CITE
15 USC Sec. 80a-16 01/05/2009
EXPCITE
TITLE 15 - COMMERCE AND TRADE
CHAPTER 2D - INVESTMENT COMPANIES AND ADVISERS
SUBCHAPTER I - INVESTMENT COMPANIES
HEAD
Sec. 80a-16. Board of directors
STATUTE
(a) Election of directors
No person shall serve as a director of a registered investment
company unless elected to that office by the holders of the
outstanding voting securities of such company, at an annual or a
special meeting duly called for that purpose; except that vacancies
occurring between such meetings may be filled in any otherwise
legal manner if immediately after filling any such vacancy at least
two-thirds of the directors then holding office shall have been
elected to such office by the holders of the outstanding voting
securities of the company at such an annual or special meeting. In
the event that at any time less than a majority of the directors of
such company holding office at that time were so elected by the
holders of the outstanding voting securities, the board of
directors or proper officer of such company shall forthwith cause
to be held as promptly as possible and in any event within sixty
days a meeting of such holders for the purpose of electing
directors to fill any existing vacancies in the board of directors
unless the Commission shall by order extend such period. The
foregoing provisions of this subsection shall not apply to members
of an advisory board.
Nothing herein shall, however, preclude a registered investment
company from dividing its directors into classes if its charter,
certificate of incorporation, articles of association, by-laws,
trust indenture, or other instrument or the law under which it is
organized, so provides and prescribes the tenure of office of the
several classes: Provided, That no class shall be elected for a
shorter period than one year or for a longer period than five years
and the term of office of at least one class shall expire each
year.
(b) Term vacancies
Any vacancy on the board of directors of a registered investment
company which occurs in connection with compliance with section 80a-
15(f)(1)(A) of this title and which must be filled by a person who
is not an interested person of either party to a transaction
subject to section 80a-15(f)(1)(A) of this title shall be filled
only by a person (1) who has been selected and proposed for
election by a majority of the directors of such company who are not
such interested persons, and (2) who has been elected by the
holders of the outstanding voting securities of such company,
except that in the case of the death, disqualification, or bona
fide resignation of a director selected and elected pursuant to
clauses (1) and (2) of this subsection (b), the vacancy created
thereby may be filled as provided in subsection (a) of this
section.
(c) Trustees of common-law trusts
The foregoing provisions of this section shall not apply to a
common-law trust existing on August 22, 1940, under an indenture of
trust which does not provide for the election of trustees by the
shareholders. No natural person shall serve as trustee of such a
trust, which is registered as an investment company, after the
holders of record of not less than two-thirds of the outstanding
shares of beneficial interests in such trust have declared that he
be removed from that office either by declaration in writing filed
with the custodian of the securities of the trust or by votes cast
in person or by proxy at a meeting called for the purpose.
Solicitation of such a declaration shall be deemed a solicitation
of a proxy within the meaning of section 80a-20(a) of this title.
The trustees of such a trust shall promptly call a meeting of
shareholders for the purpose of voting upon the question of removal
of any such trustee or trustees when requested in writing so to do
by the record holders of not less than 10 per centum of the
outstanding shares.
Whenever ten or more shareholders of record who have been such
for at least six months preceding the date of application, and who
hold in the aggregate either shares having a net asset value of at
least $25,000 or at least 1 per centum of the outstanding shares,
whichever is less, shall apply to the trustees in writing, stating
that they wish to communicate with other shareholders with a view
to obtaining signatures to a request for a meeting pursuant to this
subsection and accompanied by a form of communication and request
which they wish to transmit, the trustees shall within five
business days after receipt of such application either -
(1) afford to such applicants access to a list of the names and
addresses of all shareholders as recorded on the books of the
trust; or
(2) inform such applicants as to the approximate number of
shareholders of record, and the approximate cost of mailing to
them the proposed communication and form of request.
If the trustees elect to follow the course specified in paragraph
(2) of this subsection the trustees, upon the written request of
such applicants, accompanied by a tender of the material to be
mailed and of the reasonable expenses of mailing, shall, with
reasonable promptness, mail such material to all shareholders of
record at their addresses as recorded on the books, unless within
five business days after such tender the trustees shall mail to
such applicants and file with the Commission, together with a copy
of the material to be mailed, a written statement signed by at
least a majority of the trustees to the effect that in their
opinion either such material contains untrue statements of fact or
omits to state facts necessary to make the statements contained
therein not misleading, or would be in violation of applicable law,
and specifying the basis of such opinion.
After opportunity for hearing upon the objections specified in
the written statement so filed, the Commission may, and if demanded
by the trustees or by such applicants shall, enter an order either
sustaining one or more of such objections or refusing to sustain
any of them. If the Commission shall enter an order refusing to
sustain any of such objections, or if, after the entry of an order
sustaining one or more of such objections, the Commission shall
find, after notice and opportunity for hearing, that all objections
so sustained have been met, and shall enter an order so declaring,
the trustees shall mail copies of such material to all shareholders
with reasonable promptness after the entry of such order and the
renewal of such tender.
SOURCE
(Aug. 22, 1940, ch. 686, title I, Sec. 16, 54 Stat. 813; Pub. L. 94-
29, Sec. 28(3), June 4, 1975, 89 Stat. 165.)
AMENDMENTS
1975 - Subsecs. (b), (c). Pub. L. 94-29 added subsec. (b),
redesignated former subsec. (b) as (c), and substituted "The
foregoing provisions of this section" for "The provisions of
subsection (a) of this section" in first sentence.
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.
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, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
64 Stat. 1265, set out under section 78d of this title.