§ 80a-20. — Proxies; voting trusts; circular ownership.
[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-20]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2D--INVESTMENT COMPANIES AND ADVISERS
SUBCHAPTER I--INVESTMENT COMPANIES
Sec. 80a-20. Proxies; voting trusts; circular ownership
(a) Prohibition on use of means of interstate commerce for solicitation
of proxies
It shall be unlawful for any person, by use of the mails or any
means or instrumentality of interstate commerce or otherwise, to solicit
or to permit the use of his name to solicit any proxy or consent or
authorization in respect of any security of which a registered
investment company is the issuer in contravention of such rules and
regulations as the Commission may prescribe as necessary or appropriate
in the public interest or for the protection of investors.
(b) Prohibition on use of means of interstate commerce for sale of
voting-trust certificates
It shall be unlawful for any registered investment company or
affiliated person thereof, any issuer of a voting-trust certificate
relating to any security of a registered investment company, or any
underwriter of such a certificate, by use of the mails or any means or
instrumentality of interstate commerce, or otherwise, to offer for sale,
sell, or deliver after sale, in connection with a public offering, any
such voting-trust certificate.
(c) Prohibition on purchase of securities knowingly resulting in cross-
ownership or circular ownership
No registered investment company shall purchase any voting security
if, to the knowledge of such registered company, cross-ownership or
circular ownership exists, or after such acquisition will exist, between
such registered company and the issuer of such security. Cross-ownership
shall be deemed to exist between two companies when each of such
companies beneficially owns more than 3 per centum of the outstanding
voting securities of the other company. Circular ownership shall be
deemed to exist between two companies if such companies are included
within a group of three or more companies, each of which--
(1) beneficially owns more than 3 per centum of the outstanding
voting securities of one or more other companies of the group; and
(2) has more than 3 per centum of its own outstanding voting
securities beneficially owned by another company, or by each of two
or more other companies, of the group.
(d) Duty to eliminate existing cross-ownership or circular ownership
If cross-ownership or circular ownership between a registered
investment company and any other company or companies comes into
existence upon the purchase by a registered investment company of the
securities of another company, it shall be the duty of such registered
company, within one year after it first knows of the existence of such
cross-ownership or circular ownership, to eliminate the same.
(Aug. 22, 1940, ch. 686, title I, Sec. 20, 54 Stat. 822; Pub. L. 100-
181, title VI, Sec. 614, Dec. 4, 1987, 101 Stat. 1262.)
Amendments
1987--Subsec. (b). Pub. L. 100-181, Sec. 614(1), struck out at end
``The prohibitions of this subsection shall not apply to a class of
voting-trust certificates, if any certificate of such class was made the
subject of a public offering by the issuer or by or through an
underwriter prior to March 15, 1940.''
Subsec. (d). Pub. L. 100-181, Sec. 614(2), (3), struck out first
sentence ``If on the effective date of this subchapter cross-ownership
or circular ownership exists between a registered investment company and
any other company or companies, it shall be the duty of such registered
company, within five years after such effective date, to eliminate such
cross-ownership or circular ownership.'' and ``at any time after the
effective date of this subchapter'' after ``If'' in second sentence.
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-16, 80a-58 of
this title.
