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.
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