§ 80a-15. — Contracts of advisers and underwriters.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC80a-15]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2D--INVESTMENT COMPANIES AND ADVISERS
SUBCHAPTER I--INVESTMENT COMPANIES
Sec. 80a-15. Contracts of advisers and underwriters
(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.
(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.
Section Referred to in Other Sections
This section is referred to in sections 80a-6, 80a-10, 80a-16, 80a-
55, 80a-58 of this title.
