§ 80a-22. — Distribution, redemption, and repurchase of securities; regulations by securities associations.
[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-22]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2D--INVESTMENT COMPANIES AND ADVISERS
SUBCHAPTER I--INVESTMENT COMPANIES
Sec. 80a-22. Distribution, redemption, and repurchase of
securities; regulations by securities associations
(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.
(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.
Section Referred to in Other Sections
This section is referred to in sections 80a-2, 80a-6, 80a-12 of this
title.
