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Aberdeen Australia Equity Fund, Inc. Important Notice Regarding Change In Investment Policy

PHILADELPHIA, Jan. 13, 2012 /PRNewswire/ -- The Board of the Aberdeen Australia Equity Fund, Inc. (the "Fund") (NYSE AMEX: IAF) approved a change to the Fund's 80% non-fundamental policy, which will be effective March 14, 2012.  As a result of the changes described below, the Fund will continue to invest in Australian equities but will have greater flexibility to invest in Australian Companies that are not listed on the ASX.

The Fund's current 80% non-fundamental policy provides that the Fund will invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities, consisting of common stock, preferred stock and convertible stock, of Australian Companies listed on the Australian Stock Exchange Limited ("ASX").  The Board approved the change to remove the requirement that to be included when computing the 80% test an Australian Company must be listed on the ASX.  Under the revised policy, the Fund will invest at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in equity securities, consisting of common stock, preferred stock and convertible stock, of Australian Companies, but only 65% of its assets must be invested in ASX-listed companies.

In addition, the Board approved changes to the criteria used for determining whether a company is an "Australian Company" for purposes of the Fund's 80% investment policy.  "Australian Companies" are defined as companies that are tied economically to Australia.  In determining whether an equity security is tied economically to Australia, the manager considers several criteria.  The changes to the criteria are: (i) the current criteria of the security being listed on S&P/Australian Stock Exchange Limited ASX 200 Accumulation Index would be eliminated; (ii) listing on the ASX would become one of several criteria to consider in classifying an issuer as an "Australian Company"; and (iii) whether a majority of an issuer's assets are located in Australia or a majority of an issuer's revenues are derived from Australian sources would be added to the criteria.  Upon effectiveness of this change, the criteria for determining whether a company is tied economically to Australia will be whether the company (i) is a constituent of the ASX; (ii) has its headquarters located in Australia; (iii) pays dividends on its stock in Australian dollars; (iv) has its accounts audited by Australian auditors; (v) is subject to Australian taxes levied by the Australian Taxation Office; (vi) holds its annual general meeting in Australia; (vii) has common stock/ordinary shares and/or other principal class of securities registered with Australian regulatory authorities for sale in Australia; (viii) is incorporated in Australia; or (ix) has a majority of its assets located in Australia or a majority of its revenues derived from Australian sources. Certain of these criteria can be considered on their own in determining whether a company is "tied economically" to Australia, while others are only considered in combination with other criteria.

The Fund's fundamental investment objective to invest primarily in equity securities of Australian companies listed on the ASX and fundamental policy to invest at least 65% of its total assets in equity securities, consisting of common stock, preferred stock and convertible preferred stock, listed on the ASX will not change.

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