
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-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.
