CITE
15 USC Sec. 80a-15 01/05/2009
EXPCITE
TITLE 15 - COMMERCE AND TRADE
CHAPTER 2D - INVESTMENT COMPANIES AND ADVISERS
SUBCHAPTER I - INVESTMENT COMPANIES
HEAD
Sec. 80a-15. Contracts of advisers and underwriters
STATUTE
(a) Written contract to serve or act as investment adviser;
contents
It shall be unlawful for any person to serve or act as investment
adviser of a registered investment company, except pursuant to a
written contract, which contract, whether with such registered
company or with an investment adviser of such registered company,
has been approved by the vote of a majority of the outstanding
voting securities of such registered company, and -
(1) precisely describes all compensation to be paid thereunder;
(2) shall continue in effect for a period more than two years
from the date of its execution, only so long as such continuance
is specifically approved at least annually by the board of
directors or by vote of a majority of the outstanding voting
securities of such company;
(3) provides, in substance, that it may be terminated at any
time, without the payment of any penalty, by the board of
directors of such registered company or by vote of a majority of
the outstanding voting securities of such company on not more
than sixty days' written notice to the investment adviser; and
(4) provides, in substance, for its automatic termination in
the event of its assignment.
(b) Written contract with company for sale by principal underwriter
of security of which company is issuer; contents
It shall be unlawful for any principal underwriter for a
registered open-end company to offer for sale, sell, or deliver
after sale any security of which such company is the issuer, except
pursuant to a written contract with such company, which contract -
(1) shall continue in effect for a period more than two years
from the date of its execution, only so long as such continuance
is specifically approved at least annually by the board of
directors or by vote of a majority of the outstanding voting
securities of such company; and
(2) provides, in substance, for its automatic termination in
the event of its assignment.
(c) Approval of contract to undertake service as investment adviser
or principal underwriter by majority of noninterested directors
In addition to the requirements of subsections (a) and (b) of
this section, it shall be unlawful for any registered investment
company having a board of directors to enter into, renew, or
perform any contract or agreement, written or oral, whereby a
person undertakes regularly to serve or act as investment adviser
of or principal underwriter for such company, unless the terms of
such contract or agreement and any renewal thereof have been
approved by the vote of a majority of directors, who are not
parties to such contract or agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of
voting on such approval. It shall be the duty of the directors of a
registered investment company to request and evaluate, and the duty
of an investment adviser to such company to furnish, such
information as may reasonably be necessary to evaluate the terms of
any contract whereby a person undertakes regularly to serve or act
as investment adviser of such company. It shall be unlawful for the
directors of a registered investment company, in connection with
their evaluation of the terms of any contract whereby a person
undertakes regularly to serve or act as investment adviser of such
company, to take into account the purchase price or other
consideration any person may have paid in connection with a
transaction of the type referred to in paragraph (1), (3), or (4)
of subsection (f) of this section.
(d) Equivalent of vote of majority of outstanding voting securities
in case of common-law trust
In the case of a common-law trust of the character described in
section 80a-16(c) of this title, either written approval by holders
of a majority of the outstanding shares of beneficial interest or
the vote of a majority of such outstanding shares cast in person or
by proxy at a meeting called for the purpose shall for the purposes
of this section be deemed the equivalent of the vote of a majority
of the outstanding voting securities, and the provisions of
paragraph (42) of section 80a-2(a) of this title as to a majority
shall be applicable to the vote cast at such a meeting.
(e) Exemption of advisory boards or members from provisions of this
section
Nothing contained in this section shall be deemed to require or
contemplate any action by an advisory board of any registered
company or by any of the members of such a board.
(f) Receipt of benefits by investment adviser from sale of
securities or other interest in such investment adviser resulting
in assignment of investment advisory contract
(1) An investment adviser, or a corporate trustee performing the
functions of an investment adviser, of a registered investment
company or an affiliated person of such investment adviser or
corporate trustee may receive any amount or benefit in connection
with a sale of securities of, or a sale of any other interest in,
such investment adviser or corporate trustee which results in an
assignment of an investment advisory contract with such company or
the change in control of or identity of such corporate trustee, if -
(A) for a period of three years after the time of such action,
at least 75 per centum of the members of the board of directors
of such registered company or such corporate trustee (or
successor thereto, by reorganization or otherwise) are not (i)
interested persons of the investment adviser of such company or
such corporate trustee, or (ii) interested persons of the
predecessor investment adviser or such corporate trustee; and
(B) there is not imposed an unfair burden on such company as a
result of such transaction or any express or implied terms,
conditions, or understandings applicable thereto.
(2)(A) For the purpose of paragraph (1)(A) of this subsection,
interested persons of a corporate trustee shall be determined in
accordance with section 80a-2(a)(19)(B) of this title: Provided,
That no person shall be deemed to be an interested person of a
corporate trustee solely by reason of (i) his being a member of its
board of directors or advisory board or (ii) his membership in the
immediate family of any person specified in clause (i) of this
subparagraph.
(B) For the purpose of paragraph (1)(B) of this subsection, an
unfair burden on a registered investment company includes any
arrangement, during the two-year period after the date on which any
such transaction occurs, whereby the investment adviser or
corporate trustee or predecessor or successor investment advisers
or corporate trustee or any interested person of any such adviser
or any such corporate trustee receives or is entitled to receive
any compensation directly or indirectly (i) from any person in
connection with the purchase or sale of securities or other
property to, from, or on behalf of such company, other than bona
fide ordinary compensation as principal underwriter for such
company, or (ii) from such company or its security holders for
other than bona fide investment advisory or other services.
(3) If -
(A) an assignment of an investment advisory contract with a
registered investment company results in a successor investment
adviser to such company, or if there is a change in control of or
identity of a corporate trustee of a registered investment
company, and such adviser or trustee is then an investment
adviser or corporate trustee with respect to other assets
substantially greater in amount than the amount of assets of such
company, or
(B) as a result of a merger of, or a sale of substantially all
the assets by, a registered investment company with or to another
registered investment company with assets substantially greater
in amount, a transaction occurs which would be subject to
paragraph (1)(A) of this subsection,
such discrepancy in size of assets shall be considered by the
Commission in determining whether or to what extent an application
under section 80a-6(c) of this title for exemption from the
provisions of paragraph (1)(A) of this subsection should be
granted.
(4) Paragraph (1)(A) of this subsection shall not apply to a
transaction in which a controlling block of outstanding voting
securities of an investment adviser to a registered investment
company or of a corporate trustee performing the functions of an
investment adviser to a registered investment company is -
(A) distributed to the public and in which there is, in fact,
no change in the identity of the persons who control such
investment adviser or corporate trustee, or
(B) transferred to the investment adviser or the corporate
trustee, or an affiliated person or persons of such investment
adviser or corporate trustee, or is transferred from the
investment adviser or corporate trustee to an affiliated person
or persons of the investment adviser or corporate trustee:
Provided, That (i) each transferee (other than such adviser or
trustee) is a natural person and (ii) the transferees (other than
such adviser or trustee) owned in the aggregate more than 25 per
centum of such voting securities for a period of at least six
months prior to such transfer.
SOURCE
(Aug. 22, 1940, ch. 686, title I, Sec. 15, 54 Stat. 812; Pub. L. 91-
547, Sec. 8, Dec. 14, 1970, 84 Stat. 1419; Pub. L. 94-29, Sec.
28(1), (2), (4), June 4, 1975, 89 Stat. 164, 165; Pub. L. 100-181,
title VI, Sec. 611, Dec. 4, 1987, 101 Stat. 1261.)
AMENDMENTS
1987 - Subsec. (d). Pub. L. 100-181, Sec. 611(1), substituted
"paragraph (42)" for "paragraph (40)".
Subsec. (f)(3)(B). Pub. L. 100-181, Sec. 611(2), substituted a
comma for the period at end.
1975 - Subsec. (c). Pub. L. 94-29, Sec. 28(2), inserted
provisions making it unlawful for the directors of a registered
investment company, in connection with their evaluation of the
terms of any contract whereby a person undertakes regularly to
serve or act as investment adviser of such company, to take into
account the purchase price or other consideration any person may
have paid in connection with a transaction of the type referred to
in paragraph (1), (3), or (4) of subsec. (f).
Subsec. (d). Pub. L. 94-29, Sec. 28(4), substituted "section 80a-
16(c) of this title" for "subsection (b) of section 80a-16 of this
title".
Subsec. (f). Pub. L. 94-29, Sec. 28(1), added subsec. (f).
1970 - Subsec. (a). Pub. L. 91-547, Sec. 8(a), struck out
introductory phrase "After one year from the effective date of this
subchapter" and "unless in effect prior to March 15, 1940," before
"has been approved", and "by the investment adviser" after
"assignment" in item (4), and substituted "It" for "it".
Subsec. (b). Pub. L. 91-547, Sec. 8(b), struck out introductory
phrase "After one year from the effective date of this subchapter,"
and concluding phrase ", unless in effect prior to March 15, 1940"
after "which contract" before item (1), struck out "by such
underwriter" after "assignment" in item (2), and substituted "It"
for "it".
Subsec. (c). Pub. L. 91-547, Sec. 8(c), made it the duty of the
directors of a registered investment company to request and
evaluate, and the duty of an investment adviser to such company to
furnish, such information as may reasonably be necessary to
evaluate the terms of any contract whereby a person undertakes
regularly to serve or act as investment adviser of such company,
substituted "interested persons" for "affiliated persons", and
struck out "except a written agreement which was in effect prior to
March 15, 1940," after "written or oral,", item (1) designation
following "have been approved" and item "or (2) by the vote of a
majority of the outstanding voting securities of such company"
after "any such party,", and inserted "the vote" in phrase "by the
vote of a majority", and provision respecting voting "cast in
person at a meeting called for the purpose of voting on such
approval".
Subsecs. (d) to (f). Pub. L. 91-547, Sec. 8(d), redesignated
subsecs. (e) and (f) as (d) and (e), respectively, and struck out
former subsec. (d) which prohibited any person after March 15,
1945, from acting as investment adviser to, or principal
underwriter for, any registered investment company pursuant to a
written contract in effect prior to March 15, 1940, unless such
contract was renewed prior to March 15, 1945, in such form as to
make it comply with subsecs. (a) or (b).
EFFECTIVE DATE OF 1975 AMENDMENT
Amendment by Pub. L. 94-29 effective June 4, 1975, see section
31(a) of Pub. L. 94-29, set out as a note under section 78b of this
title.
EFFECTIVE DATE OF 1970 AMENDMENT
Amendment by Pub. L. 91-547 effective on expiration of one year
after Dec. 14, 1970, see section 30(1) of Pub. L. 91-547, set out
as a note under section 80a-52 of this title.