CITE
15 USC Sec. 80a-22 01/05/2009
EXPCITE
TITLE 15 - COMMERCE AND TRADE
CHAPTER 2D - INVESTMENT COMPANIES AND ADVISERS
SUBCHAPTER I - INVESTMENT COMPANIES
HEAD
Sec. 80a-22. Distribution, redemption, and repurchase of
securities; regulations by securities associations
STATUTE
(a) Rules relating to minimum and maximum prices for purchase and
sale of securities from investment company; time for resale and
redemption
A securities association registered under section 78o-3 of this
title may prescribe, by rules adopted and in effect in accordance
with said section and subject to all provisions of said section
applicable to the rules of such an association -
(1) a method or methods for computing the minimum price at
which a member thereof may purchase from any investment company
any redeemable security issued by such company and the maximum
price at which a member may sell to such company any redeemable
security issued by it or which he may receive for such security
upon redemption, so that the price in each case will bear such
relation to the current net asset value of such security computed
as of such time as the rules may prescribe; and
(2) a minimum period of time which must elapse after the sale
or issue of such security before any resale to such company by a
member or its redemption upon surrender by a member;
in each case for the purpose of eliminating or reducing so far as
reasonably practicable any dilution of the value of other
outstanding securities of such company or any other result of such
purchase, redemption, or sale which is unfair to holders of such
other outstanding securities; and said rules may prohibit the
members of the association from purchasing, selling, or
surrendering for redemption any such redeemable securities in
contravention of said rules.
(b) Rules relating to purchase of securities by members from issuer
investment company
(1) Such a securities association may also, by rules adopted and
in effect in accordance with section 78o-3 of this title, and
notwithstanding the provisions of subsection (b)(6) thereof but
subject to all other provisions of said section applicable to the
rules of such an association, prohibit its members from purchasing,
in connection with a primary distribution of redeemable securities
of which any registered investment company is the issuer, any such
security from the issuer or from any principal underwriter except
at a price equal to the price at which such security is then
offered to the public less a commission, discount, or spread which
is computed in conformity with a method or methods, and within such
limitations as to the relation thereof to said public offering
price, as such rules may prescribe in order that the price at which
such security is offered or sold to the public shall not include an
excessive sales load but shall allow for reasonable compensation
for sales personnel, broker-dealers, and underwriters, and for
reasonable sales loads to investors. The Commission shall on
application or otherwise, if it appears that smaller companies are
subject to relatively higher operating costs, make due allowance
therefor by granting any such company or class of companies
appropriate qualified exemptions from the provisions of this
section.
(2) At any time after the expiration of eighteen months from
December 14, 1970 (or, if earlier, after a securities association
has adopted for purposes of paragraph (1) any rule respecting
excessive sales loads), the Commission may alter or supplement the
rules of any securities association as may be necessary to
effectuate the purposes of this subsection in the manner provided
by section 78s(c) of this title.
(3) If any provision of this subsection is in conflict with any
provision of any law of the United States in effect on December 14,
1970, the provisions of this subsection shall prevail.
(c) Conflicting rules of Commission and associations
The Commission may make rules and regulations applicable to
registered investment companies and to principal underwriters of,
and dealers in, the redeemable securities of any registered
investment company, whether or not members of any securities
association, to the same extent, covering the same subject matter,
and for the accomplishment of the same ends as are prescribed in
subsection (a) of this section in respect of the rules which may be
made by a registered securities association governing its members.
Any rules and regulations so made by the Commission, to the extent
that they may be inconsistent with the rules of any such
association, shall so long as they remain in force supersede the
rules of the association and be binding upon its members as well as
all other underwriters and dealers to whom they may be applicable.
(d) Sale of securities except to or through principal underwriter;
price of securities
No registered investment company shall sell any redeemable
security issued by it to any person except either to or through a
principal underwriter for distribution or at a current public
offering price described in the prospectus, and, if such class of
security is being currently offered to the public by or through an
underwriter, no principal underwriter of such security and no
dealer shall sell any such security to any person except a dealer,
a principal underwriter, or the issuer, except at a current public
offering price described in the prospectus. Nothing in this
subsection shall prevent a sale made (i) pursuant to an offer of
exchange permitted by section 80a-11 of this title including any
offer made pursuant to section 80a-11(b) of this title; (ii)
pursuant to an offer made solely to all registered holders of the
securities, or of a particular class or series of securities issued
by the company proportionate to their holdings or proportionate to
any cash distribution made to them by the company (subject to
appropriate qualifications designed solely to avoid issuance of
fractional securities); or (iii) in accordance with rules and
regulations of the Commission made pursuant to subsection (b) of
section 80a-12 of this title.
(e) Suspension of right of redemption or postponement of date of
payment
No registered investment company shall suspend the right of
redemption, or postpone the date of payment or satisfaction upon
redemption of any redeemable security in accordance with its terms
for more than seven days after the tender of such security to the
company or its agent designated for that purpose for redemption,
except -
(1) for any period (A) during which the New York Stock Exchange
is closed other than customary week-end and holiday closings or
(B) during which trading on the New York Stock Exchange is
restricted;
(2) for any period during which an emergency exists as a result
of which (A) disposal by the company of securities owned by it is
not reasonably practicable or (B) it is not reasonably
practicable for such company fairly to determine the value of its
net assets; or
(3) for such other periods as the Commission may by order
permit for the protection of security holders of the company.
The Commission shall by rules and regulations determine the
conditions under which (i) trading shall be deemed to be restricted
and (ii) an emergency shall be deemed to exist within the meaning
of this subsection.
(f) Restrictions on transferability or negotiability of securities
No registered open-end company shall restrict the transferability
or negotiability of any security of which it is the issuer except
in conformity with the statements with respect thereto contained in
its registration statement nor in contravention of such rules and
regulations as the Commission may prescribe in the interests of the
holders of all of the outstanding securities of such investment
company.
(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.
SOURCE
(Aug. 22, 1940, ch. 686, title I, Sec. 22, 54 Stat. 823; Pub. L. 91-
547, Sec. 12, Dec. 14, 1970, 84 Stat. 1422; Pub. L. 100-181, title
VI, Sec. 616, Dec. 4, 1987, 101 Stat. 1262.)
AMENDMENTS
1987 - Subsec. (b). Pub. L. 100-181, Sec. 616(1), substituted
"subsection (b)(6)" for "subsection (b)(8)" in par. (1).
Pub. L. 100-181, Sec. 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, Sec. 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, Sec. 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, Sec. 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".
Subsec. (d). Pub. L. 91-547, Sec. 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, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
64 Stat. 1265, set out under section 78d of this title.