§ 80a-2. — Definitions; applicability; rulemaking considerations.
[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-2]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2D--INVESTMENT COMPANIES AND ADVISERS
SUBCHAPTER I--INVESTMENT COMPANIES
Sec. 80a-2. Definitions; applicability; rulemaking
considerations
(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\
---------------------------------------------------------------------------
\1\ So in original. Probably should be followed by the word ``and''.
(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'' [15 U.S.C. 79 et
seq.], 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)].
(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.
(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.)
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 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 act Aug. 26, 1935, ch. 687, title I, 49 Stat. 838,
as amended, which is classified generally to chapter 2C (Sec. 79 et
seq.) of this title. For complete classification of this Act to the
Code, see section 79 of this title and 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
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.
Section Referred to in Other Sections
This section is referred to in sections 77b, 78c, 80a-6, 80a-13,
80a-15, 80a-31, 80a-53, 80a-54, 80a-56, 80a-58, 80b-2 of this title;
title 7 sections 1a, 2; title 12 sections 371c, 1467a, 1843; title 26
sections 72, 368, 401, 731, 851, 1246.
