section 7.5. Notices.
(a) All notices given under this Agreement must be in writing.
(b) Any and all notices to be given to the Trustee or the Sponsor shall be deemed to have been duly given (i) when it is actually delivered by a messenger or recognized courier service, (ii) five days after it is mailed by registered or certified mail, postage paid or (iii) when receipt of a facsimile (if applicable) or email transmission is acknowledged via a return receipt or receipt confirmation as requested by the original transmission, in each case to or at the address set forth below:
To the Trustee:
The Bank of New York Mellon
240 Greenwich Street
8th Floor
New York, New York 10286
Attention: ETF Service Directors
Telephone: (212) 815-2698
Email: ETFCSM@bnymellon.com
or to any other place to which the Trustee may have transferred its Corporate Trust Office with notice to the Sponsor.
To the Sponsor:
iShares® Delaware Trust Sponsor LLC
400 Howard Street
San Francisco, CA 94105
Attn: Product Management Team, Intermediary Investor and Exchange-Traded
Products Department
Telephone: (415) 670-4671
Facsimile: (415) 618-5097
Email: paul.lohrey@blackrock.com
with a copy to:
iShares® Delaware Trust Sponsor LLC
400 Howard Street
San Francisco, CA 94105
Attn: Legal Department
Telephone: (415) 670-2860
Facsimile: (415) 618-5731
Email: deepa.damre@blackrock.com
or to any other place to which the Sponsor may have transferred its principal office with notice to the Trustee.
(c) Any and all notices to be given to a Registered Owner shall be deemed to have been duly given (i) when actually delivered by messenger or a recognized courier service, (ii) when mailed, postage prepaid or (iii) when sent by facsimile (if applicable) or email transmission confirmed by letter, in each case at or to the address of such Registered Owner as it appears on the transfer books of the Trustee, or, if such Registered Owner shall have filed with the Trustee a written request that any notice or communication intended for such Registered Owner be delivered to some other address, at the address designated in such request, provided that, if the Registered Owner is DTC, notices may be given to the Registered Owner in any manner consistent with the rules of DTC as they may exist from time to time.
Section 7.6. Agent for Service; Submission to Jurisdiction. The Sponsor hereby (i) irrevocably designates and appoints CT Corporation System, located at 111 Eighth Avenue, New York, New York 10011, U.S.A., as the Sponsor’s authorized agent upon which process may be served in any suit or proceeding arising out of or relating to the Shares, the Trust Property or this Agreement, (ii) consents and submits to the jurisdiction of any state or federal court in The City of New York, State of New York, in which any such suit or proceeding may be instituted, and (iii) agrees that service of process upon said authorized agent (or any successor thereto from time to time duly appointed as such by the Sponsor and the name and address of which shall have been informed in writing by the Sponsor to the Trustee) shall be deemed in every respect effective service of process upon the Sponsor in any such suit or proceeding. The Sponsor further agrees to maintain the appointment of an agent for service of process in full force and effect for so long as any Shares remain outstanding or this Agreement remains in force. In the event the Sponsor fails to continue such designation and appointment in full force and effect, the Sponsor hereby waives personal service of process upon it and consents that any such service of process may be made by certified or registered mail, return receipt requested, directed to the Sponsor at its address last specified for notices hereunder, and service so made shall be deemed completed five (5) days after the same shall have been so mailed.
Section 7.7. Governing Law. This Agreement shall be interpreted under, and all rights and duties under this Agreement shall be governed by, the internal substantive laws (but not the choice of law rules) of the State of New York.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first set forth above.
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iSHARES DELAWARE TRUST SPONSOR LLC,
as Sponsor
By: /s/ Paul C. Lohrey
Name: Paul C. Lohrey
Title: President & CEO
THE BANK OF NEW YORK MELLON,
as Trustee
By: /s/ Patrick G. Griffin
Name: Patrick G. Griffin
Title: Vice President
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[Signature Page to Depositary Trust Agreement ]
iShares® Gold Trust Micro Depositary Trust Agreement acknowledgment, Trustee
STATE OF New York
:SS.:
COUNTY OF Kings
On this 15th day of June, 2021 before me, the undersigned, personally appeared Patrick G. Griffin, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he or she executed the same in his or her capacity, and that by his or her signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.
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/s/ Stephen F. Lappert
Notary Public
STEPHEN F. LAPPERT
Notary Public, State of New York
No. 02LA4872891
Qualified in Kings County
Commission Expires Sept. 15, 2022
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iShares® Gold Trust Micro Depositary Trust Agreement acknowledgment, Sponsor
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
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State of California )
County of San Francisco )
On June 15, 2021 before me, Samir Bourema, Notary Public,
personally appeared Paul Christopher Lohrey,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature /s/Samir Bourema
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SAMIR BOUREMA
Notary Public - California
San Francisco County
Commission # 2301791
My Comm. Expires Aug 17, 2023
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EXHIBIT A
[Form of Certificate]
THE SHARES EVIDENCED HEREBY REPRESENT RIGHTS WITH RESPECT TO UNDERLYING TRUST PROPERTY (AS DEFINED IN THE DEPOSITARY TRUST AGREEMENT REFERRED TO HEREIN) HELD BY THE TRUST AND DO NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND ARE NOT GUARANTEED BY THE SPONSOR OR THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE SHARES NOR THE UNDERLYING TRUST PROPERTY ARE INSURED UNDER ANY AGREEMENT THAT DIRECTLY BENEFITS THE TRUST OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR ANY OTHER PERSON.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE AGENT AUTHORIZED BY THE ISSUER FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
iSHARES® GOLD TRUST MICRO SHARES ISSUED BY
iSHARES® GOLD TRUST MICRO
REPRESENTING
FRACTIONAL INTERESTS IN DEPOSITED GOLD AND ANY OTHER TRUST PROPERTY
THE BANK OF NEW YORK MELLON, as Trustee
CUSIP: 46436F 103
THE BANK OF NEW YORK MELLON, as Trustee (hereinafter called the “Trustee”), hereby certifies that CEDE & CO., as nominee of The Depository Trust Company, or registered assigns, is the owner of * Shares issued by iShares® Gold Trust Micro (the “Trust”), each representing a fractional undivided interest in the net assets of the Trust, as provided in the Agreement referred to below. The Trustee’s Corporate Trust Office is located at a different address than its principal executive office. Its Corporate Trust Office is located at 240 Greenwich Street, New York, New York 10286, and its principal executive office is located at 225 Liberty Street, New York, New York 10281.
This Certificate is issued upon the terms and conditions set forth in the Depositary Trust Agreement dated as of June 15, 2021 (the “Agreement”) among iShares® Delaware Trust Sponsor LLC (herein called the “Sponsor”), the Trustee, all Registered Owners and Beneficial Owners from time to time of Shares issued thereunder and all Depositors. By becoming a Registered Owner or Beneficial Owner, or by depositing Gold, a Person becomes a party to the Agreement and is bound by all the terms and conditions of the Agreement. The Agreement sets forth the rights of Depositors, Registered Owners and Beneficial Owners and the rights and duties of the Trustee and the Sponsor. Copies of the Agreement are on file at the Trustee’s Corporate Trust Office in New York City.
The Agreement is hereby incorporated by reference into and made a part of this Certificate as if set forth in full in this place. Capitalized terms not defined herein shall have the meanings set forth in the Agreement.
This Certificate shall not be entitled to any benefits under the Agreement or be valid or obligatory for any purpose unless it is executed by the Trustee by the manual or facsimile signature of a duly authorized signatory of the Trustee and, if a Registrar (other than the Trustee) for the Shares shall have been appointed, countersigned by the manual signature of a duly authorized officer of the Registrar.
[Signature Page Follows]
* That number of Shares held at The Depository Trust Company at any given point in time.
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Dated: June 15, 2021
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THE BANK OF NEW YORK MELLON,
as Trustee
By: /s/ Patrick G. Griffin
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THE TRUSTEE’S CORPORATE TRUST OFFICE ADDRESS IS
240 GREENWICH STREET, NEW YORK, NEW YORK 10286
Exhibit 4.2
iShares® Gold Trust Micro
Standard Terms for Authorized Participant Agreements
Dated as of June 15, 2021
STANDARD TERMS FOR AUTHORIZED PARTICIPANT AGREEMENTS (the “Standard Terms”) agreed to as of June 15, 2021, by and between The Bank of New York Mellon, a New York banking corporation, and iShares Delaware Trust Sponsor LLC, a Delaware limited liability company.
ARTICLE I
ORDERS FOR PURCHASE AND REDEMPTION
Section 1.01. Authorization to Purchase and Redeem Baskets. Subject to the provisions of the Authorized Participant Agreement, during the term of the Authorized Participant Agreement, the Authorized Participant will be authorized to purchase and redeem Baskets of iShares in compliance with the provisions of the Trust Agreement.
Section 1.02. Procedures for Orders. Each party hereto agrees to comply with the provisions of the Trust Agreement and the Procedures to the extent applicable to it.
Section 1.03. Consent to Recording. The phone lines used by the Trustee, the Custodian or their affiliated persons may be recorded, and the Authorized Participant hereby consents to the recording of all calls with any of those parties.
Section 1.04. Irrevocability. The Authorized Participant agrees on behalf of itself and any Authorized Participant Client that delivery to the Trustee of an Order shall be irrevocable; provided that each of the Trust and the Sponsor reserves the right to reject any Order in compliance with the provisions of the Trust Agreement.
Section 1.05. Costs and Expenses. The Authorized Participant shall be responsible for any and all expenses and costs incurred by the Trust in connection with any Orders.
Section 1.06. Delivery of Property to the Trust. The Authorized Participant understands and agrees that in the event Deposit Property is not transferred to the Trust by the time specified in the Purchase Order and in compliance with the Procedures and the Trust Agreement, a Purchase Order may be cancelled by the Trustee and the Authorized Participant will be solely responsible for all costs incurred by the Trust, the Trustee or the Custodian related to the cancelled Order.
Section 1.07. Title to Deposit Property and iShares Surrendered for Redemption. The Authorized Participant represents and warrants to the Trustee and the Sponsor that:
a. in connection with each Purchase Order, the Authorized Participant will have full power and authority to transfer to the Trust the corresponding Deposit Property, and that, upon delivery of such Deposit Property to the Custodian and/or the relevant subcustodian in accordance with the Procedures, the Trust will acquire good and unencumbered title to such property, free and clear of all liens, charges, duties imposed on the transfer of assets and encumbrances and not subject to any adverse claims or transferability restrictions, whether arising by operation of law or otherwise; and
b. as of the close of a day that the exchange on which the Trust is listed is open for regular trading and on which the Authorized Participant has placed any Redemption Order for the purpose of redeeming any iShares, it or the Authorized Participant Client, as the case may be, will own (within the meaning of Rule 200 of Regulation SHO) or has arranged to borrow for delivery to the Trust on or prior to the settlement date of the Redemption Order the number of iShares to be redeemed. In either case, the Authorized Participant acknowledges that: (i) it has or if, applicable, its Authorized Participant Client has full legal authority and legal right to tender for redemption the requisite number of iShares and to receive the entire proceeds of the redemption and (ii) if such iShares submitted for redemption have been loaned or pledged to another party or are the subject of a repurchase agreement, securities lending agreement or any other arrangement affecting legal or beneficial ownership of such iShares being tendered there are no restrictions precluding the tender and delivery of such iShares (including borrowed shares, if any) for redemption, free and clear of liens, on the redemption settlement date.
Section 1.08. Certain Payments or Distributions.
a. With respect to any Purchase Order, the Trust acknowledges and agrees to return to the Authorized Participant any payment, distribution or other amount paid to the Trust in respect of any Deposit Property transferred to the Trust that, based on the valuation of such Deposit Property at the time of transfer, should have been paid to the Authorized Participant. Likewise, the Authorized Participant acknowledges and agrees to return to the Trust any payment, distribution or other amount paid to the Authorized Participant or any Authorized Participant Client in respect of any Deposit Property transferred to the Trust that, based on the valuation of such Deposit Property at the time of transfer, should have been paid to the Trust.
b. With respect to any Redemption Order, the Authorized Participant on behalf of itself and any Authorized Participant Client acknowledges and agrees to return to the Trust any payment, distribution or other amount paid to it or an Authorized Participant Client in respect of any property transferred to the Authorized Participant or any Authorized Participant Client that, based on the valuation of such property at the time of transfer, should have been paid to the Trust. The Trust is entitled to reduce the amount of any property due to the Authorized Participant or any Authorized Participant Client by an amount equal to any payment, distribution or other sum to be paid to the Authorized Participant or to the Authorized Participant Client in respect of any property transferred to the Authorized Participant or any Authorized Participant Client that, based on the valuation of such property at the time of transfer, should be paid to the Trust. Likewise, the Trust acknowledges and agrees to return to the Authorized Participant or any Authorized Participant Client any payment, distribution or other amount paid to it in respect of any iShares transferred to the Trust that, based on the valuation of such iShares at the time of transfer, should have been paid to the Authorized Participant or such Authorized Participant Client.
Section 1.09. Governmental Sanctions. The Authorized Participant acknowledges and agrees that, if a deposit of Gold (as defined in the Procedures) made by the Authorized Participant with the Custodian (as defined in the Procedures) in connection with a Purchase Order includes any Gold which is subject to governmental sanctions applicable to brands of gold, including, without limitation, sanctions of The Office of Foreign Asset Control of the Department of Treasury of the United States applicable to brands of gold, the Custodian may reject the deposit of Gold. Upon written notification of such rejection by the Custodian to the Authorized Participant and its delivery agent, as applicable, and the Trustee and if agreed to by the Custodian, the Authorized Participant may replace the Gold subject to any such sanctions by depositing Gold with the Custodian not subject to any sanctions within twenty-four (24) hours of such notification. If the Authorized Participant does not so replace the Gold within such twenty-four (24) hour period, the Purchase Order corresponding with such deposit of Gold shall be deemed canceled
ARTICLE II
AUTHORIZED REPRESENTATIVES
Section 2.01. Certification. Concurrently with the execution of the Authorized Participant Agreement, the Authorized Participant shall deliver to the Trust a certificate signed by the Authorized Participant’s Secretary or other duly authorized person setting forth the names, e-mail addresses and telephone and facsimile numbers of all persons authorized to give instructions relating to any activity contemplated hereby or any other notice, request or instruction on behalf of the Authorized Participant (each an “Authorized Representative”) The Trustee may request updates to such certificate from time to time, in a form approved by the Trustee, but no more frequently than annually. Such certificate and any updates thereto may be accepted and relied upon by the Trust as conclusive evidence of the facts set forth therein and shall be considered to be in full force and effect until (i) receipt by the Trustee of a superseding certificate or update to a certificate in a form approved by the Trustee bearing a subsequent date, or (ii) termination of the Authorized Participant Agreement.
Section 2.02. PIN Numbers. The Trustee shall issue to each Authorized Representative a unique personal identification number (“PIN Number”) by which such Authorized Representative shall be identified and instructions issued by the Authorized Participant shall be authenticated. The PIN Number shall be kept confidential and only provided to Authorized Representatives. The Authorized Participant may revoke any PIN Number at any time upon written notice to the Trustee, and the Authorized Participant shall be responsible for doing so in the event that it becomes aware that an unauthorized person has received access to a PIN Number or has or intends to use a PIN Number in an unauthorized manner.
If an Authorized Representative’s PIN Number is changed, the new PIN Number will become effective on a date mutually agreed upon by the Authorized Participant and the Trustee. The Authorized Participant agrees that, absent the Trustee’s fraud, willful misconduct or failure to deactivate the PIN Number promptly following a written request to do so from the Authorized Participant or the termination of the Authorized Participant Agreement, none of the Trust or the Trustee shall be liable for losses incurred by the Authorized Participant as a result of unauthorized use of a Authorized Representative’s PIN Number prior to the time the Authorized Participant provides notice to the Trustee of the termination or revocation of authority pursuant to Section 2.03.
Section 2.03. Termination of Authority. Upon the termination or revocation of authority of an Authorized Representative by the Authorized Participant or the revocation of a PIN Number by the Authorized Participant, the Authorized Participant shall (i) give immediate written notice of such fact to the Trustee and such notice shall be effective upon receipt by the Trustee; and (ii), if applicable, request a new PIN Number. The Trustee shall, as promptly as practicable, deactivate the PIN Number upon receipt of such written notice.
Section 2.04. Verification. The Trustee may assume that all instructions issued to it using an Authorized Representative’s PIN Number have been properly placed by the applicable Authorized Representative, unless the Trustee has actual knowledge to the contrary or the Authorized Participant has revoked the PIN Number. The Trustee shall have no duty to verify that an Order is being placed by an Authorized Representative. The Authorized Participant agrees that the Trustee shall not be responsible for any losses incurred by the Authorized Participant as a result of an Authorized Representative identifying himself or herself as a different Authorized Representative or an unauthorized person identifying himself or herself as an Authorized Representative, unless the Trustee previously received from the Authorized Participant written notice to revoke the PIN Number used by such person.
ARTICLE III
STATUS OF THE AUTHORIZED PARTICIPANT
Section 3.01. Clearing Status. The Authorized Participant represents, covenants and warrants that, as of the date of execution of the Authorized Participant Agreement, and at all times during the term of the Authorized Participant Agreement, the Authorized Participant is and will be entitled to use the clearing and settlement services of each of the national or international clearing and settlement organizations through which, in compliance with the Procedures, the transactions contemplated hereby will clear and settle. Any change in the foregoing status of the Authorized Participant shall terminate the Authorized Participant Agreement and the Authorized Participant shall give prompt written notice thereof to the Trustee.
Section 3.02. Broker-Dealer Status. The Authorized Participant represents and warrants that, unless the following paragraph is applicable to it, it is (i) registered as a broker-dealer under the Securities Exchange Act of 1934, as amended, (ii) qualified to act as a broker or dealer in the states or other jurisdictions where it transacts business to the extent so required by applicable law, and (iii) a member in good standing of FINRA. The Authorized Participant agrees that it will maintain such registrations, qualifications, and membership in good standing and in full force and effect throughout the term of the Authorized Participant Agreement. The Authorized Participant further agrees to comply with all Federal laws, the laws of the states or other jurisdictions concerned, and the rules and regulations promulgated thereunder, to the extent such laws and regulations are applicable to the Authorized Participant’s transactions in iShares, and with the Constitution, By-Laws and Conduct Rules of FINRA applicable to its activities as an Authorized Participant, and that it will not offer or sell iShares in any state or jurisdiction where they may not lawfully be offered and/or sold.
Section 3.03. Foreign Status. If the Authorized Participant is offering and selling iShares in jurisdictions outside the several states, territories and possessions of the United States and is not otherwise required to be registered, qualified, or a member of FINRA as set forth in the preceding paragraph, the Authorized Participant nevertheless agrees to observe applicable laws.
Section 3.04. Compliance with Certain Laws. If the Authorized Participant is subject to the requirements of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (“U.S.A. PATRIOT Act”), the Authorized Purchaser is in compliance with the anti-money laundering and related provisions of the U.S.A. PATRIOT Act.
Section 3.05 Sanctions Program. The Authorized Participant represents, covenants and warrants solely to the Sponsor that it has established and presently maintains a sanctions program (the “Sanctions Program”) reasonably designed to prevent it from engaging in activities, financial transactions or other illicit purposes for or on behalf of individuals or entities in line with applicable sanctions laws and regulations, and it shall comply with the Sanctions Program and all applicable sanctions laws, regulations and rules now or hereafter in effect. The Authorized Participant acknowledges that that the Custodian may reject any Deposit Property which is subject to applicable sanctions, including without limitation OFAC sanctioned brands.
Section 3.06. Authorized Participant Status.
a. The Authorized Participant understands and acknowledges that the method by which Baskets of iShares will be created and traded may raise certain issues under applicable securities laws. For example, because new Baskets of iShares may be issued and sold by the Trust on an ongoing basis, at any point a “distribution”, as such term is used in the 1933 Act, may occur. The Authorized Participant understands and acknowledges that some activities on its part, depending on the circumstances, may result in its being deemed a participant in a distribution in a manner which could render it a statutory underwriter and subject it to the prospectus delivery and liability provisions of the 1933 Act.
b. The Sponsor shall ensure that the Prospectus contains an accurate and current listing of Authorized Participants.
ARTICLE IV
ROLE OF AUTHORIZED PARTICIPANT
Section 4.01. Independent Contractor. The Authorized Participant acknowledges and agrees that for all purposes of the Authorized Participant Agreement, the Authorized Participant will be deemed to be an independent contractor, and will have no authority to act as agent for the Trust or the Trustee in any matter or in any respect. The Authorized Participant agrees to make itself and its employees available, upon request, during normal business hours to consult with the Trustee, the Sponsor or their designees concerning the performance of the Authorized Participant’s responsibilities under the Authorized Participant Agreement; provided, however, that the Authorized Participant shall be under no obligation to divulge or otherwise disclose any information that the Authorized Participant reasonably believes (i) it is under legal obligation not to disclose, or (ii) it is confidential or proprietary in nature.
Section 4.02. Rights and Obligations of DTC Participant. In executing the Authorized Participant Agreement, the Authorized Participant agrees in connection with any purchase or redemption transactions in which it acts for an Authorized Participant Client or for any other DTC Participant or indirect participant, or any other Beneficial Owner, that it shall extend to any such party all of the rights (to the extent permitted by applicable rules and regulations), and shall be bound by all of the obligations, of a DTC Participant in addition to any obligations that it undertakes hereunder or in accordance with the Procedures.
Section 4.03. Beneficial Owner Communications. The Authorized Participant agrees, subject to any limitations arising under federal or state securities laws relating to privacy or other obligations it may have to its customers, to assist the Trustee or the Sponsor in determining the ownership level of each beneficial owner relating to positions in iShares that the Authorized Participant may hold as record holder. In addition, the Authorized Participant agrees, in accordance with applicable laws, rules and regulations, at the request of the Sponsor or the Trustee to forward to such beneficial owners written materials and communications received from the requesting party in sufficient quantities to allow mailing thereof to such beneficial owners, including notices, annual reports, disclosure or other informational materials and any amendments or supplements thereto that may be required to be sent by the Sponsor or the Trustee to such beneficial owners pursuant to the Trust Agreement or applicable law or regulation, or that the Sponsor or the Trustee reasonably wishes to distribute, at its own expense, to such beneficial owners.
ARTICLE V
MARKETING MATERIALS AND REPRESENTATIONS
Section 5.01. Authorized Participant’s Representation. The Authorized Participant represents, warrants and agrees that it will not make, or permit any of its representatives to make, any representations concerning iShares other than those contained in or consistent with the Trust’s then current Prospectus or in any promotional materials or sales literature furnished to the Authorized Participant by the Sponsor. The Authorized Participant agrees to provide each purchaser of iShares, whenever required by Rule 173 under the 1933 Act, a notice in compliance with the provisions of such Rule. The Authorized Participant agrees not to furnish or cause to be furnished to any person or display or publish any information or materials relating to iShares (including, without limitation, promotional materials and sales literature, advertisements, press releases, announcements, statements, posters, signs or other similar materials), except such information and materials as may be furnished to the Authorized Participant by the Sponsor and such other information and materials as may be approved in writing by the Sponsor. The Authorized Participant understands that the Trust will not be advertised as offering redeemable securities, and that any advertising materials will prominently disclose that the iShares are not redeemable units of beneficial interest in the Trust. Notwithstanding the foregoing, the Authorized Participant may, without the approval of the Sponsor, prepare and circulate in the regular course of its business or for internal use, research reports, institutional communications (as such term is defined in FINRA Rule 2210 as of the date hereof), correspondence (as such term is defined in FINRA Rule 2210 as of the date hereof) and other similar materials that include information, opinions or recommendations relating to iShares, provided that such materials comply with applicable FINRA rules. Copies of the then current Prospectus of the Trust will be supplied by the Sponsor to the Authorized Participant in reasonable quantities upon request.
Section 5.02. Prospectus. The Sponsor will provide, or cause to be provided, to the Authorized Participant copies of the then current Prospectus and any printed supplemental information in reasonable quantities upon request. The Sponsor will notify, or cause to be notified, the Authorized Participant when a revised, supplemented or amended Prospectus for the iShares is available, and make available to the Authorized Participant copies of such revised, supplemented or amended Prospectus at such time and in such quantities as may be reasonable to permit the Authorized Participant to comply with any obligation the Authorized Participant may have to deliver such Prospectus to its customers. The Sponsor shall be deemed to have complied with this Section 5.02 when the Authorized Participant has received such revised, supplemented or amended Prospectus by e-mail, in printable form, with such number of hard copies as may be agreed from time to time by the parties promptly thereafter.
ARTICLE VI
INDEMNIFICATION; LIMITATION OF LIABILITY
Section 6.01. Indemnification. The provisions of this Section 6.01 shall survive termination of the Authorized Participant Agreement.
a. The Authorized Participant shall indemnify and hold harmless the Sponsor, the Trustee, the Trust, the Custodian (which the parties agree is a third-party beneficiary under this Subsection 6.01(a)) their respective subsidiaries, Affiliates, directors, officers, employees and agents, and each person, if any, who controls such persons within the meaning of Section 15 of the 1933 Act (each an “Indemnified Party”) from and against any loss, liability, cost and expense (including attorneys’ fees) incurred by such Indemnified Party as a result of (i) any breach by the Authorized Participant of any representations or warranties of the Authorized Participant (including under Section 3.2 of the Trust Agreement); (ii) any failure on the part of the Authorized Participant to perform any of its obligations set forth in the Authorized Participant Agreement; (iii) any failure by the Authorized Participant to comply with applicable laws, including rules and regulations of self-regulatory organizations, that apply to it; or (iv) actions of such Indemnified Party in reliance upon any instructions issued in accordance with the Procedures reasonably believed by such Indemnified Party to be genuine and to have been given by the Authorized Participant.
b. The Authorized Participant shall not be liable to any Indemnified Party for any damages arising out of (i) mistakes or errors in data provided in connection with purchase or redemption transactions except for data provided by the Authorized Participant, or (ii) mistakes or errors by, or arising out of interruptions or delays of communications with, the Trustee or any Indemnified Party.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Commencement of Trading. The Authorized Participant may not submit an Order prior to the effectiveness of the registration statement, or amendment to the registration statement, filed with the Securities and Exchange Commission and pursuant to which the Authorized Participant is identified as such in the Prospectus.
Section 7.02. Definitions. The capitalized terms used herein are defined as follows.
a. “1933 Act” means the U.S. Securities Act of 1933, as amended.
b. “Affiliate” shall have the meaning given to it by Rule 501(b) under the 1933 Act.
c. “Authorized Participant Agreement” shall mean each Authorized Participant Agreement among the Authorized Participant, the Trustee and the Sponsor into which these Standard Terms shall have been incorporated by reference.
d. “Authorized Participant” shall have the meaning ascribed to it in the introductory paragraph of the Authorized Participant Agreement.
e. “Authorized Participant Client” means any party on whose behalf the Authorized Participant acts in connection with an Order (whether a customer or otherwise).
f. “Authorized Representative” shall have the meaning ascribed to it in Section 2.01 hereof.
g. “Basket” shall have the meaning ascribed to it in the Recitals to the Authorized Participant Agreement.
h. “Beneficial Owner” shall have the meaning given to it by Rule 16a-1(a)(2) of the Securities Exchange Act of 1934.
i. “Custodian” shall have the meaning ascribed to it in the Procedures.
j. “Deposit Property” means property which, in compliance with the provisions of the Trust Agreement, must be transferred by the Authorized Participant to the Trust in exchange for iShares.
k. “DTC” means The Depository Trust Company.
l. “DTC Participant” means a person that, pursuant to the DTC’s governing documents, is entitled to deposit securities with DTC in its capacity as a “participant”.
m. “FINRA” means the Financial Industry Regulatory Authority.
n. “Indemnified Party” shall have the meaning ascribed to it in Section 6.01.a hereof.
o. “iShares” means shares issued by the Trust pursuant to the provisions of the Trust Agreement.
p. “Order” shall have the meaning ascribed to it in Section 1 of the Authorized Participant Agreement.
q. “Procedures” shall have the meaning ascribed to it in Section 1 of the Authorized Participant Agreement.
r. “Prospectus” means the Trust’s current prospectus included in its effective registration statement, as supplemented or amended from time to time.
s. “Purchase Order” shall have the meaning ascribed to it in Section 1 of the Authorized Participant Agreement.
t. “Redemption Order” shall have the meaning ascribed to it in Section 1 of the Authorized Participant Agreement.
u. “Sponsor” shall have the meaning ascribed to it in the introductory paragraph of the Authorized Participant Agreement.
v. “Trust” shall have the meaning ascribed to it in the introductory paragraph of the Authorized Participant Agreement.
w. “Trust Agreement” shall have the meaning ascribed to it in the introductory paragraph of the Authorized Participant Agreement.
x. “Trustee” shall have the meaning ascribed to it in the introductory paragraph of the Authorized Participant Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the Sponsor and the Trustee have executed these Standard Terms as of the date first set forth above.
THE BANK OF NEW YORK MELLON, in its capacity as Trustee
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By:
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/s/ Patrick G. Griffin
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Name: Patrick G. Griffin
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Title: Vice President
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iSHARES DELAWARE TRUST SPONSOR LLC, in its capacity as Sponsor
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By:
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/s/ Paul C. Lohrey
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Name: Paul C. Lohrey
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Title: President & CEO
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Exhibit 5.1
CLIFFORD CHANCE US LLP
31 WEST 52ND STREET
NEW YORK, NY 10019-6131
TEL +1 212 878 8000
FAX +1 212 878 8375
www.cliffordchance.com
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iShares® Delaware Trust Sponsor LLC
400 Howard Street
San Francisco, California 94105
Re: iShares® Gold Trust Micro
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June 18, 2021
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Ladies and Gentlemen:
We have served as counsel to iShares® Delaware Trust Sponsor LLC, a Delaware limited liability company, in its capacity as the sponsor (in such capacity, the "Sponsor") of the iShares® Gold Trust Micro (the "Trust") in connection with the formation of the Trust and the preparation and filing on the date hereof with the Securities and Exchange Commission of a Registration Statement on Form S-1 (the "Registration Statement"), in connection with the registration under the Securities Act of 1933, as amended (the "Securities Act"), for the continuous offering of 120,000,000 shares (the "Shares") representing units of fractional undivided beneficial interest in and ownership of the Trust, an investment trust governed by the Depositary Trust Agreement dated June 15, 2021 (the "Depositary Trust Agreement"), entered into by and between the Sponsor, The Bank of New York Mellon, a New York banking corporation in its capacity as the trustee of the Trust (in such capacity, the "Trustee"), and the registered and beneficial owners from time to time of Shares and all persons that deposit gold for creation of Shares.
In connection with the preparation of this opinion, we have examined executed originals or copies of the following documents:
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1.
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The Depositary Trust Agreement.
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2.
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The Custodian Agreement, dated June 15, 2021, between the Trustee and JPMorgan Chase Bank N.A., a national banking association acting through its London branch, as custodian (in such capacity, the "Custodian").
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3.
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The Seed Capital Investor Agreement, dated June 15, 2021, between the Trust, the Sponsor and BlackRock Financial Management, Inc.
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4.
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The Registration Statement.
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5.
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Copy of the global certificate representing the Shares to be issued under the Depositary Trust Agreement.
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6.
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Such other pertinent records or documents as we have deemed necessary or appropriate as a basis for the opinion set forth herein.
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In such examination, we have assumed the following: (i) the authenticity of original documents and the genuineness of all signatures; (ii) the conformity to the originals of all documents submitted to us as copies; and (iii) the accuracy and completeness of the information, representations and warranties contained in the records, documents, instruments and certificates we have reviewed.
In rendering the opinion contained herein, we have relied with respect to certain factual matters solely upon the representations, certifications and other information contained in the documents listed in the second paragraph of this letter. We have not made or undertaken to make any independent investigation to establish or verify the accuracy or completeness of such factual representations, certifications and other information. The opinions set forth below are also based on the assumption that the Registration Statement has been declared effective under the Securities Act.
We express no opinion as to matters of law in any jurisdiction other than the State of New York.
Except as otherwise expressly set forth in this letter, our opinions are based solely upon the law and the facts as they exist on the date hereof and we undertake no, and disclaim any, obligation to advise you of any subsequent change in law or facts or circumstances which might affect any matter or opinion set forth herein.
Based on the foregoing and subject to the qualifications set forth in this letter, we are of the opinion that the Shares, when issued in accordance with the terms of the Depositary Trust Agreement, including the receipt by the Custodian, on behalf of the Trustee, of the consideration required for the issuance of Shares, will be legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion letter as an exhibit to the Registration Statement and to the use of our name where it appears in the Registration Statement. In giving this consent, we do not concede that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ Clifford Chance US LLP
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Exhibit 8.1
CLIFFORD CHANCE US LLP
31 WEST 52ND STREET
NEW YORK, NY 10019-6131
TEL +1 212 878 8000
FAX +1 212 878 8375
www.cliffordchance.com
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June 18, 2021
iShares® Delaware Trust Sponsor LLC
400 Howard Street
San Francisco, California 94105
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Re: iShares® Gold Trust Micro Registration Statement on Form S-1
Ladies and Gentlemen:
We have acted as legal counsel to iShares® Delaware Trust Sponsor LLC, a Delaware limited liability company (the "Company"), in connection with the preparation and filing under the Securities Act of 1933, as amended (the "Securities Act"), and the rules and regulations of the Securities and Exchange Commission promulgated thereunder, of a registration statement on Form S-1 (the "Registration Statement") relating to the continuous offering of shares (the "Shares") representing units of fractional undivided beneficial interest in and ownership of the iShares® Gold Trust Micro (the "Trust"), an investment trust governed by the Depositary Trust Agreement dated June 15, 2021 (the "Trust Agreement"), entered into by and between the Company as sponsor, The Bank of New York Mellon, a New York banking corporation in its capacity as the trustee of the Trust and the registered and beneficial owners from time to time of Shares and all persons that deposit gold for creation of Shares. In connection therewith, you have requested our opinion with respect to certain U.S. federal income tax matters. Capitalized terms not otherwise defined herein shall have the meanings given to them in the Trust Agreement.
In rendering the opinions expressed herein, we have examined and relied on the Trust Agreement; the Registration Statement; originals or copies, certified or otherwise identified to our satisfaction, of all such agreements, certificates and other statements of corporate officers and other representatives of the Company; and such other documents, records and instruments as we have deemed necessary in order to enable us to render the opinion referred to in this letter.
In our examination of the foregoing documents, we have assumed, with your consent, that all documents reviewed by us are original documents, or true and accurate copies of original documents, and have not been subsequently amended; the signatures of each original document are genuine; each party who executed the document had proper authority and capacity; all representations and statements set forth in such documents are true and correct; and all obligations imposed by any such documents on the parties thereto have been or will be performed or satisfied in accordance with their terms.
Our opinions are based upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations promulgated thereunder, pertinent judicial decisions, current interpretive rulings and pronouncements of the Internal Revenue Service (the "IRS"), and such other authorities as we have considered relevant, in effect as of the date hereof, all of which are subject to legislative, judicial or administrative change or differing interpretation, possibly with retroactive effect. Our opinions are not binding on the IRS, and no assurance can be given that the conclusions expressed herein will not be challenged by the IRS or sustained by a court.
Based upon and subject to the foregoing, (i) we are of the opinion, although not free from doubt due to the lack of directly governing authority, that the Trust will be classified as a "grantor trust" for U.S. federal income tax purposes, and (ii) we confirm that the discussion in the Registration Statement under the caption "United States Federal Income Tax Consequences," to the extent it consists of statements of law and legal conclusions, and subject to the limitations and qualifications set forth therein, constitutes our opinion as to the material U.S. federal income tax consequences that will apply under currently applicable law to the purchase, ownership and disposition of the Shares.
The opinions stated above represent our conclusions as to the application of the U.S. federal income tax laws existing as of the date of this letter. Further, the opinions set forth above represent our conclusions based upon the assumptions, documents, facts and representations referred to above. Any material amendments to such documents, changes in any significant facts or inaccuracy of such assumptions or representations could affect the accuracy of our opinions. Although we have made such inquiries and performed such investigations as we have deemed necessary to fulfill our professional responsibilities as counsel, we have not undertaken an independent investigation of all of the facts referred to in this letter and the certificates and other statements of corporate officers and other representatives of the Company.
The opinions set forth in this letter are (i) limited to those matters expressly covered and no opinion is expressed in respect of any other matter, (ii) as of the date hereof, and (iii) rendered by us at the request of the Company. We assume no obligation to update our opinions for events or changes in the law occurring after the effective date of the Registration Statement.
We hereby consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement and to the references therein to us. In giving such consent, we do not hereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act, or the rules and regulations of the Securities and Exchange Commission promulgated thereunder.
Very truly yours,
/s/ Clifford Chance US LLP
Exhibit 10.1
JPMorgan Chase Bank N.A., London Branch
and
The Bank of New York Mellon,
solely in its capacity as trustee of the
iShares® Gold Trust Micro and not individually
CUSTODIAN AGREEMENT
This CUSTODIAN AGREEMENT (this “Agreement”) is made on June 15, 2021
BETWEEN
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(1)
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JPMorgan Chase Bank N.A., London Branch, a company incorporated with limited liability as a National Banking Association, whose principal London office is at 25 Bank Street, Canary Wharf, London, E14 5JP, UK ("we" or "us"); and
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(2)
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The Bank of New York Mellon, a banking corporation organized under the laws of the State of New York, whose principal place of business is at 240 Greenwich Street, 8th Floor, New York, New York 10286, United States of America, in its capacity as trustee of the iShares® Gold Trust Micro ("Trust"), (in such capacity "you").
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(3)
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iShares Delaware Trust Sponsor LLC, a Delaware limited liability company, whose principal place of business is at 400 Howard Street, San Francisco, CA 94105, United States of America, in its capacity as sponsor of the Trust. Sponsor is entering into this agreement solely with respect to clause 10.1.
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INTRODUCTION
We have agreed to open and maintain for you the Account (as defined below) and to provide other services to you in connection with the Account. This Agreement sets out the terms under which we will provide those services to you and the arrangements which will apply in connection with those services.
IT IS AGREED AS FOLLOWS
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1.1
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Definitions: In this Agreement:
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"Account" means the account constituted by the Allocated Account and the Unallocated Account.
"Account Balance" means, in relation to the Account, all your rights to and interest in the balance from time to time on that Account.
"Allocated Account" means the sub-account maintained by us in your name recording the amount of Bullion received and held by us for you on an allocated basis.
“Authorized Participant” shall have the meaning ascribed to it in the Trust Agreement
“Authorized Participant Agreement” shall have the meaning ascribed to it in the Trust Agreement.
“Authorized Persons” means the persons of the Trustee identified in clause 5.1 of this Agreement.
"Availability Date" means the Business Day on which you wish to transfer or deliver Gold to us for deposit into the Account.
"BNYM" means The Bank of New York Mellon, a banking corporation organized under the laws of the State of New York.
"Bullion" means any Gold held by us or any Sub-Custodian in the Allocated Account from time to time.
"Business Day" means a Custodian Day (as defined in the Procedures).
“Custodian” means JPMorgan Chase Bank, N.A., London Branch, or its successors.
"Customs" means HM Revenue and Customs.
"eBTS" means the electronic Bullion Transfer System website developed by us.
"Fees" means the fees and charges referred to in clause 11.1 of this Agreement.
"Gold" means gold that meets the requirements of "good delivery" under the rules of the LBMA expressed in troy ounces and with a minimum fineness of 0.995.
"HMRC Agreement" means the agreement between Customs and the LBMA in relation to supplies of bullion (as set out in Section 1 of Customs’ Notice 700/57/04— Administrative agreements entered into with trade bodies).
"LBMA" means the London Bullion Market Association or its successors.
“Losses” means the items identified in clause 12.4 of this Agreement.
"Ounce" means a troy ounce of Gold.
"Procedures" means the document entitled "iShares® Gold Trust Micro Creation and Redemption Procedures" attached as Schedule 1 (as amended from time to time).
"Rules" means the rules, regulations, practices and customs of the LBMA, the Bank of England and such other regulatory authority or other body as shall affect the activities contemplated by this Agreement.
“Sponsor” means iShares® Delaware Trust Sponsor LLC, a Delaware limited liability company, or its successors.
"Sub-Custodian" means a sub-custodian, agent or depository (including an entity within our corporate group), appointed by us to perform any of our duties under this Agreement including the custody and safekeeping of Bullion.
“SWIFT” means the secure messaging system identified in clause 5.1.
“Termination Date” means the date of the termination of this Agreement identified in clause 13.1(a) of this Agreement.
“Trust Agreement” means the Depositary Trust Agreement of the Trust, dated as of June 15, 2021, as amended from time to time, between the Sponsor and the Trustee.
“Trustee” means The Bank of New York Mellon or its successors.
"Unallocated Account" means the sub-account maintained by us in your name recording the amount of Gold which either we or you, as the case may be, have a right to call upon the other party to deliver to it.
"VAT" means value added tax as imposed by the VATA (as amended or reenacted from time to time) and legislation supplemental thereto and any other tax (whether imposed in the United Kingdom in substitution thereof or in addition thereto or elsewhere) of a similar fiscal nature.
"VAT Group" means a group for the purposes of the VAT Grouping Legislation.
"VAT Grouping Legislation" means:
(a) sections 43 to 43D (inclusive) of VATA; and
(b) the Value Added Tax (Groups: eligibility) Order 2004 (SI 2004/1931).
"VATA" means the Value Added Tax Act 1994.
"Vault Location" means our vault premises in London or New York, as applicable.
“Website” means the JPMorgan Chase Bank website identified in clause 5.2 of this Agreement.
"Withdrawal Date" means the Business Day on which you wish to withdraw Gold from the Account.
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1.2
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Headings: The headings in this Agreement do not affect its interpretation.
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1.3
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Singular and plural: References to the singular include the plural and vice versa.
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1.4
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VAT Groups: References to any right, entitlement or obligation of any person under the laws in relation to VAT shall (where appropriate and unless the context otherwise requires) be construed, at any time when such person is treated as a member of a VAT Group, to include a reference to the right, entitlement or obligation under such laws of the representative member of such VAT Group at such time.
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2.1
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Opening Account: We shall open and maintain the Account. The Account shall comprise:
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(a)
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an Allocated Account in respect of Gold which you ask us to hold for you on an allocated basis; and
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(b)
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an Unallocated Account in respect of Gold which you ask us to hold for you on an unallocated basis,
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which together shall be treated as a single account for all purposes of this Agreement unless the context requires otherwise.
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2.2
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Deposits and withdrawals: The balance of your Account shall reflect the combined balance on your Allocated Account and Unallocated Account. The balance of the Allocated Account shall reflect the amount of Bullion. The balance of the Unallocated Account shall reflect your or our entitlement to delivery of an amount of Gold from the other party, in each case equal to the amount of deposits less withdrawals of Gold made by you pursuant to the terms of this Agreement in relation to the Unallocated Account.
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2.3
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Denomination of Account: The Account shall be denominated in Ounces.
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2.4
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Delivery, Receipt and Maintenance of Gold: We will receive, hold, release and deliver Gold from the Account only in accordance with this Agreement and the Procedures. In the event of a conflict between the terms of this Agreement and those of the Procedures, the Procedures shall prevail; provided, however, that any amendment to the Procedures after the date of this Agreement which modifies the scope of our duties or liabilities shall only be binding upon us to the extent that it has been adopted by you and the Sponsor with our prior written consent (which consent will not be unreasonably withheld or delayed).
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2.5
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Reports: We will provide reports to you relating to deposits into and withdrawals from the Account and the Account Balance in such form and with such frequency (but not less than monthly) as may be agreed between you and us including the reports specified in sub-clauses (a) and (b) below. We will notify you by SWIFT or email on each day there is activity in an account of the balance in the account on such day and of any instruction to which we were unable to give effect. Such reports will also be available to you daily by means of eBTS.
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(a)
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For each Business Day, not later than 9:00 a.m., New York time, on the following Business Day, we will transmit to you information showing the movement of Gold into and out of the Account, identifying separately each transaction and any substitution of Gold made under clause 2.7.
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(b)
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We will supply to you at least monthly, within ten Business Days following the end of each calendar month a written statement which:
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(i)
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lists all property held in the Account including a weight list for the Gold in the Allocated Account containing information sufficient to uniquely identify each bar of Gold;
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(ii)
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identifies the entity having physical possession of each bar; and
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(iii)
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details all transactions involving the Account, including daily balances held in the Unallocated Account and all transfers to or from the Account or any account with a Sub-Custodian containing Gold held for your benefit and any substitutions or relocations of Gold held in the Account.
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(c)
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We will maintain a secure website, whereby you shall gain access to the list of all bars of Gold in the Account, which list shall be updated at least weekly and include the following information for each bar of Gold:
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(i)
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relevant Vault Location;
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(iv)
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serial identification number;
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(vii)
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applicable refinery name.
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Such reports shall also include any other information that you may reasonably request. We will provide additional weight lists to you upon your request.
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2.6
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Reversal of entries: We at all times reserve the right to reverse any provisional or erroneous entries to the Account with effect back-valued to the date upon which the final or correct entry (or no entry) should have been made.
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2.7
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Substitution of Gold: With your prior approval (in consultation with the Sponsor), we may substitute other Gold for Bullion, provided that there is no change in the total number of Ounces of Bullion.
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2.8
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Access to Records; Inspection Rights: We will permit your officers and properly designated representatives and independent public accountants for the Trust identified by you reasonable access to the records of the Account for the purpose of confirming the content of those records. Upon at least ten days' prior notice, during our regular banking hours, any such officer or properly designated representative, any independent public accountants for the Trust identified by you and any person designated by any regulatory authority having jurisdiction over you or the Trust will be entitled to examine on our premises the Gold held by us on our premises pursuant to this Agreement and our records regarding the Gold held hereunder at a Sub-Custodian, but only upon receipt from you of properly authorised instructions to that effect. Unless we have received at least ten days' prior notice and reasonable assurances (in our sole discretion) that any costs and expenses incurred in connection therewith will be indemnified to us, we shall not be required to move to our premises any Gold held at a Sub-Custodian for purposes of making it available for inspection as provided herein. In addition, we understand that, in connection with the preparation of the financial statements of the Trust that will be filed from time to time with the United States Securities and Exchange Commission, officers of the Sponsor will be required by law or regulation to provide written assurances regarding the reliability of the internal controls used in the preparation of those financials. To the extent that our activities or controls in our capacity as custodian of the Trust assets are relevant to the information presented in the financial statements of the Trust, we will cooperate with the Sponsor and the Trustee to enable the Sponsor to provide the required written assurances referred to above, including (but not limited to) by providing the Sponsor's and the Trust's external auditors with any necessary information and reports regarding our internal control over financial reporting as far as such reporting relates to the scope of our duties.
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3.1
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Procedure: You may at any time notify us of your intention to deposit Gold. A deposit must be made (in the manner and accompanied by such documentation as we may require) by:
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(a)
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(in the case of the Unallocated Account only) transfer from an account relating to Gold and having the same denomination as that to which the Account relates; or
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(b)
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the delivery of Gold to us at any Vault Location, through any recognised clearing member of the LBMA (acting as delivery agent), or as we may otherwise direct, at your expense and risk. All deposits of Gold delivered to us must be in the form of bars which comply with the Rules (including the Rules relating to good delivery and fineness) or in such other form as may be agreed between you and us. In connection with any such deposit of Gold, we shall use commercially reasonable efforts to review the Gold to determine if any Gold included in the deposit is subject to governmental sanctions applicable to brands of gold, including, without limitation, sanctions of The Office of Foreign Asset Control of the Department of Treasury of the United States applicable to brands of gold. If any Gold included in the deposit is identified by us as being subject to any such sanctions, we shall reject the deposit of Gold and shall promptly notify in writing the depositor and the delivery agent, as applicable, and the Trustee of such rejection.
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3.2
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Notice requirements: Any notice relating to a deposit of Gold must:
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(a)
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be received by us no later than the time specified in the Procedures unless otherwise agreed;
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(b)
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in the case of a deposit pursuant to clause 3.1(a), specify the details of the account from which the Gold will be transferred;
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(c)
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in the case of a deposit pursuant to clause 3.1(b), specify the name of the person or carrier that will deliver the Gold to us at a Vault Location, or as we may direct, and the manner in which the Gold will be packed; and
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(d)
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specify the amount (in the appropriate denomination) of the Gold to be credited to the Account, the Availability Date, and any other information which we may from time to time require.
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3.3
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Timing: A deposit of Gold will not be credited to the Account until:
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(a)
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in the case of a deposit pursuant to clause 3.1(a), an account of ours with any bank, broker or other firm has been credited with an amount equal to the amount of such deposit; and
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(b)
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in the case of a deposit pursuant to clause 3.1(b), we have received the Gold and verified compliance with the Rules (without prejudice to clause 12.1), weighed it in accordance with LBMA practice to confirm that it is the required weight, confirmed all markings, and determined on the basis of a visual inspection that it is not damaged and there is no reason to believe it is not accurately described in the delivery instruction.
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3.4
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Capacity; Right to amend procedure: We will use our best efforts to have available the necessary capacity to take delivery of Gold on your behalf at the locations specified in clause 7.4 by parties making such deliveries; for this purpose we are authorised to, at our own risk and expense, move Gold held in the Account from one location to another location otherwise permitted under this Agreement.
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4.1
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Release of Gold: No Gold held in the Account shall be released in any manner whatsoever except upon your written instructions and in accordance with the Procedures. We will deliver Gold by making Gold bars available for collection at our office or at the office of a Sub-Custodian at which the Gold is held. However, we will, upon your order, deliver amounts of up to 430 Ounces from the Unallocated Account.
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4.2
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Procedure: You may at any time notify us of your intention to withdraw Gold standing to the credit of the Account. A withdrawal may be made (in the manner and accompanied by such documentation as we may require) by:
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(a)
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(in the case of the Unallocated Account only) transfer to an account relating to Gold and having the same denomination as that to which the Account relates; or
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(b)
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the collection of Gold from us at any Vault Location, or at the vault premises of such Sub-Custodian as we may direct, at your expense and risk. Without prejudice to clause 12.1, any Gold made available to you will be in the form of bars which comply with the Rules (including the Rules relating to good delivery and fineness) or in such other form as may be agreed between you and us. We are entitled to select which bars are to be made available to you.
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4.3
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Notice requirements: Any notice relating to a withdrawal of Gold must:
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(a)
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be received by us no later than the time set out in the Procedures;
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(b)
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specify the details of the account to which the Gold is to be transferred or the name of the person or carrier that will collect the Gold from us (as applicable); and
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(c)
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specify the amount of Gold to be withdrawn from the Allocated Account and the amount (in the appropriate denomination) of any Gold to be debited to the Unallocated Account, the Withdrawal Date, and any other information which we may from time to time require.
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4.4
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Collection of Bullion: You must collect, or arrange for the collection of Bullion being withdrawn from us or the Sub-Custodian at your expense and risk. We will advise you of the Vault Location or the vault premises of such Sub-Custodian as we may direct from which the Bullion may be collected no later than one Business Day prior to the Withdrawal Date.
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5.1
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Your representatives: Whenever in this Agreement it is provided that we are authorised to act or refrain from acting on instructions, approval or consent of, or notice from, you, we are so authorised to act or refrain from acting only on instructions, approval, consent or notice given in accordance with this clause 5. We are authorised to rely and act upon written instructions given by you through the Society for Worldwide Interbank Financial Telecommunications secure messaging system (“SWIFT”). It is your responsibility to maintain commercially reasonable controls and security procedures with respect to your use of SWIFT and the persons who are authorised to access SWIFT for purposes of instructions and other communications given by you to us pursuant to this Agreement. You agree to provide a list of such authorised persons to the Sponsor from time to time upon the Sponsor’s written request.
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5.2
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eBTS: All transfers into and out of the Account(s) shall be made upon receipt of, and in accordance with, instructions given by you to us. Such instructions may be given either: a. through eBTS, accessible through the JPMorgan Chase Bank website (the "Website") by you pursuant to the terms of the Website agreement; or b. if, for any reason the Website is not operational, and unless otherwise agreed, any such instruction or communication shall be effective if given by authenticated electronic transmission (including tested telex and SWIFT) or such other electronic messaging system as the parties may from time to time agree.
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5.3
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Amendments: Once given, instructions continue in full force and effect until they are cancelled, amended or superseded. Any such instructions shall have effect only after actual receipt by us.
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5.4
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Unclear or ambiguous instructions: If, in our opinion, any instructions are unclear or ambiguous, we will use reasonable endeavours (taking into account any relevant time constraints) to obtain clarification of those instructions but, failing that, we may in our absolute discretion and without any liability on our part, act upon what we believe in good faith such instructions to be or refuse to take any action or execute such instructions until any ambiguity or conflict has been resolved to our satisfaction.
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5.5
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Refusal to execute: We reserve the right to refuse to execute instructions if in our opinion they are or may be contrary to the Rules or any applicable law.
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6.1
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Disclosure to others: Subject to clause 6.2, each party shall respect the confidentiality of information acquired under this Agreement and neither will, without the consent of the other, disclose to any other person any information acquired under this Agreement provided that nothing in this Agreement will prevent or condition the filing with the United States Securities and Exchange Commission of a copy of this Agreement in connection with the registration of the public offering of its shares by the Trust.
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6.2
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Permitted disclosures: Each party accepts that from time to time the other party may be required by law or the Rules, or requested by a government department or agency, fiscal body or regulatory authority, to disclose information acquired under this Agreement. In addition, the disclosure of such information may be required by a party's auditors, by its legal or other advisors or by a company which is in the same group of companies as a party (e.g., a subsidiary or holding company of a party). Each party irrevocably authorises the other to make such disclosures without further reference to such party.
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7.1
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Appointment: You hereby appoint us to act as custodian of the Bullion in accordance with this Agreement and any Rules which apply to us.
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7.2
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Segregation of Bullion: We will segregate the Bullion from any precious metal which we own or hold for other customers or which BNYM owns in its own right and we will require Sub-Custodians to segregate the Bullion from any precious metals owned by any of the foregoing.
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7.3
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Ownership of Bullion: We will identify in our books, and will require any Sub-Custodian to identify on their books, that the Bullion belongs to you.
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7.4
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Location of Bullion: The Bullion must be held by us at a Vault Location or at the vaults of any Sub-Custodian in England or the United States, unless otherwise agreed between you and us (with the Sponsor's approval).
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7.5
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Minimization of Gold held in Unallocated Account: We will seek to minimise the amount of Gold held in the Unallocated Account by allocating, on each Business Day, bars of Gold to the Allocated Account in substitution for holdings of an equivalent denomination in the Unallocated Account such that no Gold is held in the Unallocated Account at the close of such Business Day. If in the process of reducing to zero the number of Ounces in the Unallocated Account on any Business Day we allocate to the Allocated Account a Gold bar with an aggregate weight in excess of your balance in the Unallocated Account prior to such allocation, we and the Trust will be co-owners of such Gold bar in proportion to our respective ownership interests. We will take reasonable steps to limit at all times the number of bars of Bullion co-owned by the Trust and us to no more than one and, for this purpose, any allocation to the Allocated Account will seek to eliminate such co-ownership by first transferring to the Trust the portion of any jointly owned Gold bar not owned by the Trust.
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7.6
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Charges; Liens: The Bullion and Gold held in the Account shall not be subject to any right, charge, security interest, lien or claim of any kind in favour of us, any Sub-Custodian or any creditor of any of them or any other person, except a lien in our favour for our Fees payable under clause 11 for the safe custody and administration of the Bullion or Gold held in the Account. We shall not loan, hypothecate, pledge or otherwise encumber any Bullion or Gold held in the Account absent your written instructions.
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7.7
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Insurance: We undertake that we maintain insurance in support of our custodial obligations under this Agreement including covering any loss of Gold. In addition, we will maintain breadth of policies and coverage limits agreed between us and the Sponsor and its affiliates from time to time. Subject to your execution of a mutually agreeable non-disclosure agreement, evidence of such insurance coverage is available upon request. In the event that we elect to reduce, cancel or not to renew such insurance, we will give you prior written notice as follows: in the case of a reduction, we will endeavour to provide such notice at least 30 days prior to the effective date of the reduction; and in the event of a cancellation or expiration of the insurance without renewal we will provide such notice at least 30 days prior to the last day of insurance coverage. You acknowledge that any such insurance is held for our benefit and not for the benefit of you or the Trust, and that notwithstanding clause 12.6 you may not submit any claim under the terms of such insurance.
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7.8
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Notice of Changes: We will notify you promptly in writing if we become aware that (i) we receive notice of any claim against the Account other than a claim for payment of safe custody or administration permitted by this Agreement; (ii) we otherwise fail to comply with any of the provisions of this Agreement; or (iii) any of our representations and warranties in clause 9 shall cease to be true and correct.
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7.9
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Other Information: To the extent that the Custodian’s activities under this Agreement are relevant to the preparation of the filings required of the Trust under the securities laws of the United States or any other jurisdiction, the Custodian will, to the extent permitted by applicable law, the Rules or applicable regulatory authority, and upon reasonable request, cooperate with the Trustee and the Sponsor and the Trustee’s and the Sponsor’s representatives to provide such information concerning the Custodian’s activities as may be necessary, in the Sponsor’s discretion, for such filings to be completed. Additionally, to the extent that the Custodian’s activities or controls in its capacity as custodian of the Trust’s assets are relevant to the information presented in the financial statements of the Trust, the Custodian will, upon reasonable request, cooperate with the Sponsor and the Trustee to assist the Sponsor in providing the required written assurances regarding the reliability of the internal controls used in the preparation of such financial statements, including by providing the Trust’s external auditors with information and reports regarding the Custodian’s internal controls over financial reporting as far as such reporting relates to the scope of the Custodian’s duties.
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7.10
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Purchases of Gold by us: When requested by you on any Business Day on which Gold held by the Trust is evaluated, we will purchase from you, for cash and for standard t+2 settlement, the amount of Gold that you specify as necessary to pay the expenses of the Trust at a price per Ounce equal to the price used by you for the evaluation of the Trust's Gold on such date. We will pay to you or to your order the proceeds of each purchase of Gold made under this clause when requested by you or otherwise on the first Business Day following the end of the month in which the transaction occurred.
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8.
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SUB-CUSTODIANS AND AGENTS
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8.1
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Sub-Custodians: We may appoint Sub-Custodians to perform any of our duties under this Agreement including the custody and safekeeping of Bullion. We will use reasonable care in the appointment of any Sub-Custodian. Gold held by a Sub-Custodian shall be kept in our account at such Sub-Custodian, and we will separately identify on our books Gold that is so held on your behalf. Our account with each such Sub-Custodian will be subject only to our instructions. Any Sub-Custodian will be a member of the LBMA.
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8.2
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Liability for Sub-Custodians: Our use of Sub-Custodians shall be without prejudice to our obligations and liabilities under this Agreement.
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8.3
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Notice: We will provide you on request with the name and address of any Sub-Custodian of Bullion along with any other information which you may reasonably require concerning the appointment of a Sub-Custodian.
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8.4
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Monitoring: We will monitor the conduct of each Sub-Custodian, and promptly advise you of any difficulties or problems (financial, operational or otherwise) existing with respect to such Sub-Custodian of which we are aware and will take appropriate and lawful action to protect and safekeep your Gold deposited with such Sub-Custodian, including to the extent feasible, the withdrawal of such Gold from such Sub-Custodian.
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8.5
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Access and Inspection: We will not entrust Gold held in the Account to any Sub-Custodian unless that Sub-Custodian grants rights of access and inspection to records and Gold that are similar to those granted by us under this Agreement.
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8.6
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Use of Agents: We may in our discretion use agents in connection with handling transactions under this Agreement, provided that any such use shall not relieve us of any of our responsibilities or liabilities hereunder.
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9.1
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Your representations: You represent and warrant to us that:
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(a)
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the Trust is and will remain duly constituted with all necessary authority, powers, consents, licences and authorisations and all necessary action has been taken to enable it to engage in the transactions provided for under this Agreement;
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(b)
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you are appointed as trustee of the Trust and have and will have unencumbered legal title to the assets of the Trust at all times;
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(c)
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you have all necessary authority, powers, consents, licences and authorisations and have taken all necessary action to enable you lawfully to enter into and perform your duties and obligations under this Agreement;
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(d)
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the persons entering into this Agreement on your behalf have been duly authorised to do so; and
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(e)
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this Agreement and the obligations created under it are binding upon you and enforceable against you in accordance with its terms (subject to applicable principles of equity) and do not and will not violate the terms of the Rules or any order, charge or agreement by which you are bound.
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You undertake to notify us in the event that any of the statements set out in the sub-clauses ceases to be true.
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9.2
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Our representations: We represent and warrant to you that:
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(a)
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We are a bank, duly organized under the laws of our country of organization as set forth above, and are regulated as such by that country's government or an agency thereof;
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(b)
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this Agreement has been duly authorized, executed and delivered on our behalf and constitutes our legal, valid and binding obligation;
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(c)
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we are, and will continue to be during the term of this Agreement, a member of the LBMA;
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(d)
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the execution, delivery and performance of this Agreement by us do not and will not violate any applicable law or regulation and do not require the consent of any governmental or other regulatory body except for such consents and approvals as have been obtained; and
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(e)
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Gold substituted by us under clause 2.7 has a fine weight at least equal to the fine weight of the Bullion for which it is substituted.
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10.1
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The Sponsor represents, warrants, and undertakes, on a continuing basis that each Authorized Participant shall be required, in accordance with the terms of their respective Authorized Participant Agreements, to represent, covenant and warrant to the Sponsor that it has established and shall maintain a sanctions program (a “Sanctions Program”) reasonably designed to prevent it from engaging in activities, financial transactions or other illicit purposes for or on behalf of individuals or entities in line with applicable sanctions laws and regulations, and that it shall comply with the Sanctions Program and all applicable sanctions laws, regulations and rules in effect during the term of its Authorized Participant Agreement.
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11.1
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Fees: Our fees will be paid in accordance with the fee agreement which has been executed by us and the Sponsor, as that agreement may be amended from time to time by the parties to it in accordance with its terms. Details of charges (including charges with respect to the use of the Website, if any, transfer clearing charges and storage charges) will be advised to you by us in writing from time to time.
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11.2
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Credit balances: No interest or other amount will be paid by us on any credit balance on the Unallocated Account.
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11.3
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Debit balances: You are not entitled to overdraw the Unallocated Account except to the extent that there is equivalent Bullion in the Allocated Account. If for any reason the Unallocated Account is overdrawn beyond 430 Ounces, we may at our sole discretion and without any further consent from you transfer equivalent Bullion from the Allocated Account in satisfaction of such debit balance.
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12.
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SCOPE OF RESPONSIBILITY
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12.1
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Disclaimer of liability: You understand and agree that we will not know, except as provided in clause 3.3(b), will not have any duty to determine and, except as provided in clause 9.2(e), in making any report required under this Agreement, will not be considered to be making any representation or warranty as to whether in fact the Gold deposited with us contains the amount of pure gold indicated on the bars. Except for Gold deposited by us in substitution for other Gold held in the Account under clause 2.7, WE DISCLAIM ALL LIABILITY FOR THE GENUINENESS AND FINENESS OF GOLD DEPOSITED WITH US UNDER THIS AGREEMENT.
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12.2
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Exclusion of liability: We will use reasonable care in the performance of our duties under this Agreement and without prejudice to clause 12.1 will only be responsible for any loss or damage suffered by you as a direct result of any negligence, fraud or wilful default on our part in the performance of our duties, and in which case our liability will not exceed the aggregate of the market value of the Bullion and the balance of the Unallocated Account at the time of such negligence, fraud or wilful default.
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12.3
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Force majeure: Neither we, nor any of our directors, employees, agents or affiliates shall incur any liability to you if, by reason of any provision of any present or future law or regulation of the United Kingdom or any other country, or of any governmental or regulatory authority or stock exchange, or by reason of any act of God or war or terrorism or other circumstances beyond our control, we are prevented or forbidden from, or would be subject to any civil or criminal penalty on account of, or are delayed in, doing or performing any act or thing which by the terms of this Agreement it is provided shall be done or performed and accordingly we do not do that thing or do that thing at a later time than would otherwise be required.
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12.4
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Indemnity in favour of us: You, solely from and to the extent of the assets of the Trust, shall indemnify and keep us indemnified (on an after tax basis) on demand against all costs and expenses, damages, liabilities and losses (including but not limited to reasonable legal fees and expenses) ("Losses") which we may suffer or incur directly in connection with this Agreement except to the extent that such Losses are due directly to our negligence, wilful default or fraud.
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12.5
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Indemnity in favour of you: We shall be liable for and shall indemnify you for, and hold you harmless from, any Losses incurred by you (individually or in your capacity as trustee) directly relating to or arising from any breach of our covenants, agreements, representations and warranties contained in this Agreement, any failure by us to act or refrain from acting in accordance with instructions under clause 5 from you, or any physical loss, destruction or damage to the Bullion, except, in each case, for Losses arising from nuclear fission or fusion, radioactivity, war, terrorist event, invasion, insurrection, civil commotion, riot, strike, act of government or public authority, act of God or a similar cause that is beyond our control, provided that our liability under this clause shall be limited to the value of Gold under custody at the time of the act or omission giving rise to the claim under this clause. You will notify us promptly of any proceeding or claim for which you may seek indemnity, and we shall cooperate fully with you with respect to any such proceeding or claim. Any deposit of Gold held in the Account with a Sub-Custodian pursuant to clause 8 hereof shall not affect our responsibilities or liabilities or in any way limit or relieve us of our responsibilities or liabilities under this clause 12, and we shall remain fully liable with respect to such Gold as if we had retained physical possession of it.
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12.6
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Subrogation: You and the Trust will be subrogated to us with respect to any claim against a Sub-Custodian or any other person for any loss or damage suffered by you or the Trust if and to the extent that you and the Trust have not been made whole for such loss or damage, and we hereby assign all such rights to you. Your exercise of the rights granted in this clause shall not affect our liabilities under the preceding provisions of this clause 12.
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12.7
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Exculpation in respect of offer document: We and our officers, directors, employees, agents and sub-custodians shall not be responsible or liable in any manner for any recitals, statements, representations or warranties made by any person other than us under or in connection with the establishment of, or sale of interests in, the Trust, including without limitation any offer document, prospectus, filings, marketing documentation or other documentation relating thereto.
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13.1
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Method: Either party may terminate this Agreement by giving not less than 180 Business Days written notice to the other party, provided that we may terminate this Agreement immediately on written notice in the event that any of the statements set out in clause 9.1(a)-(e) become untrue, and you may terminate this Agreement immediately on written notice following an event specified in clause 7.8 provided that clause 12 shall survive termination of this Agreement. Any such notice given by you must specify:
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(a)
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the date on which the termination will take effect (the "Termination Date");
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(b)
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the person to whom any Bullion and any credit balance on the Unallocated Account is to be transferred; and
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(c)
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all other necessary arrangements for the transfer or repayment, as the case may be, of any Account Balance.
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13.2
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Redelivery arrangements: If you do not make arrangements acceptable to us for the transfer or repayment of any Bullion or credit balance in the Unallocated Account we may continue to store the Bullion or maintain that Unallocated Account (as the case may be), in which case we will continue to charge the Fees payable under clause 11. If you have not made arrangements acceptable to us for the redelivery of the Bullion or transfer or repayment of any credit balance in the Unallocated Account (as the case may be) within 6 months of the date specified in the termination notice as the date on which the termination will take effect, we will be entitled to close the Account, sell the Bullion and close the Unallocated Account and account to you for the proceeds after deducting any amounts due to us under this Agreement.
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13.3
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Existing rights: Termination shall not affect rights and obligations then outstanding under this Agreement which shall continue to be governed by this Agreement until all obligations have been fully performed.
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13.4
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eBTS: Effective the Termination Date, the use of the Website will automatically be terminated and no further access to the Website will be permitted.
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14.1
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VAT exclusive: All sums payable or other consideration provided to us by you or the Sponsor in connection with this Agreement (including, without limitation, pursuant to the fee agreement referred to in clause 11.1) are deemed to be exclusive of VAT. To the extent that VAT or any other tax shall become chargeable and payable in respect of the services provided by us , you shall pay to us such VAT, or other tax, in addition to the fees payable by the Sponsor referred to in clause 11.1.
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14.2
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Supplies of Gold: Notwithstanding clause 14.1, where, pursuant to or in connection with this Agreement:
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(a)
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(i) you instruct us in writing to remove any Gold from the black box; and
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(ii) we, or any Sub-Custodian for us, are required to account to Customs for any VAT in respect of such removal,
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you shall pay to us a sum equal to the amount of such VAT, such payment to be made within 5 Business Days of receipt by you of a valid VAT invoice (or a copy of such invoice where the original of the same has been issued to the person to whom you instructed us to deliver the relevant Gold).
(b) you or any other person makes a supply to us for VAT purposes and VAT is or becomes chargeable on such supply, we shall, within 5 Business Days of receipt of a valid VAT invoice in respect of such supply, pay to you a sum equal to the amount of such VAT, save to the extent that we (acting reasonably and in good faith) are not entitled to credit or repayment in respect of such VAT from Customs.
In this clause 14.2 the terms "remove" (and any derivation thereof) and "black box" to be construed in accordance with the HMRC Agreement.
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15.
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NOTICES AND RECORD-KEEPING
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15.1
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Form: A notice or other communication under or in connection with this Agreement may be given orally unless required in writing under this Agreement. References to writing includes an electronic transmission.
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15.2
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Method of transmission: Any notice or other communication required to be in writing may be delivered personally or sent by first class post, pre-paid recorded delivery (or air mail if overseas), authenticated electronic transmission (including email and SWIFT) or such other electronic transmission as the parties may from time to time agree, to the party due to receive the notice or communication, addressed as follows, or to another address, number or destination specified by that party by written notice to the other:
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JPMorgan Chase Bank, N.A., London branch
25 Bank Street
6th Floor, Metalics Processing, Bullion Operations
Canary Wharf
London, E14 5JP
UK
Attention: John-Paul Crocker
Email: Metalics.BO.Processing@chase.com (for escalation: john-paul.a.crocker@jpmorgan.com; m.a.smith@jpmorgan.com)
The Bank of New York Mellon
240 Greenwich Street
8th Floor
New York, New York 10286
Attention: ETF Service Directors
Telephone: + (212) 815-2698
Email: ETFCSM@bnymellon.com
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15.3
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Deemed receipt on notice: A notice or other communication under or in connection with this Agreement will be deemed received only if actually received or delivered.
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15.4
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Recording of calls: We may record telephone conversations without use of a warning tone. Such recordings will be our sole property and accepted by you as evidence of the orders or instructions given; provided that in case of any dispute or disagreement regarding any conversation so recorded we will promptly share the recordings with you and your representatives; and provided further, that we will have no obligations to retain any such recordings prior to becoming aware of any such dispute or disagreement.
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15.5
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Records: We will maintain adequate records identifying the Gold as belonging to you. Such records shall include, with respect to the Account:
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(a)
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journals or other records of original entry containing an itemised daily record in detail of all receipts and deliveries of Gold (including adequate information to uniquely identify each bar of Gold received in or delivered from the Allocated Account and the person from whom each bar was delivered; and
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(b)
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ledgers (or other records) reflecting:
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(i)
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Gold in our physical possession, or held by any Sub-Custodian; and
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(ii)
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Gold held in the Unallocated Account and allocations made daily in respect thereof, as provided in clause 7.5; and
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(iii)
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such other books and records as you may reasonably request.
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15.6
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Annual Certificate: We will deliver annually to you and more frequently if requested by you, a certificate dated the date of delivery, certifying that we have, since the date of this Agreement or the date of the preceding such certificate, complied with the terms and conditions of this Agreement and that our representations and warranties in clause 9 of this Agreement continue to be true and correct.
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16.1
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No advice: Our duties and obligations under this Agreement do not include providing you with investment advice. In asking us to open and maintain the Account, you do so in reliance upon your own judgement and we shall not owe to you any duty to exercise any judgement on your behalf as to the merits or suitability of any deposits into, or withdrawals from, an Account.
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16.2
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Assignment: This Agreement is for the benefit of and binding upon us both and our respective successors and assigns. You may not assign, transfer or encumber, or purport to assign, transfer or encumber, your right, title or interest in relation to any Account or any right or obligation under this Agreement or any part of any of the foregoing unless we otherwise agree in writing. Notwithstanding the forgoing, if there is any change in the identity of the Trustee in accordance with the Trust Agreement, the Custodian and the Trustee shall take such reasonable steps to execute such documents and shall take such reasonable actions as the new Trustee and the outgoing Trustee may reasonably require for the purpose of vesting in the new Trustee the rights and obligations of the outgoing Trustee and releasing the outgoing Trustee from its future obligations under this Agreement.
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16.3
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Amendments: Any amendment to this Agreement must be agreed in writing and be signed by us both. Any amendment affecting the rights of the Sponsor under this Agreement shall require written consent of the Sponsor. Unless otherwise agreed, an amendment will not affect any legal rights or obligations which may already have arisen.
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16.4
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Partial invalidity: If any of the clauses (or part of a clause) of this Agreement becomes invalid or unenforceable in any way under the Rules or any law, the validity of the remaining clauses (or part of a clause) will not in any way be affected or impaired.
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16.5
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Entire agreement: This document represents the entire agreement, and supersedes any previous agreements between you and us relating to the subject matter of this Agreement.
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16.6
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Joint and several liability: If there is more than one of you, your responsibilities under this Agreement apply to each of you individually as well as jointly.
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.
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16.7
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Counterparts: This Agreement may be executed in any number of counterparts each of which when executed and delivered is an original, but all the counterparts together constitute the same agreement.
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16.8
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Contracts (Rights of Third Parties) Act 1999: Other than the Sponsor, a person who is not a party to this Agreement shall have no rights under the Contracts (Rights of Third Parties Act) 1999.
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16.9
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Legal opinion: We will furnish to you an opinion of counsel acceptable to you addressed to you and dated the date hereof to the effect that:
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(a)
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our execution, delivery and performance of this Agreement have been duly authorized by us and do not and will not violate any applicable law or regulation and do not require the consent of any governmental or other regulatory body; and
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(b)
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this Agreement has been duly executed and delivered by us and constitutes our legal, valid and binding obligation, enforceable in accordance with its terms subject to principles of equity.
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The provisions of the Procedures are hereby incorporated into and made a part of this Agreement, subject to clause 2.4. You and we agree to comply with the Procedures. You, with the prior written consent of the Sponsor, may modify the Procedures from time to time upon reasonable advance notice and, if the modifications relate to our duties, after consultation with us.
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18.
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GOVERNING LAW AND JURISDICTION
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18.1
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Governing law: This Agreement is governed by, and will be construed in accordance with, English law.
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18.2
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Jurisdiction: The English courts have non-exclusive jurisdiction to settle any disputes or claims which may arise out of or in connection with this Agreement and, for these purposes you irrevocably submit to the jurisdiction of the English courts.
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18.3
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Waiver of immunity: To the extent that you may in any jurisdiction claim for yourself or your assets any immunity from suit, judgement, enforcement or otherwise howsoever, you agree not to claim and irrevocably waive any such immunity to which you would otherwise be entitled (whether on grounds of sovereignty or otherwise) to the full extent permitted by the laws of such jurisdiction.
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18.4
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Service of process: Process by which any proceedings are begun may be served on a party by being delivered to such party’s address specified below. This does not affect any right to serve process in another manner permitted by law.
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Trustee’s Address for service of process:
BNY Mellon
One Canada Square
London E14 5AL
England
Attention: Legal Department
with a copy to:
The Bank of New York Mellon
240 Greenwich Street
New York, New York 10286
Attention: ETF Service Directors
Custodian’s Address for service of process:
JPMorgan Chase Bank, N.A., London branch
25 Bank Street
Canary Wharf
London, E14 5JP
UK
Attention: Legal Department (Commodities)
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.
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Signed on behalf of
JPMorgan Chase Bank N.A., London Branch
by
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Signature:
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/s/ Mark Amlin
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Name:
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Mark Amlin
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Title:
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Executive Director
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Signed on behalf of
The Bank of New York Mellon
solely in its capacity as trustee of the iShares® Gold Trust Micro
by
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Signature:
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/s/ Patrick Griffin
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Name:
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Patrick Griffin
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Title:
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Vice President
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Solely with respect to clause 10.1, the Sponsor has duly executed this Agreement as of the date first above written.
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Signed on behalf of
iSHARES DELAWARE TRUST SPONSOR LLC,
in its capacity as Sponsor
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By:
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/s/ Paul C. Lohrey
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Name: Paul C. Lohrey
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Title: President & CEO
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Schedule 1
Creation and Redemption Procedures
iSHARES® GOLD TRUST MICRO
CREATION AND REDEMPTION PROCEDURES
adopted by the Sponsor and the Trustee (each as defined below) as of June 15, 2021
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions. For purposes of these Procedures, unless the context otherwise requires, the following terms will have the following meanings:
“Authorized Participant” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.
“Authorized Participant Agreement” shall mean, with respect to an Authorized Participant, such Authorized Participant's Authorized Participant Agreement with the Trustee and the Sponsor.
“Authorized Representative” shall mean, with respect to an Authorized Participant, each individual who, pursuant to the provisions of its Authorized Participant Agreement, has the power and authority to act on behalf of the Authorized Participant in connection with the placement of Purchase Orders or Redemption Orders and is in possession of the personal identification number (PIN) assigned by the Trustee for use in any communications regarding Purchase or Redemption Orders on behalf of such Authorized Participant.
“Basket” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.
“Basket Gold Amount” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.
“Business Day” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.
“Creation and Redemption Line” shall mean a telephone number designated as such by the Trustee and communicated to each Authorized Participant in compliance with the notice provisions of the respective Authorized Participant Agreement.
“Custodial Account” shall mean an account established by the Trustee with a Custodian pursuant to the Custodian Agreement.
“Custodian” shall mean a financial institution or other entity with which the Trustee shall have entered into an agreement for the custody of the Trust's property; provided, that if there is more than one Custodian at any time, a reference in these Procedures to “the Custodian” in connection with a particular Purchase Order or Redemption Order shall be to such Custodian as the Trustee shall have designated for purposes of such Purchase Order or Redemption Order.
“Custodian Agreement” shall mean, as of any date, the Custodian Agreement at the time in effect between the Trustee and the Custodian.
“Custodian Day” shall mean, with respect to a Custodian, a day on which the facilities at which a Delivery of Gold is to take place to or by such Custodian on behalf of the Trust are open for business.
“Delivery” shall mean a delivery of Gold or Shares, as applicable, in each case effected according to the definition of “Deliver” in Section 1.1 of the Trust Agreement.
“Depositor” shall mean any Authorized Participant that deposits Gold into the Trust, either for its own account or on behalf of another Person that is the owner or beneficial owner of that Gold.
“DTC” shall mean The Depository Trust Company, its nominees and their respective successors.
“Fine Ounces” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.
“Gold” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.
“iShares” shall mean shares issued by the Trustee representing fractional, undivided interests in the net assets of the Trust.
“LBMA” shall mean the London Bullion Market Association.
“Order Cut-Off Time” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.
“Order Date” shall have, (i) with respect to a Purchase Order, the meaning ascribed to the term in Section 2.3 of the Trust Agreement; and (ii) with respect to a Redemption Order, the meaning ascribed to the term in Section 2.6 of the Trust Agreement.
“Person” shall mean any natural person or any limited liability company, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.
“Procedures” shall mean these Creation and Redemption Procedures, as may be amended from time to time.
“Purchase Order” shall mean an order to purchase one or more Baskets in the form from time to time adopted by the Trustee.
“Redemption Order” shall mean an order to redeem one or more Baskets in the form from time to time adopted by the Trustee.
“Sponsor” shall mean iShares Delaware Trust Sponsor LLC, a Delaware limited liability company, in its capacity as sponsor of the Trust, and any successor thereto in such capacity.
“Transaction Fee” shall mean, as of any date, the fee at the time in effect pursuant to Section 5.7(a) of the Trust Agreement.
“Trust” shall mean the iShares® Gold Trust Micro, a trust governed by the provisions of the Trust Agreement.
“Trustee” shall mean The Bank of New York Mellon, a New York banking corporation, in its capacity as Trustee under the Trust Agreement, and any successor thereto in compliance with the provisions thereof.
“Trust Agreement” shall mean, as of any date, the Depositary Trust Agreement at the time in effect among the Trustee, the Sponsor, all registered owners and beneficial owners from time to time of iShares and all Depositors.
“Unallocated Basis” shall have the meaning ascribed to the term in Section 1.1 of the Trust Agreement.
“Valuation Relevant Price” shall mean, as of any date, the price used by the Trustee on such date to determine in compliance with the Trust Agreement the value of the Gold held by the Trust.
“VAT” shall mean (a) any tax imposed pursuant to or in compliance with the Sixth Directive of the Council of the European Economic Communities (77/388/EEC) including, in relation to the United Kingdom, value added tax imposed by the Value Added Tax Act 1994 and legislation and regulations supplemental thereto; and (b) any other tax of a similar nature, whether imposed in a member state of the European Union or elsewhere, in substitution for, or levied in addition to, such tax referred to in “(a)”.
Section 1.02. Interpretation. In these Procedures:
Unless otherwise indicated, all references to Sections, clauses, paragraphs, schedules or exhibits, are to Sections, clauses, paragraphs, schedules or exhibits in or to these Procedures.
The words “hereof”, “herein”, “hereunder” and words of similar import shall refer to these Procedures as a whole, and not to any individual provision in which such words may appear.
A reference to any statute, law, decree, rule, regulation or other applicable norm shall be construed as a reference to such statute, law, decree, rule, regulation or other applicable norm as re- enacted, re-designated or amended from time to time.
A reference to any agreement, instrument or document shall be construed as a reference to such agreement, instrument or document as the same may have been amended from time to time in compliance with the provisions thereof.
Section 1.03. Conflicts. In case of conflict between any provision of these Procedures and the terms of the Trust Agreement, the terms of the Trust Agreement shall control.
ARTICLE II
CREATION PROCEDURES
Section 2.01. Creation of iShares. The issuance and Delivery of iShares shall take place only in integral numbers of Baskets in compliance with the following rules:
a. Authorized Participants wishing to acquire from the Trustee one or more Baskets shall place a Purchase Order with the Trustee on any Business Day; provided, however, that only Purchase Orders received by the Trustee prior to the Order Cut-Off Time on a Business Day shall have such Business Day as the Order Date. Purchase Orders received by the Trustee on or after the Order Cut-Off Time on a Business Day (except as otherwise provided in Section 2.01(b)(ii)) will not be accepted. A new Purchase Order may be submitted in accordance with these Procedures.
b. For purposes of paragraph “a” above, a Purchase Order shall be deemed “received” by the Trustee only when each of the following has occurred:
(i) An Authorized Representative shall have placed a telephone call to the Trustee's Creation and Redemption Line, or entered a Purchase Order through the Trustee’s electronic order entry system, as such may be available and constituted from time to time (the use of which shall be subject to the Order Entry System Terms and Conditions attached hereto as Annex A), informing the Trustee that the Authorized Participant wishes to place a Purchase Order for a specified number of Baskets, and the location or locations where the Authorized Participant intends to make Delivery of the Basket Gold Amount corresponding to each Basket (such locations to be limited to those where, in compliance with the Custodian Agreement, a Custodian is authorized to hold Gold on behalf of the Trust and for which written procedures for the delivery of Gold to and from such locations in connection with the creation and redemption of Baskets have been agreed to by the Custodian, the Trustee and the Sponsor). If the Authorized Participant wishes to settle a Purchase Order in a time frame other than the second Business Day following the Order Date (i.e., T + 2), such request must be made to the Trustee upon placement of the Purchase Order and must be approved by the Trustee in its sole discretion.
(ii) Within one hour following such telephone call, the Trustee shall have received, via electronic mail message, a duly completed, irrevocable Purchase Order executed by an Authorized Representative of such Authorized Participant (which Purchase Order may be received after the Order Cut-Off Time if such telephone call was made prior to the Order Cut-Off Time).
c. The Trustee will ask the Custodian to confirm whether delivery can be made at the locations indicated by the Authorized Participant.
d. Before accepting a Purchase Order, the Trustee shall make sure that there exists at least one location at which the Authorized Participant is willing to Deliver, and the Custodian is capable of accepting, the requisite amount of Gold in connection with such Purchase Order. Should the Trustee elect to accept the Purchase Order, it shall communicate its decision by sending to the Authorized Participant (with copies to the Custodian at the offices of the Custodian in London and at each location at which the Authorized Participant will be expected to Deliver Gold pursuant to paragraph “c” above), via facsimile or electronic mail message, no later than 5:00 p.m. (New York time) on the Order Date for such Purchase Order a copy of the corresponding Purchase Order endorsed “Accepted” by the Trustee and indicating the Basket Gold Amount that the Authorized Participant shall Deliver to the Custodian in respect of each Basket. For Purchase Orders submitted via the Trustee’s electronic order entry system which the Trustee has elected to accept, the Authorized Participant will receive an automated electronic mail message indicating the acceptance of the Purchase Order and indicating the Basket Gold Amount that the Authorized Participant shall Deliver to the Custodian in respect of each Basket, and the Purchase Order will be marked “Accepted” in the Trustee’s electronic order entry system. Prior to the transmission of the Trustee's acceptance as specified above, a Purchase Order will only represent the Authorized Participant's unilateral offer to deposit Gold in exchange for Baskets and will have no binding effect upon the Trust, the Trustee, the Custodian or any other party.
e. Unless waived by the Trustee in writing, the Authorized Participant will be responsible for the cost of transportation of Gold to the location where it is to be Delivered, as well as for the cost of transportation of any Gold that has to be removed from a location at which the Authorized Participant wishes to make Delivery in order to make capacity available for such Delivery at such location. The Basket Gold Amount corresponding to each Basket must be delivered at the locations specified by the Custodian no later than 10:00 a.m. (local time at the place of Delivery) on the settlement date of the Purchase Order, which shall be the second Custodian Day following the Order Date unless prior approval for earlier settlement has been granted by the Trustee in its sole discretion. Delivery may be made for deposit either in the Trustee's Custodial Account, in an account with a subcustodian of the Custodian or in an account of the Authorized Participant with the Custodian. If delivery is made for deposit in the Authorized Participant's account with the Custodian, it will be accompanied by an irrevocable order to the Custodian authorizing the transfer of the Gold so delivered to the Trustee's Custodial Account against the delivery by the Trustee of the corresponding number of iShares as provided in paragraph “h” or “i” below, as applicable. The Authorized Participant shall contact the Custodian to obtain information regarding the location of the facilities where Delivery shall take place. The Custodian shall take all necessary measures to ensure that the facilities at which Delivery is to take place in respect of a Purchase Order are prepared to take such Delivery no later than 10:00 a.m. (local time at the place of Delivery) on the second Custodian Day following the applicable Order Date.
f. Gold shall be Delivered to the Custodian in the form of Gold bars only and must be accompanied by the corresponding bar list; provided, that an amount of Gold not exceeding 430 Ounces may be Delivered to the Custodian on an Unallocated Basis. Gold that has been Delivered to the Custodian no later than 10:00 a.m. (local time at the place of Delivery) on a Custodian Day shall be allocated by the Custodian to the Trustee's Custodial Account no later than 12:00 p.m. (New York time) on the date of such Delivery. Where Gold is Delivered to the Custodian after 10:00 a.m. (local time at the place of Delivery) on a Custodian Day, the Custodian (i) will use its commercially reasonable efforts to allocate such Gold to the Trustee's Custodial Account no later than 12:00 p.m. (New York time) on the date of such Delivery and (ii) will allocate such Gold to the Trustee's Custodial Account no later than 9:00 a.m. (New York time) on the next Custodian Day following the date of such Delivery.
g. The Custodian shall allocate Gold to the Trustee's Custodial Account by (i) making entries in the Custodian's books and records to identify such Gold as being held for the Trust, it being understood that such entries shall identify each bar of Gold so allocated by refiner, assay, serial number and gross and fine weight; (ii) physically segregating from Gold held by the Custodian for its own account or on behalf of other clients the Gold so allocated to the Trustee's Custodial Account; and (iii) sending to the Trustee, via electronic mail message, a written confirmation of the allocation, including the identification of the bars allocated as described above.
h. On the second Business Day following the Order Date corresponding to a Purchase Order, or on such earlier date as the Trustee in its discretion may agree, the Trustee shall issue the aggregate number of iShares corresponding to the Baskets ordered by the Authorized Participant and Deliver them, by credit to the account at DTC which the Authorized Participant shall have identified for such purpose in its Purchase Order, provided that, by 1:00 p.m. (New York time) on the date such issuance and Delivery is to take place:
(i) the Custodian shall have reported in writing or by electronic communication to the Trustee that:
(a) in the case of Gold bars delivered by the Authorized Participant, it has reviewed the corresponding bar list and the Gold received from the Authorized Participant to assure that the Gold matches the description in the bar list in terms of weight, fineness, refiner's marks and bar numbers and that, based on that review and on such further examination as the Custodian customarily performs in respect of gold purchased for its own account, the Gold deposited by the Authorized Participant in respect to such Purchase Order (A) complies with (1) the “Good Delivery” Rules of the LBMA, and/or (2) such other standards as the Custodian and the Trustee, with the approval of the Sponsor, may have adopted; and (B) except as otherwise permitted pursuant to the documents governing the Custodial Account, is held by the Custodian on behalf of the Trust in allocated form; or
(b) in the case of Gold delivered by the Authorized Participant on an Unallocated Basis, the corresponding amount of Gold has been credited to the Trustee’s Custodial Account and (except as otherwise permitted pursuant to the documents governing the Custodial Account) been allocated to the Trustee's Custodial Account, and the Gold so allocated is in compliance with the provisions of the paragraph above;
(ii) the Trustee shall have received from the Authorized Participant the applicable Transaction Fee;
(iii) the Authorized Participant shall have agreed to pay, or reimburse the Custodian, the Trustee or the Trust for the amount of any applicable taxes (including VAT) which are or become due in connection with the Delivery of Gold to the Custodian; and
(iv) any other conditions to the issuance under the Trust Agreement shall have been satisfied.
i. In all other cases, the Authorized Participant shall consult with the Sponsor to determine the ongoing status of the Purchase Order, and the Trustee shall issue the aggregate number of iShares corresponding to the Baskets ordered by the Authorized Participant and Deliver them by credit to the account at DTC which the Authorized Participant shall have identified for such purpose in its Purchase Order on the Business Day following the date on which the conditions set forth in clauses (i) to (iv) of paragraph “h” above shall have been met.
ARTICLE III
REDEMPTION PROCEDURES
Section 3.01. Redemption of iShares. Redemption of iShares shall take place only in integral numbers of Baskets in compliance with the following rules:
a. Authorized Participants wishing to redeem one or more Baskets shall place a Redemption Order with the Trustee on any Business Day; provided, however, that only Redemption Orders received by the Trustee prior to the Order Cut-Off Time on a Business Day shall have such Business Day as the Order Date. Redemption Orders received by the Trustee on or after the Order Cut-Off Time on any Business Day (except as otherwise provided in Section 3.01(b)(ii)) will not be accepted. A new Redemption Order may be submitted in accordance with these Procedures.
b. For purposes of paragraph “a” above, a Redemption Order shall be deemed “received” by the Trustee only when each of the following has occurred:
(i) An Authorized Representative shall have placed a telephone call to the Trustee's Creation and Redemption Line informing the Trustee that the Authorized Participant wishes to place a Redemption Order for a specified number of Baskets, or entered a Redemption Order through the Trustee’s electronic order entry system, as such may be available and constituted from time to time (the use of which shall be subject to the Order Entry System Terms and Conditions attached hereto as Annex A). If the Authorized Participant wishes to settle a Redemption Order in a time frame other than the second Business Day following the Order Date (i.e., T + 2), such request must be made to the Trustee upon placement of the Redemption Order and must be approved by the Trustee in its sole discretion.
(ii) Within one hour following such telephone call, the Trustee shall have received, via electronic mail message, a duly completed, irrevocable Redemption Order executed by an Authorized Representative of such Authorized Participant (which Redemption Order may be received after the Order Cut-Off Time if such telephone call was made prior to the Order Cut-Off Time).
c. Should the Trustee elect to accept such Redemption Order, it shall communicate its decision to the Authorized Participant by sending to the Authorized Participant (with copy to the Custodian), via facsimile or electronic mail message, no later than 5:00 p.m. (New York time) on the Order Date for such Redemption Order a copy of the corresponding Redemption Order endorsed “Accepted” by the Trustee and indicating the Basket Gold Amount that the Custodian shall Deliver to the Authorized Participant in respect of each Basket being redeemed. For Redemption Orders submitted via the Trustee’s electronic order entry system that the Trustee elects to accept, the Authorized Participant will receive an automated electronic mail message indicating the acceptance of the Redemption Order and indicating the Basket Gold Amount that the Custodian shall Deliver to the Authorized Participant in respect of each Basket, and the Redemption Order will be marked “Accepted” in the Trustee’s electronic order entry system.
d. Unless otherwise agreed to by the Custodian, Gold will be Delivered by the Custodian in the form of Gold bars only; provided, that an amount of Gold not exceeding 430 Ounces may be Delivered by the Custodian on an Unallocated Basis. While a redeeming Authorized Participant will be entitled to express a preference as to the city or facility where it would like to have the Basket Gold Amount delivered, the Custodian, in consultation with the Trustee, will have final authority to decide where such delivery will take place. The Custodian shall inform via electronic mail message or facsimile sent to an Authorized Representative of the redeeming Authorized Participant no later than 11:00 a.m. (New York time) on the first Custodian Day following the Order Date of such Redemption Order the exact location(s) where Delivery will be made, and the amount of Gold to be Delivered to the Authorized Participant at each such location.
e. Provided that, by 10:00 a.m. (New York time) on the second Custodian Day following the Order Date of a Redemption Order, the Trustee shall have confirmed in writing or by electronic communication to the Custodian that:
(i) the Authorized Participant has Delivered to the Trustee's account at DTC the total number of iShares to be redeemed by such Authorized Participant pursuant to such Redemption Order;
(ii) the Trustee has received the corresponding Transaction Fee;
(iii) the Authorized Participant has agreed to pay, or reimburse the Custodian, the Trustee or the Trust for the amount of any applicable taxes (including VAT) which are or becomes due in connection with the Delivery of Gold to the Authorized Participant; and
(iv) any other conditions to the redemption under the Trust Agreement have been satisfied,
the Custodian will, as applicable, on such day, at the locations and in the amounts specified in the communication sent in compliance with paragraph “d” above: (A) Deliver to such Authorized Participant the corresponding amounts of Gold which complies with (1) the “Good Delivery” Rules of the LBMA, and/or (2) such other standards as the Custodian and the Trustee, with the approval of the Sponsor, may have adopted; and, if applicable, (B) Deliver Gold to the redeeming Authorized Participant by crediting the account indicated by the redeeming Authorized Participant in its Redemption Order. Having made such Delivery, the Custodian will send written confirmation thereof to the Trustee who will then cancel the iShares so redeemed.
f. In all other cases, Delivery must be completed by the Custodian as soon as, in the reasonable judgment of the Custodian, it is practicable following receipt of written confirmation from the Trustee as described in clauses “i” to “iv” of paragraph “e” above.
g. The foregoing provisions notwithstanding, the Custodian shall not be liable for any failure or delay in making Delivery of Gold in respect of a Redemption Order arising from nuclear fission or fusion, radioactivity, war, terrorist event, invasion, insurrection, civil commotion, riot, strike, act of government, public authority or act of God, or a similar cause that is beyond the Custodian's control. In the event of any such delay, the time to complete Delivery in respect of a Redemption Order will be extended for a period equal to that during which the inability to perform continues.
h. In the event that, by 10:00 a.m. (New York time) on the second Custodian Day following the Order Date of a Redemption Order the Trustee's account at DTC shall not have been credited with the total number of iShares corresponding to the total number of Baskets to be redeemed pursuant to such Redemption Order, the Trustee will cancel such Redemption Order and will send via electronic mail message notice of such cancellation to the respective Authorized Participant and the Custodian.
[Signature Page Follows]
IN WITNESS WHEREOF, the Sponsor and the Trustee have executed these Creation and Redemption Procedures as of the date first set forth above.
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THE BANK OF NEW YORK MELLON,
in its capacity as Trustee
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By:
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/s/ Patrick G. Griffin
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Name: Patrick G. Griffin
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Title: Vice President
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iSHARES DELAWARE TRUST SPONSOR LLC,
in its capacity as Sponsor
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By:
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/s/ Paul C. Lohrey
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Name: Paul Lohrey
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Title: Director, President and Chief Executive Officer
(Principal executive officer)
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ANNEX A
ORDER ENTRY SYSTEM TERMS AND CONDITIONS
This Annex shall govern use by an Authorized Participant of the electronic order entry system for placing Purchase Orders and Redemption Orders for iShares® Gold Trust Micro (the “System”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Authorized Participant Agreement (the “AP Agreement”). In the event of any conflict between the terms of this Annex and the main body of the AP Agreement with respect to the placing of Purchase Orders and Redemption Orders, the terms of this Annex shall control.
1. (a) Authorized Participant shall provide to the Trustee a duly executed authorization letter, in a form satisfactory to Trustee, identifying those Authorized Persons who will access the System. Authorized Participant shall notify the Trustee promptly in writing, including, but not limited to, by electronic mail, in the event that any person’s status as an Authorized Person is revoked or terminated, in order to give the Trustee a reasonable opportunity to terminate such Authorized Person’s access to the System. The Trustee shall promptly revoke access of such Authorized Person to the electronic entry systems through which Purchase Orders and Redemption are submitted by such person on behalf of the Authorized Participant.
(b) It is understood and agreed that each Authorized Person shall be designated as an authorized user of Authorized Participant for the purpose of the AP Agreement. Upon termination of the AP Agreement, the Authorized Participant’s and each Authorized Person’s access rights with respect to System shall be immediately revoked.
2. Trustee grants to Authorized Participant a personal, nontransferable and nonexclusive license to use the System solely for the purpose of transmitting Purchase Orders and Redemption Orders and otherwise communicating with Trustee in connection with the same. Authorized Participant shall use the System solely for its own internal and proper business purposes. Except as set forth herein, no license or right of any kind is granted to Authorized Participant with respect to the System. Authorized Participant acknowledges that Trustee and its suppliers retain and have title and exclusive proprietary rights to the System. Authorized Participant further acknowledges that all or a part of the System may be copyrighted or trademarked (or a registration or claim made therefor) by Trustee or its suppliers. Authorized Participant shall not take any action with respect to the System inconsistent with the foregoing acknowledgments. Authorized Participant may not copy, distribute, sell, lease or provide, directly or indirectly, the System or any portion thereof to any other person or entity without Trustee’s prior written consent. Authorized Participant may not remove any statutory copyright notice or other notice included in the System. Authorized Participant shall reproduce any such notice on any reproduction of any portion of the System and shall add any statutory copyright notice or other notice upon Trustee’s request.
3. (a) Authorized Participant acknowledges that any user manual or other documentation (whether in hard copy or electronic form) (collectively, the “Material”), which is delivered or made available to Authorized Participant regarding the System is the exclusive and confidential property of Trustee. Authorized Participant shall keep the Material confidential by using the same care and discretion that Authorized Participant uses with respect to its own confidential property and trade secrets, but in no event less than reasonable care. Authorized Participant may make such copies of the Material as is reasonably necessary for Authorized Participant to use the System and shall reproduce Trustee’s proprietary markings on any such copy. The foregoing shall not in any way be deemed to affect the copyright status of any of the Material which may be copyrighted and shall apply to all Material whether or not copyrighted. TRUSTEE AND ITS SUPPLIERS MAKE NO WARRANTIES, EXPRESS OR IMPLIED, CONCERNING THE MATERIAL OR ANY PRODUCT OR SERVICE, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
(b) Upon termination of the AP Agreement for any reason, Authorized Participant shall return to Trustee all copies of the Material which is in Authorized Participant’s possession or under its control.
4. Authorized Participant agrees that it shall have sole responsibility for maintaining adequate security and control of the user IDs, passwords and codes for access to the System, which shall not be disclosed to any third party without the prior written consent of Trustee. Trustee shall be entitled to rely on the information received by it from the Authorized Participant and Trustee may assume that all such information was transmitted by or on behalf of an Authorized Person regardless of by whom it was actually transmitted, unless the Authorized Participant shall have notified the Trustee a reasonable time prior that such person is not an Authorized Person.
5. Trustee shall have no liability in connection with the use of the System, the access granted to the Authorized Participant and its Authorized Persons hereunder, or any transaction effected or attempted to be effected by the Authorized Participant hereunder, except for damages incurred by the Authorized Participant as a direct result of Trustee’s negligence or willful misconduct. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, IT IS HEREBY AGREED THAT IN NO EVENT SHALL TRUSTEE OR ANY MANUFACTURER OR SUPPLIER OF EQUIPMENT, SOFTWARE OR SERVICES BE RESPONSIBLE OR LIABLE FOR ANY SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES WHICH THE AUTHORIZED PARTICIPANT MAY INCUR OR EXPERIENCE BY REASON OF ITS HAVING ENTERED INTO OR RELIED ON THIS AGREEMENT, OR IN CONNECTION WITH THE ACCESS GRANTED TO THE AUTHORIZED PARTICIPANT HEREUNDER, OR ANY TRANSACTION EFFECTED OR ATTEMPTED TO BE EFFECTED BY THE AUTHORIZED PARTICIPANT HEREUNDER, EVEN IF TRUSTEE OR SUCH MANUFACTURER OR SUPPLIER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, NOR SHALL TRUSTEE OR ANY SUCH MANUFACTURER OR SUPPLIER BE LIABLE FOR ACTS OF GOD, MACHINE OR COMPUTER BREAKDOWN OR MALFUNCTION, INTERRUPTION OR MALFUNCTION OF COMMUNICATION FACILITIES, LABOR DIFFICULTIES OR ANY OTHER SIMILAR OR DISSIMILAR CAUSE BEYOND SUCH PERSON’S REASONABLE CONTROL.
6. Trustee reserves the right to revoke Authorized Participant’s access to the System, with written notice, upon any breach by the Authorized Participant of the terms and conditions of this Annex.
7. Trustee shall acknowledge through the System its receipt of each Purchase Order or Redemption Order communicated through the System, and in the absence of such acknowledgment Trustee shall not be liable for any failure to act in accordance with such Purchase Order or Redemption Order and Authorized Participant may not claim that such Purchase Order or Redemption Order was received by Trustee. Trustee may in its discretion decline to act upon any instructions or communications that are insufficient or incomplete or are not received by Trustee in sufficient time for Trustee to act upon, or in accordance with, such instructions or communications.
8. Authorized Participant agrees to use reasonable efforts consistent with its own procedures used in the ordinary course of business to prevent the transmission through the System of any software or file which contains any viruses, worms, harmful component or corrupted data and agrees not to use any device, software, or routine to interfere or attempt to interfere with the proper working of the Systems.
9. Authorized Participant acknowledges and agrees that encryption may not be available for every communication through the System, or for all data. Authorized Participant agrees that Trustee may deactivate any encryption features at any time, without notice or liability to Authorized Participant, for the purpose of maintaining, repairing or troubleshooting its systems.
Exhibit 10.2
iSHARES GOLD TRUST MICRO SUBLICENSE AGREEMENT
This Sublicense Agreement (the "Agreement") is made as of June 15, 2021, by and between BlackRock Institutional Trust Company, N.A. (f/k/a Barclays Global Investors, N.A.), a national banking association organized under the laws of the United States ("BlackRock") and The Bank of New York Mellon (f/k/a The Bank of New York), a banking corporation organized under the laws of the State of New York acting in its capacity as trustee (the "Trustee") of the iShares® Gold Trust Micro, a trust organized under the laws of the State of New York (the "Trust").
RECITALS
WHEREAS, pursuant to that certain License Agreement dated January 29, 2004 (the "License Agreement") between The Bank of New York Mellon (in its individual capacity, "BNY Mellon"), and BlackRock (Attachment A), BlackRock obtained a license to use in connection with Gold-Based Securities Products (as defined in the License Agreement) certain intellectual property (the "Licensor Patent Rights"); and
WHEREAS, BlackRock has the right pursuant to the License Agreement to sublicense its rights thereunder to the Trust; and
WHEREAS, the Trust wishes to have the right to use the Licensor Patent Rights in connection with its operation as an exchanged-traded product, as described in the Registration Statement on Form S-1 of the Trust, Registration No. 333-253614, as amended from time to time (the "Registration Statement"); and
WHEREAS, BlackRock wishes to grant a sublicense to the Trust for the use of the Licensor Patent Rights;
NOW, THEREFORE, the parties agree as follows:
1. Certain Definitions. For the purposes of this Agreement, capitalized terms shall have the meanings set forth in this Agreement and in the License Agreement.
2. Grant of Sublicense. Subject to the terms and conditions of this Agreement, BlackRock hereby grants to the Trust a sublicense to use the Licensor Patent Rights in the manner set forth in, and subject to the terms of, the License Agreement.
3. Performance of Obligations Under the License. The Trust will be responsible for performing all of BlackRock’s obligations under the License Agreement (other than the payment of any license fees), as such obligations relate to use of the Licensor Patent Rights.
4. Fees. The Trust shall have no obligation to pay any sublicense fees to BlackRock or the Trustee under this Agreement.
5. Termination. This Agreement shall terminate upon the earlier to occur of (a) termination of the License Agreement, or (b) termination of the Trust. BlackRock shall notify the Trustee as soon as reasonably practicable of the occurrence of the event described in (a) above. Upon termination of this Agreement, the Trust's right to use the Licensor Patent Rights pursuant to the License Agreement shall terminate immediately.
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a.
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The Trust shall indemnify and hold harmless BlackRock, its officers, employees, agents, successors, and assigns against all judgments, damages, costs or losses of any kind (including reasonable attorneys' fees and experts' fees) resulting from any claim, action or proceeding (collectively "claims") that arises out of or relates to any breach by BlackRock of its covenants, other obligations, representations, or warranties under the License Agreement caused by the actions or inactions of the Trust. The provisions of this section shall survive termination of this Agreement.
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b.
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BlackRock shall indemnify and hold harmless the Trust against all judgments, damages, costs or losses of any kind (including reasonable attorneys' fees and experts' fees) resulting from any claims that arise out of or relate to any assertion by BNY Mellon that the business or operations of the Trust, as described in the Registration Statement, violate Licensor Patent Rights.
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7. Assignment. The Trustee will not make, or purport to make, any assignment or other transfer of this Agreement on behalf of the Trust except with the prior written consent of Blackrock. BlackRock may assign its rights and obligations under this Agreement effective
upon the giving of written notice to the Trustee.
8. Amendment. No provision of this Agreement may be waived, altered, or amended except by written agreement of the parties.
9. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof.
10. Construction. Headings used in this Agreement are for convenience only, and shall not affect the construction or interpretation of any of its provisions. Each of the provisions of this Agreement is severable, and the invalidity or inapplicability of one or more provisions, in whole or in part, shall not affect any other provision. To the extent not preempted by federal law, this Agreement shall be construed and interpreted under the laws of the State of New York.
11. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts together shall constitute only one instrument.
[Signature page follows]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first above written, with intent to be bound hereby.
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BLACKROCK INSTITUTIONAL TRUST
COMPANY, N.A.
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THE BANK OF NEW YORK MELLON,
acting in its capacity as trustee of the
iShares® Gold Trust Micro
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By: /s/ Paul C. Lohrey
Name: Paul Lohrey
Title: Managing Director
Date: June 10, 2021
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By: /s/ Patrick Griffin
Name: Patrick Griffin
Title: Vice President
Date: June 15, 2021
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Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form S-1 of iShares® Gold Trust Micro of our report dated June 18, 2021 relating to the financial statements of iShares® Gold Trust Micro, which appears in this Registration Statement. We also consent to the reference to us under the heading "Experts” in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
June 18, 2021
