CITE
15 USC Sec. 80a-2 01/05/2009
EXPCITE
TITLE 15 - COMMERCE AND TRADE
CHAPTER 2D - INVESTMENT COMPANIES AND ADVISERS
SUBCHAPTER I - INVESTMENT COMPANIES
HEAD
Sec. 80a-2. Definitions; applicability; rulemaking considerations
STATUTE
(a) Definitions
When used in this subchapter, unless the context otherwise
requires -
(1) "Advisory board" means a board, whether elected or
appointed, which is distinct from the board of directors or board
of trustees, of an investment company, and which is composed
solely of persons who do not serve such company in any other
capacity, whether or not the functions of such board are such as
to render its members "directors" within the definition of that
term, which board has advisory functions as to investments but
has no power to determine that any security or other investment
shall be purchased or sold by such company.
(2) "Affiliated company" means a company which is an affiliated
person.
(3) "Affiliated person" of another person means (A) any person
directly or indirectly owning, controlling, or holding with power
to vote, 5 per centum or more of the outstanding voting
securities of such other person; (B) any person 5 per centum or
more of whose outstanding voting securities are directly or
indirectly owned, controlled, or held with power to vote, by such
other person; (C) any person directly or indirectly controlling,
controlled by, or under common control with, such other person;
(D) any officer, director, partner, copartner, or employee of
such other person; (E) if such other person is an investment
company, any investment adviser thereof or any member of an
advisory board thereof; and (F) if such other person is an
unincorporated investment company not having a board of
directors, the depositor thereof.
(4) "Assignment" includes any direct or indirect transfer or
hypothecation of a contract or chose in action by the assignor,
or of a controlling block of the assignor's outstanding voting
securities by a security holder of the assignor; but does not
include an assignment of partnership interests incidental to the
death or withdrawal of a minority of the members of the
partnership having only a minority interest in the partnership
business or to the admission to the partnership of one or more
members who, after such admission, shall be only a minority of
the members and shall have only a minority interest in the
business.
(5) "Bank" means (A) a depository institution (as defined in
section 1813 of title 12) or a branch or agency of a foreign bank
(as such terms are defined in section 3101 of title 12), (B) a
member bank of the Federal Reserve System, (C) any other banking
institution or trust company, whether incorporated or not, doing
business under the laws of any State or of the United States, a
substantial portion of the business of which consists of
receiving deposits or exercising fiduciary powers similar to
those permitted to national banks under the authority of the
Comptroller of the Currency, and which is supervised and examined
by State or Federal authority having supervision over banks, and
which is not operated for the purpose of evading the provisions
of this subchapter, and (D) a receiver, conservator, or other
liquidating agent of any institution or firm included in clauses
(A), (B), or (C) of this paragraph.
(6) The term "broker" has the same meaning as given in section
3 of the Securities Exchange Act of 1934 [15 U.S.C. 78c], except
that such term does not include any person solely by reason of
the fact that such person is an underwriter for one or more
investment companies.
(7) "Commission" means the Securities and Exchange Commission.
(8) "Company" means a corporation, a partnership, an
association, a joint-stock company, a trust, a fund, or any
organized group of persons whether incorporated or not; or any
receiver, trustee in a case under title 11 or similar official or
any liquidating agent for any of the foregoing, in his capacity
as such.
(9) "Control" means the power to exercise a controlling
influence over the management or policies of a company, unless
such power is solely the result of an official position with such
company.
Any person who owns beneficially, either directly or through
one or more controlled companies, more than 25 per centum of the
voting securities of a company shall be presumed to control such
company. Any person who does not so own more than 25 per centum
of the voting securities of any company shall be presumed not to
control such company. A natural person shall be presumed not to
be a controlled person within the meaning of this subchapter. Any
such presumption may be rebutted by evidence, but except as
hereinafter provided, shall continue until a determination to the
contrary made by the Commission by order either on its own motion
or on application by an interested person. If an application
filed hereunder is not granted or denied by the Commission within
sixty days after filing thereof, the determination sought by the
application shall be deemed to have been temporarily granted
pending final determination of the Commission thereon. The
Commission, upon its own motion or upon application, may by order
revoke or modify any order issued under this paragraph whenever
it shall find that the determination embraced in such original
order is no longer consistent with the facts.
(10) "Convicted" includes a verdict, judgment, or plea of
guilty, or a finding of guilt on a plea of nolo contendere, if
such verdict, judgment, plea, or finding has not been reversed,
set aside, or withdrawn, whether or not sentence has been
imposed.
(11) The term "dealer" has the same meaning as given in the
Securities Exchange Act of 1934 [15 U.S.C. 78a et seq.], but does
not include an insurance company or investment company.
(12) "Director" means any director of a corporation or any
person performing similar functions with respect to any
organization, whether incorporated or unincorporated, including
any natural person who is a member of a board of trustees of a
management company created as a common-law trust.
(13) "Employees' securities company" means any investment
company or similar issuer all of the outstanding securities of
which (other than short-term paper) are beneficially owned (A) by
the employees or persons on retainer of a single employer or of
two or more employers each of which is an affiliated company of
the other, (B) by former employees of such employer or employers,
(C) by members of the immediate family of such employees, persons
on retainer, or former employees, (D) by any two or more of the
foregoing classes of persons, or (E) by such employer or
employers together with any one or more of the foregoing classes
of persons.
(14) "Exchange" means any organization, association, or group
of persons, whether incorporated or unincorporated, which
constitutes, maintains, or provides a market place or facilities
for bringing together purchasers and sellers of securities or for
otherwise performing with respect to securities the functions
commonly performed by a stock exchange as that term is generally
understood, and includes the market place and the market
facilities maintained by such exchange.
(15) "Face-amount certificate" means any certificate,
investment contract, or other security which represents an
obligation on the part of its issuer to pay a stated or
determinable sum or sums at a fixed or determinable date or dates
more than twenty-four months after the date of issuance, in
consideration of the payment of periodic installments of a stated
or determinable amount (which security shall be known as a face-
amount certificate of the "installment type"); or any security
which represents a similar obligation on the part of a face-
amount certificate company, the consideration for which is the
payment of a single lump sum (which security shall be known as a
"fully paid" face-amount certificate).
(16) "Government security" means any security issued or
guaranteed as to principal or interest by the United States, or
by a person controlled or supervised by and acting as an
instrumentality of the Government of the United States pursuant
to authority granted by the Congress of the United States; or any
certificate of deposit for any of the foregoing.
(17) "Insurance company" means a company which is organized as
an insurance company, whose primary and predominant business
activity is the writing of insurance or the reinsuring of risks
underwritten by insurance companies, and which is subject to
supervision by the insurance commissioner or a similar official
or agency of a State; or any receiver or similar official or any
liquidating agent for such a company, in his capacity as such.
(18) "Interstate commerce" means trade, commerce,
transportation, or communication among the several States, or
between any foreign country and any State, or between any State
and any place or ship outside thereof.
(19) "Interested person" of another person means -
(A) when used with respect to an investment company -
(i) any affiliated person of such company,
(ii) any member of the immediate family of any natural
person who is an affiliated person of such company,
(iii) any interested person of any investment adviser of or
principal underwriter for such company,
(iv) any person or partner or employee of any person who at
any time since the beginning of the last two completed fiscal
years of such company has acted as legal counsel for such
company,
(v) any person or any affiliated person of a person (other
than a registered investment company) that, at any time
during the 6-month period preceding the date of the
determination of whether that person or affiliated person is
an interested person, has executed any portfolio transactions
for, engaged in any principal transactions with, or
distributed shares for -
(I) the investment company;
(II) any other investment company having the same
investment adviser as such investment company or holding
itself out to investors as a related company for purposes
of investment or investor services; or
(III) any account over which the investment company's
investment adviser has brokerage placement discretion,
(vi) any person or any affiliated person of a person (other
than a registered investment company) that, at any time
during the 6-month period preceding the date of the
determination of whether that person or affiliated person is
an interested person, has loaned money or other property to -
(I) the investment company;
(II) any other investment company having the same
investment adviser as such investment company or holding
itself out to investors as a related company for purposes
of investment or investor services; or
(III) any account for which the investment company's
investment adviser has borrowing authority,(!1)
(vii) any natural person whom the Commission by order shall
have determined to be an interested person by reason of
having had, at any time since the beginning of the last two
completed fiscal years of such company, a material business
or professional relationship with such company or with the
principal executive officer of such company or with any other
investment company having the same investment adviser or
principal underwriter or with the principal executive officer
of such other investment company:
Provided, That no person shall be deemed to be an interested
person of an investment company solely by reason of (aa) his
being a member of its board of directors or advisory board or
an owner of its securities, or (bb) his membership in the
immediate family of any person specified in clause (aa) of this
proviso; and
(B) when used with respect to an investment adviser of or
principal underwriter for any investment company -
(i) any affiliated person of such investment adviser or
principal underwriter,
(ii) any member of the immediate family of any natural
person who is an affiliated person of such investment adviser
or principal underwriter,
(iii) any person who knowingly has any direct or indirect
beneficial interest in, or who is designated as trustee,
executor, or guardian of any legal interest in, any security
issued either by such investment adviser of principal
underwriter or by a controlling person or such investment
adviser or principal underwriter,
(iv) any person or partner or employee of any person who at
any time since the beginning of the last two completed fiscal
years of such investment company has acted as legal counsel
for such investment adviser or principal underwriter,
(v) any person or any affiliated person of a person (other
than a registered investment company) that, at any time
during the 6-month period preceding the date of the
determination of whether that person or affiliated person is
an interested person, has executed any portfolio transactions
for, engaged in any principal transactions with, or
distributed shares for -
(I) any investment company for which the investment
adviser or principal underwriter serves as such;
(II) any investment company holding itself out to
investors, for purposes of investment or investor services,
as a company related to any investment company for which
the investment adviser or principal underwriter serves as
such; or
(III) any account over which the investment adviser has
brokerage placement discretion,
(vi) any person or any affiliated person of a person (other
than a registered investment company) that, at any time
during the 6-month period preceding the date of the
determination of whether that person or affiliated person is
an interested person, has loaned money or other property to -
(I) any investment company for which the investment
adviser or principal underwriter serves as such;
(II) any investment company holding itself out to
investors, for purposes of investment or investor services,
as a company related to any investment company for which
the investment adviser or principal underwriter serves as
such; or
(III) any account for which the investment adviser has
borrowing authority,(!1)
(vii) any natural person whom the Commission by order shall
have determined to be an interested person by reason of
having had at any time since the beginning of the last two
completed fiscal years of such investment company a material
business or professional relationship with such investment
adviser or principal underwriter or with the principal
executive officer or any controlling person of such
investment adviser or principal underwriter.
For the purposes of this paragraph (19), "member of the immediate
family" means any parent, spouse of a parent, child, spouse of a
child, spouse, brother, or sister, and includes step and adoptive
relationships. The Commission may modify or revoke any order
issued under clause (vi) of subparagraph (A) or (B) of this
paragraph whenever it finds that such order is no longer
consistent with the facts. No order issued pursuant to clause
(vi) of subparagraph (A) or (B) of this paragraph shall become
effective until at least sixty days after the entry thereof, and
no such order shall affect the status of any person for the
purposes of this subchapter or for any other purpose for any
period prior to the effective date of such order.
(20) "Investment adviser" of an investment company means (A)
any person (other than a bona fide officer, director, trustee,
member of an advisory board, or employee of such company, as
such) who pursuant to contract with such company regularly
furnishes advice to such company with respect to the desirability
of investing in, purchasing or selling securities or other
property, or is empowered to determine what securities or other
property shall be purchased or sold by such company, and (B) any
other person who pursuant to contract with a person described in
clause (A) of this paragraph regularly performs substantially all
of the duties undertaken by such person described in said clause
(A); but does not include (i) a person whose advice is furnished
solely through uniform publications distributed to subscribers
thereto, (ii) a person who furnishes only statistical and other
factual information, advice regarding economic factors and
trends, or advice as to occasional transactions in specific
securities, but without generally furnishing advice or making
recommendations regarding the purchase or sale of securities,
(iii) a company furnishing such services at cost to one or more
investment companies, insurance companies, or other financial
institutions, (iv) any person the character and amount of whose
compensation for such services must be approved by a court, or
(v) such other persons as the Commission may by rules and
regulations or order determine not to be within the intent of
this definition.
(21) "Investment banker" means any person engaged in the
business of underwriting securities issued by other persons, but
does not include an investment company, any person who acts as an
underwriter in isolated transactions but not as a part of a
regular business, or any person solely by reason of the fact that
such person is an underwriter for one or more investment
companies.
(22) "Issuer" means every person who issues or proposes to
issue any security, or has outstanding any security which it has
issued.
(23) "Lend" includes a purchase coupled with an agreement by
the vendor to repurchase; "borrow" includes a sale coupled with a
similar agreement.
(24) "Majority-owned subsidiary" of a person means a company 50
per centum or more of the outstanding voting securities of which
are owned by such person, or by a company which, within the
meaning of this paragraph, is a majority-owned subsidiary of such
person.
(25) "Means or instrumentality of interstate commerce" includes
any facility of a national securities exchange.
(26) "National securities exchange" means an exchange
registered under section 6 of the Securities Exchange Act of 1934
[15 U.S.C. 78f].
(27) "Periodic payment plan certificate" means (A) any
certificate, investment contract, or other security providing for
a series of periodic payments by the holder, and representing an
undivided interest in certain specified securities or in a unit
or fund of securities purchased wholly or partly with the
proceeds of such payments, and (B) any security the issuer of
which is also issuing securities of the character described in
clause (A) of this paragraph and the holder of which has
substantially the same rights and privileges as those which
holders of securities of the character described in said clause
(A) have upon completing the periodic payments for which such
securities provide.
(28) "Person" means a natural person or a company.
(29) "Principal underwriter" of or for any investment company
other than a closed-end company, or of any security issued by
such a company, means any underwriter who as principal purchases
from such company, or pursuant to contract has the right (whether
absolute or conditional) from time to time to purchase from such
company, any such security for distribution, or who as agent for
such company sells or has the right to sell any such security to
a dealer or to the public or both, but does not include a dealer
who purchases from such company through a principal underwriter
acting as agent for such company. "Principal underwriter" of or
for a closed-end company or any issuer which is not an investment
company, or of any security issued by such a company or issuer,
means any underwriter who, in connection with a primary
distribution of securities, (A) is in privity of contract with
the issuer or an affiliated person of the issuer; (B) acting
alone or in concert with one or more other persons, initiates or
directs the formation of an underwriting syndicate; or (C) is
allowed a rate of gross commission, spread, or other profit
greater than the rate allowed another underwriter participating
in the distribution.
(30) "Promoter" of a company or a proposed company means a
person who, acting alone or in concert with other persons, is
initiating or directing, or has within one year initiated or
directed, the organization of such company.
(31) "Prospectus", as used in section 80a-22 of this title,
means a written prospectus intended to meet the requirements of
section 10(a) of the Securities Act of 1933 [15 U.S.C. 77j(a)]
and currently in use. As used elsewhere, "prospectus" means a
prospectus as defined in the Securities Act of 1933 [15 U.S.C.
77a et seq.].
(32) "Redeemable security" means any security, other than short-
term paper, under the terms of which the holder, upon its
presentation to the issuer or to a person designated by the
issuer, is entitled (whether absolutely or only out of surplus)
to receive approximately his proportionate share of the issuer's
current net assets, or the cash equivalent thereof.
(33) "Reorganization" means (A) a reorganization under the
supervision of a court of competent jurisdiction; (B) a merger or
consolidation; (C) a sale of 75 per centum or more in value of
the assets of a company; (D) a restatement of the capital of a
company, or an exchange of securities issued by a company for any
of its own outstanding securities; (E) a voluntary dissolution or
liquidation of a company; (F) a recapitalization or other
procedure or transaction which has for its purpose the
alteration, modification, or elimination of any of the rights,
preferences, or privileges of any class of securities issued by a
company, as provided in its charter or other instrument creating
or defining such rights, preferences, and privileges; (G) an
exchange of securities issued by a company for outstanding
securities issued by another company or companies, preliminary to
and for the purpose of effecting or consummating any of the
foregoing; or (H) any exchange of securities by a company which
is not an investment company for securities issued by a
registered investment company.
(34) "Sale", "sell", "offer to sell", or "offer for sale"
includes every contract of sale or disposition of, attempt or
offer to dispose of, or solicitation of an offer to buy, a
security or interest in a security, for value. Any security given
or delivered with, or as a bonus on account of, any purchase of
securities or any other thing, shall be conclusively presumed to
constitute a part of the subject of such purchase and to have
been sold for value.
(35) "Sales load" means the difference between the price of a
security to the public and that portion of the proceeds from its
sale which is received and invested or held for investment by the
issuer (or in the case of a unit investment trust, by the
depositor or trustee), less any portion of such difference
deducted for trustee's or custodian's fees, insurance premiums,
issue taxes, or administrative expenses or fees which are not
properly chargeable to sales or promotional activities. In the
case of a periodic payment plan certificate, "sales load"
includes the sales load on any investment company securities in
which the payments made on such certificate are invested, as well
as the sales load on the certificate itself.
(36) "Security" means any note, stock, treasury stock, security
future, bond, debenture, evidence of indebtedness, certificate of
interest or participation in any profit-sharing agreement,
collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-
trust certificate, certificate of deposit for a security,
fractional undivided interest in oil, gas, or other mineral
rights, any put, call, straddle, option, or privilege on any
security (including a certificate of deposit) or on any group or
index of securities (including any interest therein or based on
the value thereof), or any put, call, straddle, option, or
privilege entered into on a national securities exchange relating
to foreign currency, or, in general, any interest or instrument
commonly known as a "security", or any certificate of interest or
participation in, temporary or interim certificate for, receipt
for, guarantee of, or warrant or right to subscribe to or
purchase, any of the foregoing.
(37) "Separate account" means an account established and
maintained by an insurance company pursuant to the laws of any
State or territory of the United States, or of Canada or any
province thereof, under which income, gains and losses, whether
or not realized, from assets allocated to such account, are, in
accordance with the applicable contract, credited to or charged
against such account without regard to other income, gains, or
losses of the insurance company.
(38) "Short-term paper" means any note, draft, bill of
exchange, or banker's acceptance payable on demand or having a
maturity at the time of issuance of not exceeding nine months,
exclusive of days of grace, or any renewal thereof payable on
demand or having a maturity likewise limited; and such other
classes of securities, of a commercial rather than an investment
character, as the Commission may designate by rules and
regulations.
(39) "State" means any State of the United States, the District
of Columbia, Puerto Rico, the Virgin Islands, or any other
possession of the United States.
(40) "Underwriter" means any person who has purchased from an
issuer with a view to, or sells for an issuer in connection with,
the distribution of any security, or participates or has a direct
or indirect participation in any such undertaking, or
participates or has a participation in the direct or indirect
underwriting of any such undertaking; but such term shall not
include a person whose interest is limited to a commission from
an underwriter or dealer not in excess of the usual and customary
distributor's or seller's commission. As used in this paragraph
the term "issuer" shall include, in addition to an issuer, any
person directly or indirectly controlling or controlled by the
issuer, or any person under direct or indirect common control
with the issuer. When the distribution of the securities in
respect of which any person is an underwriter is completed such
person shall cease to be an underwriter in respect of such
securities or the issuer thereof.
(41) "Value", with respect to assets of registered investment
companies, except as provided in subsection (b) of section 80a-28
of this title, means -
(A) as used in sections 80a-3, 80a-5, and 80a-12 of this
title, (i) with respect to securities owned at the end of the
last preceding fiscal quarter for which market quotations are
readily available, the market value at the end of such quarter;
(ii) with respect to other securities and assets owned at the
end of the last preceding fiscal quarter, fair value at the end
of such quarter, as determined in good faith by the board of
directors; and (iii) with respect to securities and other
assets acquired after the end of the last preceding fiscal
quarter, the cost thereof; and
(B) as used elsewhere in this subchapter, (i) with respect to
securities for which market quotations are readily available,
the market value of such securities; and (ii) with respect to
other securities and assets, fair value as determined in good
faith by the board of directors;
in each case as of such time or times as determined pursuant to
this subchapter, and the rules and regulations issued by the
Commission hereunder. Notwithstanding the fact that market
quotations for securities issued by controlled companies are
available, the board of directors may in good faith determine the
value of such securities: Provided, That the value so determined
is not in excess of the higher of market value or asset value of
such securities in the case of majority-owned subsidiaries, and
is not in excess of market value in the case of other controlled
companies.
For purposes of the valuation of those assets of a registered
diversified company which are not subject to the limitations
provided for in section 80a-5(b)(1) of this title, the Commission
may, by rules and regulations or orders, permit any security to
be carried at cost, if it shall determine that such procedure is
consistent with the general intent and purposes of this
subchapter. For purposes of sections 80a-5 and 80a-12 of this
title in lieu of values determined as provided in clause (A)
above, the Commission shall by rules and regulations permit
valuation of securities at cost or other basis in cases where it
may be more convenient for such company to make its computations
on such basis by reason of the necessity or desirability of
complying with the provisions of any United States revenue laws
or rules and regulations issued thereunder, or the laws or the
rules and regulations issued thereunder of any State in which the
securities of such company may be qualified for sale.
The foregoing definition shall not derogate from the authority
of the Commission with respect to the reports, information, and
documents to be filed with the Commission by any registered
company, or with respect to the accounting policies and
principles to be followed by any such company, as provided in
sections 80a-8, 80a-29, and 80a-30 of this title.
(42) "Voting security" means any security presently entitling
the owner or holder thereof to vote for the election of directors
of a company. A specified percentage of the outstanding voting
securities of a company means such amount of its outstanding
voting securities as entitles the holder or holders thereof to
cast said specified percentage of the aggregate votes which the
holders of all the outstanding voting securities of such company
are entitled to cast. The vote of a majority of the outstanding
voting securities of a company means the vote, at the annual or a
special meeting of the security holders of such company duly
called, (A) of 67 per centum or more of the voting securities
present at such meeting, if the holders of more than 50 per
centum of the outstanding voting securities of such company are
present or represented by proxy; or (B) of more than 50 per
centum of the outstanding voting securities of such company,
whichever is the less.
(43) "Wholly-owned subsidiary" of a person means a company 95
per centum or more of the outstanding voting securities of which
are owned by such person, or by a company which, within the
meaning of this paragraph, is a wholly-owned subsidiary of such
person.
(44) "Securities Act of 1933" [15 U.S.C. 77a et seq.],
"Securities Exchange Act of 1934" [15 U.S.C. 78a et seq.],
"Public Utility Holding Company Act of 1935",(!2) and "Trust
Indenture Act of 1939" [15 U.S.C. 77aaa et seq.] mean those acts,
respectively, as heretofore or hereafter amended.
(45) "Savings and loan association" means a savings and loan
association, building and loan association, cooperative bank,
homestead association, or similar institution, which is
supervised and examined by State or Federal authority having
supervision over any such institution, and a receiver,
conservator, or other liquidating agent of any such institution.
(46) "Eligible portfolio company" means any issuer which -
(A) is organized under the laws of, and has its principal
place of business in, any State or States;
(B) is neither an investment company as defined in section
80a-3 of this title (other than a small business investment
company which is licensed by the Small Business Administration
to operate under the Small Business Investment Act of 1958 [15
U.S.C. 661 et seq.] and which is a wholly-owned subsidiary of
the business development company) nor a company which would be
an investment company except for the exclusion from the
definition of investment company in section 80a-3(c) of this
title; and
(C) satisfies one of the following:
(i) it does not have any class of securities with respect
to which a member of a national securities exchange, broker,
or dealer may extend or maintain credit to or for a customer
pursuant to rules or regulations adopted by the Board of
Governors of the Federal Reserve System under section 7 of
the Securities Exchange Act of 1934 [15 U.S.C. 78g];
(ii) it is controlled by a business development company,
either alone or as part of a group acting together, and such
business development company in fact exercises a controlling
influence over the management or policies of such eligible
portfolio company and, as a result of such control, has an
affiliated person who is a director of such eligible
portfolio company;
(iii) it has total assets of not more than $4,000,000, and
capital and surplus (shareholders' equity less retained
earnings) of not less than $2,000,000, except that the
Commission may adjust such amounts by rule, regulation, or
order to reflect changes in 1 or more generally accepted
indices or other indicators for small businesses; or
(iv) it meets such other criteria as the Commission may, by
rule, establish as consistent with the public interest, the
protection of investors, and the purposes fairly intended by
the policy and provisions of this subchapter.
(47) "Making available significant managerial assistance" by a
business development company means -
(A) any arrangement whereby a business development company,
through its directors, officers, employees, or general
partners, offers to provide, and, if accepted, does so provide,
significant guidance and counsel concerning the management,
operations, or business objectives and policies of a portfolio
company;
(B) the exercise by a business development company of a
controlling influence over the management or policies of a
portfolio company by the business development company acting
individually or as part of a group acting together which
controls such portfolio company; or
(C) with respect to a small business investment company
licensed by the Small Business Administration to operate under
the Small Business Investment Act of 1958 [15 U.S.C. 661 et
seq.], the making of loans to a portfolio company.
For purposes of subparagraph (A), the requirement that a business
development company make available significant managerial
assistance shall be deemed to be satisfied with respect to any
particular portfolio company where the business development
company purchases securities of such portfolio company in
conjunction with one or more other persons acting together, and
at least one of the persons in the group makes available
significant managerial assistance to such portfolio company,
except that such requirement will not be deemed to be satisfied
if the business development company, in all cases, makes
available significant managerial assistance solely in the manner
described in this sentence.
(48) "Business development company" means any closed-end
company which -
(A) is organized under the laws of, and has its principal
place of business in, any State or States;
(B) is operated for the purpose of making investments in
securities described in paragraphs (1) through (3) of section
80a-54(a) of this title, and makes available significant
managerial assistance with respect to the issuers of such
securities, provided that a business development company must
make available significant managerial assistance only with
respect to the companies which are treated by such business
development company as satisfying the 70 per centum of the
value of its total assets condition of section 80a-54 of this
title; and provided further that a business development company
need not make available significant managerial assistance with
respect to any company described in paragraph (46)(C)(iii), or
with respect to any other company that meets such criteria as
the Commission may by rule, regulation, or order permit, as
consistent with the public interest, the protection of
investors, and the purposes of this subchapter; and
(C) has elected pursuant to section 80a-53(a) of this title
to be subject to the provisions of sections 80a-54 through 80a-
64 of this title.
(49) "Foreign securities authority" means any foreign
government or any governmental body or regulatory organization
empowered by a foreign government to administer or enforce its
laws as they relate to securities matters.
(50) "Foreign financial regulatory authority" means any (A)
foreign securities authority, (B) other governmental body or
foreign equivalent of a self-regulatory organization empowered by
a foreign government to administer or enforce its laws relating
to the regulation of fiduciaries, trusts, commercial lending,
insurance, trading in contracts of sale of a commodity for future
delivery, or other instruments traded on or subject to the rules
of a contract market, board of trade or foreign equivalent, or
other financial activities, or (C) membership organization a
function of which is to regulate the participation of its members
in activities listed above.
(51)(A) "Qualified purchaser" means -
(i) any natural person (including any person who holds a
joint, community property, or other similar shared ownership
interest in an issuer that is excepted under section 80a-
3(c)(7) of this title with that person's qualified purchaser
spouse) who owns not less than $5,000,000 in investments, as
defined by the Commission;
(ii) any company that owns not less than $5,000,000 in
investments and that is owned directly or indirectly by or for
2 or more natural persons who are related as siblings or spouse
(including former spouses), or direct lineal descendants by
birth or adoption, spouses of such persons, the estates of such
persons, or foundations, charitable organizations, or trusts
established by or for the benefit of such persons;
(iii) any trust that is not covered by clause (ii) and that
was not formed for the specific purpose of acquiring the
securities offered, as to which the trustee or other person
authorized to make decisions with respect to the trust, and
each settlor or other person who has contributed assets to the
trust, is a person described in clause (i), (ii), or (iv); or
(iv) any person, acting for its own account or the accounts
of other qualified purchasers, who in the aggregate owns and
invests on a discretionary basis, not less than $25,000,000 in
investments.
(B) The Commission may adopt such rules and regulations
applicable to the persons and trusts specified in clauses (i)
through (iv) of subparagraph (A) as it determines are necessary
or appropriate in the public interest or for the protection of
investors.
(C) The term "qualified purchaser" does not include a company
that, but for the exceptions provided for in paragraph (1) or (7)
of section 80a-3(c) of this title, would be an investment company
(hereafter in this paragraph referred to as an "excepted
investment company"), unless all beneficial owners of its
outstanding securities (other than short-term paper), determined
in accordance with section 80a-3(c)(1)(A) of this title, that
acquired such securities on or before April 30, 1996 (hereafter
in this paragraph referred to as "pre-amendment beneficial
owners"), and all pre-amendment beneficial owners of the
outstanding securities (other than short-term paper) of any
excepted investment company that, directly or indirectly, owns
any outstanding securities of such excepted investment company,
have consented to its treatment as a qualified purchaser.
Unanimous consent of all trustees, directors, or general partners
of a company or trust referred to in clause (ii) or (iii) of
subparagraph (A) shall constitute consent for purposes of this
subparagraph.
(52) The terms "security future" and "narrow-based security
index" have the same meanings as provided in section 3(a)(55) of
the Securities Exchange Act of 1934 [15 U.S.C. 78c(a)(55)].
(53) The term "credit rating agency" has the same meaning as in
section 3 of the Securities Exchange Act of 1934 [15 U.S.C. 78c].
(b) Applicability to government
No provision in this subchapter shall apply to, or be deemed to
include, the United States, a State, or any political subdivision
of a State, or any agency, authority, or instrumentality of any one
or more of the foregoing, or any corporation which is wholly owned
directly or indirectly by any one or more of the foregoing, or any
officer, agent, or employee of any of the foregoing acting as such
in the course of his official duty, unless such provision makes
specific reference thereto.
(c) Consideration of promotion of efficiency, competition, and
capital formation
Whenever pursuant to this subchapter the Commission is engaged in
rulemaking and is required to consider or determine whether an
action is consistent with the public interest, the Commission shall
also consider, in addition to the protection of investors, whether
the action will promote efficiency, competition, and capital
formation.
SOURCE
(Aug. 22, 1940, ch. 686, title I, Sec. 2, 54 Stat. 790; Proc. No.
2695, eff. July 4, 1946, 11 F.R. 7517, 60 Stat. 1352; Aug. 10,
1954, ch. 667, title IV, Sec. 401, 68 Stat. 688; Pub. L. 86-70,
Sec. 12(d), June 25, 1959, 73 Stat. 143; Pub. L. 86-624, Sec. 7(c),
July 12, 1960, 74 Stat. 412; Pub. L. 91-547, Sec. 2(a), Dec. 14,
1970, 84 Stat. 1413; Pub. L. 95-598, title III, Sec. 310(a), Nov.
6, 1978, 92 Stat. 2676; Pub. L. 96-477, title I, Sec. 101, Oct. 21,
1980, 94 Stat. 2275; Pub. L. 97-303, Sec. 5, Oct. 13, 1982, 96
Stat. 1409; Pub. L. 100-181, title VI, Secs. 601-603, Dec. 4, 1987,
101 Stat. 1260; Pub. L. 101-550, title II, Sec. 206(a), Nov. 15,
1990, 104 Stat. 2720; Pub. L. 104-290, title I, Sec. 106(c), title
II, Sec. 209(b), title V, Secs. 503, 504, Oct. 11, 1996, 110 Stat.
3425, 3434, 3445; Pub. L. 105-353, title III, Sec. 301(c)(1), Nov.
3, 1998, 112 Stat. 3236; Pub. L. 106-102, title II, Secs. 213(a),
(b), 215, 216, 223, Nov. 12, 1999, 113 Stat. 1397, 1399, 1401; Pub.
L. 106-554, Sec. 1(a)(5) [title II, Sec. 209(a)(1), (3)], Dec. 21,
2000, 114 Stat. 2763, 2763A-435, 2763A-436; Pub. L. 109-291, Sec.
4(b)(2)(A), Sept. 29, 2006, 120 Stat. 1337.)
REFERENCES IN TEXT
The Securities Exchange Act of 1934, referred to in subsec.
(a)(11), (44), is act June 6, 1934, ch. 404, 48 Stat. 881, as
amended, which is classified generally to chapter 2B (Sec. 78a et
seq.) of this title. For complete classification of this Act to the
Code, see section 78a of this title and Tables.
The Securities Act of 1933, referred to in subsec. (a)(31), (44),
is act May 27, 1933, ch. 38, title I, 48 Stat. 74, as amended,
which is classified generally to subchapter I (Sec. 77a et seq.) of
chapter 2A of this title. For complete classification of this Act
to the Code, see section 77a of this title and Tables.
The Public Utility Holding Company Act of 1935, referred to in
subsec. (a)(44), is title I of act Aug. 26, 1935, ch. 687, 49 Stat.
803, as amended, which was classified generally to chapter 2C (Sec.
79 et seq.) of this title, prior to repeal by Pub. L. 109-58, title
XII, Sec. 1263, Aug. 8, 2005, 119 Stat. 974. For complete
classification of this Act to the Code, see Tables.
The Trust Indenture Act of 1939, referred to in subsec. (a)(44),
is title III of act May 27, 1933, ch. 38, as added Aug. 3, 1939,
ch. 411, 53 Stat. 1149, as amended, which is classified generally
to subchapter III (Sec. 77aaa et seq.) of chapter 2A of this title.
For complete classification of this Act to the Code, see section
77aaa of this title and Tables.
The Small Business Investment Act of 1958, referred to in subsec.
(a)(46)(B), (47)(C), is Pub. L. 85-699, Aug. 21, 1958, 72 Stat.
689, as amended, which is classified principally to chapter 14B
(Sec. 661 et seq.) of this title. For complete classification of
this Act to the Code, see Short Title note set out under section
661 of this title and Tables.
CODIFICATION
Words "Philippine Islands" deleted from definition of term
"State" under authority of Proc. No. 2695, which granted
independence to the Philippine Islands. Proc. No. 2695 was issued
pursuant to section 1394 of Title 22, Foreign Relations and
Intercourse, and is set out as a note under that section.
AMENDMENTS
2006 - Subsec. (a)(53). Pub. L. 109-291 added par. (53).
2000 - Subsec. (a)(36). Pub. L. 106-554, Sec. 1(a)(5) [title II,
Sec. 209(a)(1)], inserted "security future," after "treasury
stock,".
Subsec. (a)(52). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
209(a)(3)], added par. (52).
1999 - Subsec. (a)(5)(A). Pub. L. 106-102, Sec. 223, substituted
"a depository institution (as defined in section 1813 of title 12)
or a branch or agency of a foreign bank (as such terms are defined
in section 3101 of title 12)" for "a banking institution organized
under the laws of the United States".
Subsec. (a)(6). Pub. L. 106-102, Sec. 215, amended par. (6)
generally. Prior to amendment, par. (6) read as follows: " 'Broker'
means any person engaged in the business of effecting transactions
in securities for the account of others, but does not include a
bank or any person solely by reason of the fact that such person is
an underwriter for one or more investment companies."
Subsec. (a)(11). Pub. L. 106-102, Sec. 216, amended par. (11)
generally. Prior to amendment, par. (11) read as follows: "
'Dealer' means any person regularly engaged in the business of
buying and selling securities for his own account, through a broker
or otherwise, but does not include a bank, insurance company, or
investment company, or any person insofar as he is engaged in
investing, reinvesting, or trading in securities, or in owning or
holding securities, for his own account, either individually or in
some fiduciary capacity, but not as a part of a regular business."
Subsec. (a)(19)(A)(v). Pub. L. 106-102, Sec. 213(a)(1), added cl.
(v) and struck out former cl. (v) which read as follows: "any
broker or dealer registered under the Securities Exchange Act of
1934 or any affiliated person of such a broker or dealer, and".
Subsec. (a)(19)(A)(vi), (vii). Pub. L. 106-102, Sec. 213(a)(2),
(3), added cl. (vi) and redesignated former cl. (vi) as (vii).
Subsec. (a)(19)(B)(v). Pub. L. 106-102, Sec. 213(b)(1), added cl.
(v) and struck out former cl. (v) which read as follows: "any
broker or dealer registered under the Securities Exchange Act of
1934 or any affiliated person of such a broker or dealer, and".
Subsec. (a)(19)(B)(vi), (vii). Pub. L. 106-102, Sec. 213(b)(2),
(3), added cl. (vi) and redesignated former cl. (vi) as (vii).
1998 - Subsec. (a)(8). Pub. L. 105-353 made a technical amendment
to reference in original act which appears in text as reference to
title 11.
1996 - Subsec. (a)(46)(C)(iii), (iv). Pub. L. 104-290, Sec. 503,
added cl. (iii) and redesignated former cl. (iii) as (iv).
Subsec. (a)(48)(B). Pub. L. 104-290, Sec. 504, inserted at end
"provided further that a business development company need not make
available significant managerial assistance with respect to any
company described in paragraph (46)(C)(iii), or with respect to any
other company that meets such criteria as the Commission may by
rule, regulation, or order permit, as consistent with the public
interest, the protection of investors, and the purposes of this
subchapter; and".
Subsec. (a)(51). Pub. L. 104-290, Sec. 209(b), added par. (51).
Subsec. (c). Pub. L. 104-290, Sec. 106(c), added subsec. (c).
1990 - Subsec. (a)(49), (50). Pub. L. 101-550 added pars. (49)
and (50).
1987 - Subsec. (a)(19). Pub. L. 100-181, Sec. 601, inserted
"completed" before "fiscal years" wherever appearing in subpars.
(A)(iv), (vi) and (B)(iv), (vi).
Subsec. (a)(39). Pub. L. 100-181, Sec. 602, struck out reference
to Canal Zone.
Subsec. (a)(48)(B). Pub. L. 100-181, Sec. 603, substituted
"paragraphs (1) through (3) of section 80a-54(a) of this title" for
"sections 80a-54(a)(1) through (3) of this title".
1982 - Subsec. (a)(36). Pub. L. 97-303 inserted "any put, call,
straddle, option, or privilege on any security (including a
certificate of deposit) or on any group or index of securities
(including any interest therein or based on the value thereof), or
any put, call, straddle, option, or privilege entered into on a
national securities exchange relating to foreign currency," after
"mineral rights,".
1980 - Subsec. (a)(46) to (48). Pub. L. 96-477 added pars. (46)
to (48).
1978 - Subsec. (a)(8). Pub. L. 95-598 substituted "a case under
title 11" for "bankruptcy".
1970 - Subsec. (a)(5). Pub. L. 91-547, Sec. 2(a)(1), substituted
"under the authority of the Comptroller of the Currency" for "under
section 248(k) of title 12,".
Subsec. (a)(19). Pub. L. 91-547, Sec. 2(a)(3), added par. (19).
Former par. (19) redesignated (20).
Subsecs. (a)(20) to (36). Pub. L. 91-547, Sec. 2(a)(2),
redesignated former pars. (19) to (35) as (20) to (36),
respectively.
Subsec. (a)(37). Pub. L. 91-547, Sec. 2(a)(4), added par. (37).
Former par. (37) redesignated (39).
Subsecs. (a)(38) to (44). Pub. L. 91-547, Sec. 2(a)(2),
redesignated former pars. (36) to (42) as (38) to (44).
Subsec. (a)(45). Pub. L. 91-547, Sec. 2(a)(5), added par. (45).
1960 - Subsec. (a)(37). Pub. L. 86-624 struck out reference to
Hawaii.
1959 - Subsec. (a)(37). Pub. L. 86-70 struck out reference to
Alaska.
1954 - Subsec. (a)(30). Act Aug. 10, 1954, substituted "section
10(a) of the Securities Act of 1933" for "section 5(b) of the
Securities Act of 1933".
EFFECTIVE DATE OF 1999 AMENDMENT
Amendment by Pub. L. 106-102 effective 18 months after Nov. 12,
1999, see section 225 of Pub. L. 106-102, set out as a note under
section 77c of this title.
EFFECTIVE DATE OF 1996 AMENDMENT
Section 209(e) of Pub. L. 104-290 provided that: "The amendments
made by this section [amending this section and section 80a-3 of
this title] shall take effect on the earlier of -
"(1) 180 days after the date of enactment of this Act [Oct. 11,
1996]; or
"(2) the date on which the rulemaking required under subsection
(d)(2) [set out below] is completed."
EFFECTIVE DATE OF 1978 AMENDMENT
Amendment by Pub. L. 95-598 effective Oct. 1, 1979, see section
402(a) of Pub. L. 95-598, set out as an Effective Date note
preceding section 101 of Title 11, Bankruptcy.
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.
EFFECTIVE DATE OF 1954 AMENDMENT
Amendment by act Aug. 10, 1954, effective 60 days after Aug. 10,
1954, see note set out under section 77b of this title.
REGULATIONS
Section 209(d)(2) of Pub. L. 104-290 provided that: "Not later
than 180 days after the date of enactment of this Act [Oct. 11,
1996], the Commission shall prescribe rules defining the term, or
otherwise identifying, 'investments' for purposes of section
2(a)(51) of the Investment Company Act of 1940 [15 U.S.C. 80a-
2(a)(51)], as added by this Act."
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.
FOOTNOTE
(!1) So in original. Probably should be followed by the word
"and".
(!2) See References in Text note below.