
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 15USC80a-10]

 
                      TITLE 15--COMMERCE AND TRADE
 
              CHAPTER 2D--INVESTMENT COMPANIES AND ADVISERS
 
                   SUBCHAPTER I--INVESTMENT COMPANIES
 
Sec. 80a-10. Affiliations or interest of directors, officers, 
        and employees
        

(a) Interested persons of company who may serve on board of directors

    No registered investment company shall have a board of directors 
more than 60 per centum of the members of which are persons who are 
interested persons of such registered company.

(b) Employment and use of directors, officers, etc., as regular broker, 
        principal underwriter, or investment banker

    No registered investment company shall--
        (1) employ as regular broker any director, officer, or employee 
    of such registered company, or any person of which any such 
    director, officer, or employee is an affiliated person, unless a 
    majority of the board of directors of such registered company shall 
    be persons who are not such brokers or affiliated persons of any of 
    such brokers;
        (2) use as a principal underwriter of securities issued by it 
    any director, officer, or employee of such registered company or any 
    person of which any such director, officer, or employee is an 
    interested person, unless a majority of the board of directors of 
    such registered company shall be persons who are not such principal 
    underwriters or interested persons of any of such principal 
    underwriters; or
        (3) have as director, officer, or employee any investment 
    banker, or any affiliated person of an investment banker, unless a 
    majority of the board of directors of such registered company shall 
    be persons who are not investment bankers or affiliated persons of 
    any investment banker. For the purposes of this paragraph, a person 
    shall not be deemed an affiliated person of an investment banker 
    solely by reason of the fact that he is an affiliated person of a 
    company of the character described in section 80a-12(d)(3)(A) and 
    (B) of this title.

(c) Officers, directors, or employees of one bank as majority of board 
        of directors of company; exceptions

    No registered investment company shall have a majority of its board 
of directors consisting of persons who are officers, directors, or 
employees of any one bank, except that, if on March 15, 1940, any 
registered investment company had a majority of its directors consisting 
of persons who are directors, officers, or employees of any one bank, 
such company may continue to have the same percentage of its board of 
directors consisting of persons who are directors, officers, or 
employees of such bank.

(d) Exception to limitation of number of interested persons who may 
        serve on board of directors

    Notwithstanding subsections (a) and (b)(2) of this section, a 
registered investment company may have a board of directors all the 
members of which, except one, are interested persons of the investment 
adviser of such company, or are officers or employees of such company, 
if--
        (1) such investment company is an open-end company;
        (2) such investment adviser is registered under subchapter II of 
    this chapter and is engaged principally in the business of rendering 
    investment supervisory services as defined in subchapter II;
        (3) no sales load is charged on securities issued by such 
    investment company;
        (4) any premium over net asset value charged by such company 
    upon the issuance of any such security, plus any discount from net 
    asset value charged on redemption thereof, shall not in the 
    aggregate exceed 2 per centum;
        (5) no sales or promotion expenses are incurred by such 
    registered company; but expenses incurred in complying with laws 
    regulating the issue or sale of securities shall not be deemed sales 
    or promotion expenses;
        (6) such investment adviser is the only investment adviser to 
    such investment company, and such investment adviser does not 
    receive a management fee exceeding 1 per centum per annum of the 
    value of such company's net assets averaged over the year or taken 
    as of a definite date or dates within the year;
        (7) all executive salaries and executive expenses and office 
    rent of such investment company are paid by such investment adviser; 
    and
        (8) such investment company has only one class of securities 
    outstanding, each unit of which has equal voting rights with every 
    other unit.

(e) Death, disqualification, or resignation of directors as suspension 
        of limitation provisions

    If by reason of the death, disqualification, or bona fide 
resignation of any director or directors, the requirements of the 
foregoing provisions of this section or of section 80a-15(f)(1) of this 
title in respect of directors shall not be met by a registered 
investment company, the operation of such provision shall be suspended 
as to such registered company--
        (1) for a period of thirty days if the vacancy or vacancies may 
    be filled by action of the board of directors;
        (2) for a period of sixty days if a vote of stockholders is 
    required to fill the vacancy or vacancies; or
        (3) for such longer period as the Commission may prescribe, by 
    rules and regulations upon its own motion or by order upon 
    application, as not inconsistent with the protection of investors.

(f) Officer, director, etc., of company acting as principal underwriter 
        of security acquired by company

    No registered investment company shall knowingly purchase or 
otherwise acquire, during the existence of any underwriting or selling 
syndicate, any security (except a security of which such company is the 
issuer) a principal underwriter of which is an officer, director, member 
of an advisory board, investment adviser, or employee of such registered 
company, or is a person (other than a company of the character described 
in section 80a-12(d)(3)(A) and (B) of this title) of which any such 
officer, director, member of an advisory board, investment adviser, or 
employee is an affiliated person, unless in acquiring such security such 
registered company is itself acting as a principal underwriter for the 
issuer. The Commission, by rules and regulations upon its own motion or 
by order upon application, may conditionally or unconditionally exempt 
any transaction or classes of transactions from any of the provisions of 
this subsection, if and to the extent that such exemption is consistent 
with the protection of investors.

(g) Advisory boards; restrictions on membership

    In the case of a registered investment company which has an advisory 
board, such board, as a distinct entity, shall be subject to the same 
restrictions as to its membership as are imposed upon a board of 
directors by this section.

(h) Application of section to unincorporated registered management 
        companies

    In the case of a registered management company which is an 
unincorporated company not having a board of directors, the provisions 
of this section shall apply as follows:
        (1) the provisions of subsection (a) of this section, as 
    modified by subsection (e) of this section, shall apply to the board 
    of directors of the depositor of such company;
        (2) the provisions of subsections (b) and (c) of this section, 
    as modified by subsection (e) of this section, shall apply to the 
    board of directors of the depositor and of every investment adviser 
    of such company; and
        (3) the provisions of subsection (f) of this section shall apply 
    to purchases and other acquisitions for the account of such company 
    of securities a principal underwriter of which is the depositor or 
    an investment adviser of such company, or an affiliated person of 
    such depositor or investment adviser.

(Aug. 22, 1940, ch. 686, title I, Sec. 10, 54 Stat. 806; Pub. L. 91-547, 
Sec. 5, Dec. 14, 1970, 84 Stat. 1416; Pub. L. 94-29, Sec. 28(5), June 4, 
1975, 89 Stat. 165; Pub. L. 106-102, title II, Sec. 213(c), Nov. 12, 
1999, 113 Stat. 1398.)

                       Amendment of Subsection (c)

        Pub. L. 106-102, title II, Secs. 213(c), 225, Nov. 12, 1999, 113 
    Stat. 1398, 1402, provided that, effective 18 months after Nov. 12, 
    1999, subsection (c) of this section is amended by striking ``bank, 
    except'' and inserting ``bank (together with its affiliates and 
    subsidiaries) or any one bank holding company (together with its 
    affiliates and subsidiaries) (as such terms are defined in section 
    1841 of title 12), except''.


                               Amendments

    1975--Subsec. (e). Pub. L. 94-29 inserted reference to provisions of 
section 80a-15(f)(1) of this title.
    1970--Subsec. (a). Pub. L. 91-547, Sec. 5(a), struck out 
introductory text ``After one year from the effective date of this 
subchapter'' and substituted ``interested persons of such registered 
company'' for ``investment advisers of, affiliated persons of an 
investment adviser of, or officers or employees of, such registered 
company''.
    Subsec. (b). Pub. L. 91-547, Sec. 5(b)(1), struck out introductory 
text ``After one year from the effective date of this subchapter,'' and 
substituted ``No'' for ``no''.
    Subsec. (b)(2). Pub. L. 91-547, Sec. 5(b)(2), substituted 
``interested'' for ``affiliated'' in two places.
    Subsec. (c). Pub. L. 91-547, Sec. 5(c), struck out introductory text 
``After the effective date of this subchapter'', substituted ``No'', ``, 
except that'', ``had a majority'', and ``such company'' for ``no'', ``: 
Provided, That'', ``shall have had a majority'', and ``such company'', 
respectively, and inserted reference to employees where first appearing.
    Subsec. (d). Pub. L. 91-547, Sec. 5(d), reenacted provisions except 
for substitution of ``interested persons'' for ``affiliated persons'' in 
introductory text, deletion of ``such investment adviser'' before ``is 
engaged'' in item (2), and substitution of ``class of securities'' for 
``class of stock'' and ``unit'' for ``share'' in two places in item (8).


                    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 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

    For effective date of amendment by Pub. L. 91-547, see section 30 
(introductory text and pars. (1) and (2)) 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-6, 80a-12, 80a-58 of 
this title.
