§ 80a-16. — Board of directors.
[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-16]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2D--INVESTMENT COMPANIES AND ADVISERS
SUBCHAPTER I--INVESTMENT COMPANIES
Sec. 80a-16. Board of directors
(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.
(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.
Section Referred to in Other Sections
This section is referred to in sections 80a-6, 80a-13, 80a-15, 80a-
18, 80a-31, 80a-58 of this title.
