Rule Text 2

Page 415

TITLE 15—COMMERCE AND TRADE

(g) Issuance of securities for services or property
other than cash
No registered open-end company shall issue
any of its securities (1) for services; or (2) for
property other than cash or securities (including
securities of which such registered company is
the issuer), except as a dividend or distribution
to its security holders or in connection with a
reorganization.
(Aug. 22, 1940, ch. 686, title I, § 22, 54 Stat. 823;
Pub. L. 91–547, § 12, Dec. 14, 1970, 84 Stat. 1422;
Pub. L. 100–181, title VI, § 616, Dec. 4, 1987, 101
Stat. 1262.)
AMENDMENTS
1987—Subsec. (b). Pub. L. 100–181, § 616(1), substituted
‘‘subsection (b)(6)’’ for ‘‘subsection (b)(8)’’ in par. (1).
Pub. L. 100–181, § 616(2), (3), redesignated par. (3) as (2)
and
substituted
‘‘section
78s(c)’’
for
‘‘section
78o–3(k)(2)’’, redesignated par. (4) as (3), and struck out
former par. (2) which read as follows: ‘‘At any time
after the expiration of eighteen months from December
14, 1970, or after a securities association has adopted
rules as contemplated by this subsection, the Commission may make such rules and regulations pursuant to
section 78o(b)(10) of this title as are appropriate to effectuate the purpose of this subsection with respect to
sales of shares of a registered investment company by
broker-dealers subject to regulation under section
78o(b)(8) of this title: Provided, That the underwriter of
such shares may file with the Commission at any time
a notice of election to comply with the rules prescribed
pursuant to this subsection by a national securities association specified in such notice, and thereafter the
sales load shall not exceed that prescribed by such
rules of such association, and the rules of the Commission as hereinabove authorized shall thereafter be inapplicable to such sales.’’
Subsec. (e). Pub. L. 100–181, § 616(4), (5), in introductory provisions, substituted ‘‘redemption, or postpone’’
for ‘‘redemption or postpone’’ and ‘‘redemption, except’’ for ‘‘redemption except’’, and, in closing provisions, struck out ‘‘Any company which, as of March 15,
1940, was required by provision of its charter, certificate of incorporation, articles of association, or trust
indenture, or of a bylaw or regulation duly adopted
thereunder, to postpone the date of payment or satisfaction upon redemption of redeemable securities issued by it, shall be exempt from the requirements of
this subsection; but such exemption shall terminate
upon the expiration of one year from the effective date
of this subchapter, or upon the repeal or amendment of
such provision, or upon the sale by such company after
March 15, 1940, of any security (other than short-term
paper) of which it is the issuer, whichever first occurs.’’
1970—Subsec. (b). Pub. L. 91–547, § 12(a), designated existing provisions as par. (1), inserted ‘‘notwithstanding
the provisions of subsection (b)(8) thereof but’’, and
‘‘other’’ in phrase ‘‘all other provisions’’, substituted
exclusion of ‘‘excessive sales load’’ for ‘‘unconscionable
or grossly excessive sales load’’, provided for allowance
for reasonable compensation for sales personnel,
broker-dealers, and underwriters, and for reasonable
sales loads to investors, and for grant by Commission
of appropriate qualified exemptions from provisions of
this section where on application or otherwise it appears that smaller companies are subject to relatively
higher operating costs, and added pars. (2) to (4).
Subsec. (c). Pub. L. 91–547, § 12(b), provided for application of rules and regulations to registered investment companies, struck out introductory phrase ‘‘After
one year from the effective date of this chapter’’, ‘‘registered’’ before ‘‘securities association’’ where first appearing, and substituted ‘‘prescribed in subsection (a)
of this section’’ for ‘‘prescribed in subsections (a) and
(b) of this section’’ and ‘‘. Any rules and regulations’’
for ‘‘; and any rules and regulations’’.

§ 80a–23

Subsec. (d). Pub. L. 91–547, § 12(c), substituted ‘‘public
offering price described in the prospectus. Nothing in
this subsection’’ for ‘‘public offering price described in
the prospectus: Provided, however, That nothing in this
subsection’’ and struck out ‘‘clause (1) or (2) of’’ before
‘‘section 80a–11(b) of this title’’.
EFFECTIVE DATE OF 1970 AMENDMENT
Amendment by Pub. L. 91–547 effective Dec. 14, 1970,
see section 30 of Pub. L. 91–547, set out as a note under
section 80a–52 of this title.
TRANSFER OF FUNCTIONS
For transfer of functions of Securities and Exchange
Commission, with certain exceptions, to Chairman of
such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2,
eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under
section 78d of this title.

§ 80a–23. Closed-end companies
(a) Issuance of securities
No registered closed-end company shall issue
any of its securities (1) for services; or (2) for
property other than cash or securities (including
securities of which such registered company is
the issuer), except as a dividend or distribution
to its security holders or in connection with a
reorganization.
(b) Sale of common stock at price below current
net asset value
No registered closed-end company shall sell
any common stock of which it is the issuer at a
price below the current net asset value of such
stock, exclusive of any distributing commission
or discount (which net asset value shall be determined as of a time within forty-eight hours,
excluding Sundays and holidays, next preceding
the time of such determination), except (1) in
connection with an offering to the holders of one
or more classes of its capital stock; (2) with the
consent of a majority of its common stockholders; (3) upon conversion of a convertible security
in accordance with its terms; (4) upon the exercise of any warrant outstanding on August 22,
1940, or issued in accordance with the provisions
of section 80a–18(d) of this title; or (5) under such
other circumstances as the Commission may
permit by rules and regulations or orders for the
protection of investors.
(c) Purchase of securities of which it is issuer;
exceptions
No registered closed-end company shall purchase any securities of any class of which it is
the issuer except—
(1) on a securities exchange or such other
open market as the Commission may designate by rules and regulations or orders: Provided, That if such securities are stock, such
registered company shall, within the preceding six months, have informed stockholders of
its intention to purchase stock of such class
by letter or report addressed to stockholders
of such class; or
(2) pursuant to tenders, after reasonable opportunity to submit tenders given to all holders of securities of the class to be purchased;
or
(3) under such other circumstances as the
Commission may permit by rules and regulations or orders for the protection of investors
in order to insure that such purchases are

§ 80a–24

TITLE 15—COMMERCE AND TRADE

made in a manner or on a basis which does not
unfairly discriminate against any holders of
the class or classes of securities to be purchased.
(Aug. 22, 1940, ch. 686, title I, § 23, 54 Stat. 825.)
TRANSFER OF FUNCTIONS
For transfer of functions of Securities and Exchange
Commission, with certain exceptions, to Chairman of
such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2,
eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under
section 78d of this title.

§ 80a–24. Registration of securities under Securities Act of 1933
(a) Registration statement; contents
In registering under the Securities Act of 1933
[15 U.S.C. 77a et seq.], any security of which it
is the issuer, a registered investment company,
in lieu of furnishing a registration statement
containing the information and documents specified in schedule A of said Act [15 U.S.C. 77aa],
may file a registration statement containing the
following information and documents:
(1) such copies of the registration statement
filed by such company under this subchapter,
and of such reports filed by such company pursuant to section 80a–29 of this title or such
copies of portions of such registration statement and reports, as the Commission shall
designate by rules and regulations; and
(2) such additional information and documents (including a prospectus) as the Commission shall prescribe by rules and regulations as
necessary or appropriate in the public interest
or for the protection of investors.
(b) Filing of three copies of advertisement, pamphlet, etc. in connection with public offering;
time of filing
It shall be unlawful for any of the following
companies, or for any underwriter for such a
company, in connection with a public offering of
any security of which such company is the issuer, to make use of the mails or any means or
instrumentalities of interstate commerce, to
transmit any advertisement, pamphlet, circular,
form letter, or other sales literature addressed
to or intended for distribution to prospective investors unless three copies of the full text thereof have been filed with the Commission or are
filed with the Commission within ten days
thereafter:
(1) any registered open-end company;
(2) any registered unit investment trust; or
(3) any registered face-amount certificate
company.
(c) Additional requirement for prospectuses relating to periodic payment plan certificates
or face-amount certificate
In addition to the powers relative to prospectuses granted the Commission by section 10 of
the Securities Act of 1933 [15 U.S.C. 77j], the
Commission is authorized to require, by rules
and regulations or order, that the information
contained in any prospectus relating to any
periodic payment plan certificate or faceamount certificate registered under the Securities Act of 1933 [15 U.S.C. 77a et seq.], on or after
the effective date of this subchapter be pre-

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sented in such form and order of items, and such
prospectus contain such summaries of any portion of such information, as are necessary or appropriate in the public interest or for the protection of investors.
(d) Application of other provisions to securities
of investment companies, face-amount certificate companies, and open-end companies
or unit investment trust
The exemption provided by paragraph (8) of
section 3(a) of the Securities Act of 1933 [15
U.S.C. 77c(a)(8)] shall not apply to any security
of which an investment company is the issuer.
The exemption provided by paragraph (11) of
said section 3(a) [15 U.S.C. 77c(a)(11)] shall not
apply to any security of which a registered investment company is the issuer. The exemption
provided by section 4(3) of the Securities Act of
1933 [15 U.S.C. 77d(3)] shall not apply to any
transaction in a security issued by a faceamount certificate company or in a redeemable
security issued by an open-end management
company or unit investment trust if any other
security of the same class is currently being offered or sold by the issuer or by or through an
underwriter in a distribution which is not exempted from section 5 of said Act [15 U.S.C. 77e],
except to such extent and subject to such terms
and conditions as the Commission, having due
regard for the public interest and the protection
of investors, may prescribe by rules or regulations with respect to any class of persons, securities, or transactions.
(e) Amendment of registration statements relating to securities issued by face-amount certificate companies, open-end management
companies or unit investment trusts
For the purposes of section 11 of the Securities
Act of 1933, as amended [15 U.S.C. 77k] the effective date of the latest amendment filed shall be
deemed the effective date of the registration
statement with respect to securities sold after
such amendment shall have become effective.
For the purposes of section 13 of the Securities
Act of 1933, as amended [15 U.S.C. 77m], no such
security shall be deemed to have been bona fide
offered to the public prior to the effective date
of the latest amendment filed pursuant to this
subsection. Except to the extent the Commission otherwise provides by rules or regulations
as appropriate in the public interest or for the
protection of investors, no prospectus relating
to a security issued by a face-amount certificate
company or a redeemable security issued by an
open-end management company or unit investment trust which varies for the purposes of subsection (a)(3) of section 10 of the Securities Act
of 1933 [15 U.S.C. 77j(a)(3)] from the latest prospectus filed as a part of the registration statement shall be deemed to meet the requirements
of said section 10 [15 U.S.C. 77j] unless filed as
part of an amendment to the registration statement under said Act [15 U.S.C. 77a et seq.] and
such amendment has become effective.
(f) Registration of indefinite amount of securities
(1) Registration of securities
Upon the effective date of its registration
statement, as provided by section 8 of the Securities Act of 1933 [15 U.S.C. 77h], a face-