---
kind: "section"
citation: "15 U.S.C. § 80a–12"
title: "15"
title_heading: "Commerce and Trade"
number: "80a–12"
heading: "Functions and activities of investment companies"
release: "119-102"
url: "https://uscodex.org/usc/15/80a-12"
units:
  - "Chapter 2D — Investment Companies and Advisers"
  - "Subchapter I — Investment Companies"
---

# §80a–12. Functions and activities of investment companies

- (a) **Purchase of securities on margin; joint trading accounts; short sales of securities; exceptions—** It shall be unlawful for any registered [investment company](/usc/15/77z–2.md?p=i-2), in contravention of such rules and regulations or [orders](/usc/15/8702.md?p=14) as the [Commission](/usc/15/80a–2.md?p=a-7) may prescribe as necessary or appropriate in the public interest or for the protection of investors—
  - (1) to [purchase](/usc/15/78c–5.md?p=g) any [security](/usc/15/80a–2.md?p=a-36) on margin, except such short-term [credits](/usc/15/1679a.md?p=4) as are necessary for the clearance of transactions;
  - (2) to participate on a joint or a joint and several basis in any trading [account](/usc/15/1681a.md?p=r-4) in [securities](/usc/15/80a–2.md?p=a-36), except in connection with an underwriting in which such registered [company](/usc/15/80a–2.md?p=a-8) is a participant; or
  - (3) to effect a short sale of any [security](/usc/15/80a–2.md?p=a-36), except in connection with an underwriting in which such registered [company](/usc/15/80a–2.md?p=a-8) is a participant.
- (b) **Distribution by investment company of securities of which it is issuer—** It shall be unlawful for any registered [open-end company](/usc/15/80a–5.md?p=a-1) (other than a [company](/usc/15/80a–2.md?p=a-8) complying with the provisions of [section 80a–10(d) of this title](/usc/15/80a–10.md?p=d)) to act as a [distributor](/usc/15/1278.md?p=c-1-D-i) of [securities](/usc/15/80a–2.md?p=a-36) of which it is the [issuer](/usc/15/80a–2.md?p=a-22), except through an underwriter, in contravention of such rules and regulations as the [Commission](/usc/15/80a–2.md?p=a-7) may prescribe as necessary or appropriate in the public interest or for the protection of investors.
- (c) **Limitations on commitments as underwriter—** It shall be unlawful for any registered diversified [company](/usc/15/80a–2.md?p=a-8) to make any commitment as underwriter, if immediately thereafter the amount of its outstanding underwriting commitments, plus the value of its investments in [securities](/usc/15/80a–2.md?p=a-36) of [issuers](/usc/15/80a–2.md?p=a-22) (other than [investment companies](/usc/15/77z–2.md?p=i-2)) of which it owns more than 10 per centum of the outstanding [voting securities](/usc/15/80a–2.md?p=a-42), exceeds 25 per centum of the value of its total assets.
- (d) **Limitations on acquisition by investment companies of securities of other specific businesses—**
  - (1)
    - (A) It shall be unlawful for any registered [investment company](/usc/15/77z–2.md?p=i-2) (the “acquiring [company](/usc/15/80a–2.md?p=a-8)”) and any [company](/usc/15/80a–2.md?p=a-8) or [companies](/usc/15/80a–2.md?p=a-8) controlled by such acquiring [company](/usc/15/80a–2.md?p=a-8) to [purchase](/usc/15/78c–5.md?p=g) or otherwise acquire any [security](/usc/15/80a–2.md?p=a-36) issued by any other [investment company](/usc/15/77z–2.md?p=i-2) (the “acquired [company](/usc/15/80a–2.md?p=a-8)”), and for any [investment company](/usc/15/77z–2.md?p=i-2) (the “acquiring [company](/usc/15/80a–2.md?p=a-8)”) and any [company](/usc/15/80a–2.md?p=a-8) or [companies](/usc/15/80a–2.md?p=a-8) controlled by such acquiring [company](/usc/15/80a–2.md?p=a-8) to [purchase](/usc/15/78c–5.md?p=g) or otherwise acquire any [security](/usc/15/80a–2.md?p=a-36) issued by any registered [investment company](/usc/15/77z–2.md?p=i-2) (the “acquired [company](/usc/15/80a–2.md?p=a-8)”), if the acquiring [company](/usc/15/80a–2.md?p=a-8) and any [company](/usc/15/80a–2.md?p=a-8) or [companies](/usc/15/80a–2.md?p=a-8) controlled by it immediately after such [purchase](/usc/15/78c–5.md?p=g) or acquisition own in the aggregate—
      - (i) more than 3 per centum of the total outstanding voting stock of the acquired [company](/usc/15/80a–2.md?p=a-8);
      - (ii) [securities](/usc/15/80a–2.md?p=a-36) issued by the acquired [company](/usc/15/80a–2.md?p=a-8) having an aggregate value in excess of 5 per centum of the value of the total assets of the acquiring [company](/usc/15/80a–2.md?p=a-8); or
      - (iii) [securities](/usc/15/80a–2.md?p=a-36) issued by the acquired [company](/usc/15/80a–2.md?p=a-8) and all other [investment companies](/usc/15/77z–2.md?p=i-2) (other than treasury stock of the acquiring [company](/usc/15/80a–2.md?p=a-8)) having an aggregate value in excess of 10 per centum of the value of the total assets of the acquiring [company](/usc/15/80a–2.md?p=a-8).
    - (B) It shall be unlawful for any registered open-end [investment company](/usc/15/77z–2.md?p=i-2) (the “acquired [company](/usc/15/80a–2.md?p=a-8)”), any principal underwriter therefor, or any [broker or dealer](/usc/15/78c.md?p=h-2) registered under the [Securities](/usc/15/80a–2.md?p=a-36) Exchange Act of 1934 [[15 U.S.C. 78a](/usc/15/78a.md) et seq.], knowingly to sell or otherwise dispose of any [security](/usc/15/80a–2.md?p=a-36) issued by the acquired [company](/usc/15/80a–2.md?p=a-8) to any other [investment company](/usc/15/77z–2.md?p=i-2) (the “acquiring [company](/usc/15/80a–2.md?p=a-8)”) or any [company](/usc/15/80a–2.md?p=a-8) or [companies](/usc/15/80a–2.md?p=a-8) controlled by the acquiring [company](/usc/15/80a–2.md?p=a-8), if immediately after such sale or disposition—
      - (i) more than 3 per centum of the total outstanding voting stock of the acquired [company](/usc/15/80a–2.md?p=a-8) is owned by the acquiring [company](/usc/15/80a–2.md?p=a-8) and any [company](/usc/15/80a–2.md?p=a-8) or [companies](/usc/15/80a–2.md?p=a-8) controlled by it; or
      - (ii) more than 10 per centum of the total outstanding voting stock of the acquired [company](/usc/15/80a–2.md?p=a-8) is owned by the acquiring [company](/usc/15/80a–2.md?p=a-8) and other [investment companies](/usc/15/77z–2.md?p=i-2) and [companies](/usc/15/80a–2.md?p=a-8) controlled by them.
    - (C) It shall be unlawful for any [investment company](/usc/15/77z–2.md?p=i-2) (the “acquiring [company](/usc/15/80a–2.md?p=a-8)”) and any [company](/usc/15/80a–2.md?p=a-8) or [companies](/usc/15/80a–2.md?p=a-8) controlled by the acquiring [company](/usc/15/80a–2.md?p=a-8) to [purchase](/usc/15/78c–5.md?p=g) or otherwise acquire any [security](/usc/15/80a–2.md?p=a-36) issued by a registered closed-end [investment company](/usc/15/77z–2.md?p=i-2), if immediately after such [purchase](/usc/15/78c–5.md?p=g) or acquisition the acquiring [company](/usc/15/80a–2.md?p=a-8), other [investment companies](/usc/15/77z–2.md?p=i-2) having the same [investment adviser](/usc/15/6102.md?p=d-2-B-ii), and [companies](/usc/15/80a–2.md?p=a-8) controlled by such [investment companies](/usc/15/77z–2.md?p=i-2), own more than 10 per centum of the total outstanding voting stock of such [closed-end company](/usc/15/80a–5.md?p=a-2).
    - (D) The provisions of this paragraph shall not apply to a [security](/usc/15/80a–2.md?p=a-36) received as a dividend or as a result of an offer of [exchange](/usc/15/80a–2.md?p=a-14) approved pursuant to [section 80a–11 of this title](/usc/15/80a–11.md) or of a plan of [reorganization](/usc/15/80a–2.md?p=a-33) of any [company](/usc/15/80a–2.md?p=a-8) (other than a plan devised for the purpose of evading the foregoing provisions).
    - (E) The provisions of this paragraph shall not apply to a [security](/usc/15/80a–2.md?p=a-36) (or [securities](/usc/15/80a–2.md?p=a-36)) purchased or acquired by an [investment company](/usc/15/77z–2.md?p=i-2) if—
      - (i) the depositor of, or principal underwriter for, such [investment company](/usc/15/77z–2.md?p=i-2) is a [broker or dealer](/usc/15/78c.md?p=h-2) registered under the [Securities](/usc/15/80a–2.md?p=a-36) Exchange Act of 1934 [[15 U.S.C. 78a](/usc/15/78a.md) et seq.], or a [person](/usc/15/80a–2.md?p=a-28) controlled by such a [broker or dealer](/usc/15/78c.md?p=h-2);
      - (ii) such [security](/usc/15/80a–2.md?p=a-36) is the only investment [security](/usc/15/80a–2.md?p=a-36) held by such [investment company](/usc/15/77z–2.md?p=i-2) (or such [securities](/usc/15/80a–2.md?p=a-36) are the only investment [securities](/usc/15/80a–2.md?p=a-36) held by such [investment company](/usc/15/77z–2.md?p=i-2), if such [investment company](/usc/15/77z–2.md?p=i-2) is a registered [unit investment trust](/usc/15/80a–4.md?p=2) that issues two or more classes or series of [securities](/usc/15/80a–2.md?p=a-36), each of which provides for the accumulation of shares of a different [investment company](/usc/15/77z–2.md?p=i-2)); and
      - (iii) the [purchase](/usc/15/78c–5.md?p=g) or acquisition is made pursuant to an arrangement with the [issuer](/usc/15/80a–2.md?p=a-22) of, or principal underwriter for the [issuer](/usc/15/80a–2.md?p=a-22) of, the [security](/usc/15/80a–2.md?p=a-36) whereby such [investment company](/usc/15/77z–2.md?p=i-2) is obligated—
        - (aa) either to seek instructions from its [security](/usc/15/80a–2.md?p=a-36) holders with regard to the voting of all proxies with respect to such [security](/usc/15/80a–2.md?p=a-36) and to vote such proxies only in accordance with such instructions, or to vote the shares held by it in the same proportion as the vote of all other holders of such [security](/usc/15/80a–2.md?p=a-36), and
        - (bb) in the event that such [investment company](/usc/15/77z–2.md?p=i-2) is not a registered [investment company](/usc/15/77z–2.md?p=i-2), to refrain substituting such [security](/usc/15/80a–2.md?p=a-36) unless the [Commission](/usc/15/80a–2.md?p=a-7) shall have approved such substitution in the manner provided in [section 80a–26 of this title](/usc/15/80a–26.md).
    - (F) The provisions of this paragraph shall not apply to [securities](/usc/15/80a–2.md?p=a-36) purchased or otherwise acquired by a registered [investment company](/usc/15/77z–2.md?p=i-2) if—
      - (i) immediately after such [purchase](/usc/15/78c–5.md?p=g) or acquisition not more than 3 per centum of the total outstanding stock of such [issuer](/usc/15/80a–2.md?p=a-22) is owned by such registered [investment company](/usc/15/77z–2.md?p=i-2) and all affiliated [persons](/usc/15/80a–2.md?p=a-28) of such registered [investment company](/usc/15/77z–2.md?p=i-2); and
      - (ii) such registered [investment company](/usc/15/77z–2.md?p=i-2) has not offered or sold after January 1, 1971, and is not proposing to offer or sell any [security](/usc/15/80a–2.md?p=a-36) issued by it through a principal underwriter or otherwise at a public offering price which includes a [sales load](/usc/15/80a–2.md?p=a-35) of more than 1½ per centum.

      No [issuer](/usc/15/80a–2.md?p=a-22) of any [security](/usc/15/80a–2.md?p=a-36) purchased or acquired by a registered [investment company](/usc/15/77z–2.md?p=i-2) pursuant to this subparagraph shall be obligated to redeem such [security](/usc/15/80a–2.md?p=a-36) in an amount exceeding 1 per centum of such [issuer](/usc/15/80a–2.md?p=a-22)’s total outstanding [securities](/usc/15/80a–2.md?p=a-36) during any period of less than thirty days. Such [investment company](/usc/15/77z–2.md?p=i-2) shall exercise voting rights by proxy or otherwise with respect to any [security](/usc/15/80a–2.md?p=a-36) purchased or acquired pursuant to this subparagraph in the manner prescribed by subparagraph (E) of this subsection.

    - (G)
      - (i) This paragraph does not apply to [securities](/usc/15/80a–2.md?p=a-36) of a registered open-end [investment company](/usc/15/77z–2.md?p=i-2) or a registered [unit investment trust](/usc/15/80a–4.md?p=2) (hereafter in this subparagraph referred to as the “acquired [company](/usc/15/80a–2.md?p=a-8)”) purchased or otherwise acquired by a registered open-end [investment company](/usc/15/77z–2.md?p=i-2) or a registered [unit investment trust](/usc/15/80a–4.md?p=2) (hereafter in this subparagraph referred to as the “acquiring [company](/usc/15/80a–2.md?p=a-8)”) if—
        - (I) the acquired [company](/usc/15/80a–2.md?p=a-8) and the acquiring [company](/usc/15/80a–2.md?p=a-8) are part of the same [group of investment companies](#d-1-G-ii);
        - (II) the [securities](/usc/15/80a–2.md?p=a-36) of the acquired [company](/usc/15/80a–2.md?p=a-8), [securities](/usc/15/80a–2.md?p=a-36) of other registered open-end [investment companies](/usc/15/77z–2.md?p=i-2) and registered [unit investment trusts](/usc/15/80a–4.md?p=2) that are part of the same [group of investment companies](#d-1-G-ii), [Government securities](/usc/15/80a–2.md?p=a-16), and [short-term paper](/usc/15/80a–2.md?p=a-38) are the only investments held by the acquiring [company](/usc/15/80a–2.md?p=a-8);
        - (III) with respect to—
          - (aa) [securities](/usc/15/80a–2.md?p=a-36) of the acquired [company](/usc/15/80a–2.md?p=a-8), the acquiring [company](/usc/15/80a–2.md?p=a-8) does not pay and is not assessed any charges or fees for distribution-related activities, unless the acquiring [company](/usc/15/80a–2.md?p=a-8) does not charge a [sales load](/usc/15/80a–2.md?p=a-35) or other fees or charges for distribution-related activities; or
          - (bb) [securities](/usc/15/80a–2.md?p=a-36) of the acquiring [company](/usc/15/80a–2.md?p=a-8), any [sales loads](/usc/15/80a–2.md?p=a-35) and other distribution-related fees charged, when aggregated with any [sales load](/usc/15/80a–2.md?p=a-35) and distribution-related fees paid by the acquiring [company](/usc/15/80a–2.md?p=a-8) with respect to [securities](/usc/15/80a–2.md?p=a-36) of the acquired [company](/usc/15/80a–2.md?p=a-8), are not excessive under rules adopted pursuant to [section 80a–22(b) of this title](/usc/15/80a–22.md?p=b) or [section 80a–22(c) of this title](/usc/15/80a–22.md?p=c) by a [securities](/usc/15/80a–2.md?p=a-36) [association](/usc/15/657h.md?p=a-2) registered under section 15A of the [Securities](/usc/15/80a–2.md?p=a-36) Exchange Act of 1934 [[15 U.S.C. 78o](/usc/15/78o.md)–3], or the [Commission](/usc/15/80a–2.md?p=a-7);
        - (IV) the acquired [company](/usc/15/80a–2.md?p=a-8) has a policy that prohibits it from acquiring any [securities](/usc/15/80a–2.md?p=a-36) of registered open-end [investment companies](/usc/15/77z–2.md?p=i-2) or registered [unit investment trusts](/usc/15/80a–4.md?p=2) in reliance on this subparagraph or [subparagraph (F)](#d-1-F); and
        - (V) such acquisition is not in contravention of such rules and regulations as the [Commission](/usc/15/80a–2.md?p=a-7) may from time to time prescribe with respect to acquisitions in accordance with this subparagraph, as necessary and appropriate for the protection of investors.
      - (ii) For purposes of this subparagraph, the term “group of investment companies” means any 2 or more registered [investment companies](/usc/15/77z–2.md?p=i-2) that hold themselves out to investors as related [companies](/usc/15/80a–2.md?p=a-8) for purposes of investment and investor services.
    - (H) For the purposes of this paragraph, the value of an [investment company](/usc/15/77z–2.md?p=i-2)’s total assets shall be computed as of the time of a [purchase](/usc/15/78c–5.md?p=g) or acquisition or as closely thereto as is reasonably possible.
    - (I) In any action brought to enforce the provisions of this paragraph, the [Commission](/usc/15/80a–2.md?p=a-7) may join as a party the [issuer](/usc/15/80a–2.md?p=a-22) of any [security](/usc/15/80a–2.md?p=a-36) purchased or otherwise acquired in [violation](/usc/15/57b–1.md?p=a-7) of this paragraph, and the court may issue any [order](/usc/15/8702.md?p=14) with respect to such [issuer](/usc/15/80a–2.md?p=a-22) as may be necessary or appropriate for the enforcement of the provisions of this paragraph.
    - (J) The [Commission](/usc/15/80a–2.md?p=a-7), by rule or regulation, upon its own motion or by [order](/usc/15/8702.md?p=14) upon [application](/usc/15/77ccc.md?p=8), may conditionally or unconditionally exempt any [person](/usc/15/80a–2.md?p=a-28), [security](/usc/15/80a–2.md?p=a-36), or transaction, or any class or classes of [persons](/usc/15/80a–2.md?p=a-28), [securities](/usc/15/80a–2.md?p=a-36), or transactions from any provision of this paragraph, if and to the extent that such exemption is consistent with the public interest and the protection of investors.
  - (2) It shall be unlawful for any registered [investment company](/usc/15/77z–2.md?p=i-2) and any [company](/usc/15/80a–2.md?p=a-8) or [companies](/usc/15/80a–2.md?p=a-8) controlled by such registered [investment company](/usc/15/77z–2.md?p=i-2) to [purchase](/usc/15/78c–5.md?p=g) or otherwise acquire any [security](/usc/15/80a–2.md?p=a-36) (except a [security](/usc/15/80a–2.md?p=a-36) received as a dividend or as a result of a plan of [reorganization](/usc/15/80a–2.md?p=a-33) of any [company](/usc/15/80a–2.md?p=a-8), other than a plan devised for the purpose of evading the provisions of this paragraph) issued by any [insurance company](/usc/15/80a–2.md?p=a-17) of which such registered [investment company](/usc/15/77z–2.md?p=i-2) and any [company](/usc/15/80a–2.md?p=a-8) or [companies](/usc/15/80a–2.md?p=a-8) controlled by such registered [company](/usc/15/80a–2.md?p=a-8) do not, at the time of such [purchase](/usc/15/78c–5.md?p=g) or acquisition, own in the aggregate at least 25 per centum of the total outstanding voting stock, if such registered [company](/usc/15/80a–2.md?p=a-8) and any [company](/usc/15/80a–2.md?p=a-8) or [companies](/usc/15/80a–2.md?p=a-8) controlled by it own in the aggregate, or as a result of such [purchase](/usc/15/78c–5.md?p=g) or acquisition will own in the aggregate, more than 10 per centum of the total outstanding voting stock of such [insurance company](/usc/15/80a–2.md?p=a-17).
  - (3) It shall be unlawful for any registered [investment company](/usc/15/77z–2.md?p=i-2) and any [company](/usc/15/80a–2.md?p=a-8) or [companies](/usc/15/80a–2.md?p=a-8) controlled by such registered [investment company](/usc/15/77z–2.md?p=i-2) to [purchase](/usc/15/78c–5.md?p=g) or otherwise acquire any [security](/usc/15/80a–2.md?p=a-36) issued by or any other interest in the business of any [person](/usc/15/80a–2.md?p=a-28) who is a [broker](/usc/15/80a–2.md?p=a-6), a [dealer](/usc/15/80a–2.md?p=a-11), is engaged in the business of underwriting, or is either an [investment adviser](/usc/15/6102.md?p=d-2-B-ii) of an [investment company](/usc/15/77z–2.md?p=i-2) or an [investment adviser](/usc/15/6102.md?p=d-2-B-ii) registered under subchapter II of this chapter, unless (A) such [person](/usc/15/80a–2.md?p=a-28) is a corporation all the outstanding [securities](/usc/15/80a–2.md?p=a-36) of which (other than [short-term paper](/usc/15/80a–2.md?p=a-38), [securities](/usc/15/80a–2.md?p=a-36) representing bank loans, and [directors](/usc/15/80a–2.md?p=a-12)’ qualifying shares) are, or after such acquisition will be, owned by one or more registered [investment companies](/usc/15/77z–2.md?p=i-2); and (B) such [person](/usc/15/80a–2.md?p=a-28) is primarily engaged in the business of underwriting and distributing [securities](/usc/15/80a–2.md?p=a-36) issued by other [persons](/usc/15/80a–2.md?p=a-28), selling [securities](/usc/15/80a–2.md?p=a-36) to [customers](/usc/15/78c–5.md?p=g), or any one or more of such or related activities, and the gross income of such [person](/usc/15/80a–2.md?p=a-28) normally is derived principally from such business or related activities.
- (e) **Acquisition of securities issued by corporations in business of underwriting, furnishing capital to industry, etc.** Notwithstanding any provisions of this subchapter, any registered [investment company](/usc/15/77z–2.md?p=i-2) may hereafter [purchase](/usc/15/78c–5.md?p=g) or otherwise acquire any [security](/usc/15/80a–2.md?p=a-36) issued by any one corporation engaged or proposing to engage in the business of underwriting, furnishing capital to industry, financing promotional enterprises, purchasing [securities](/usc/15/80a–2.md?p=a-36) of [issuers](/usc/15/80a–2.md?p=a-22) for which no ready market is in existence, and reorganizing [companies](/usc/15/80a–2.md?p=a-8) or similar activities; provided—
  - (1) That the [securities](/usc/15/80a–2.md?p=a-36) issued by such corporation (other than [short-term paper](/usc/15/80a–2.md?p=a-38) and [securities](/usc/15/80a–2.md?p=a-36) representing bank loans) shall consist solely of one class of common stock and shall have been originally issued or sold for investment to registered [investment companies](/usc/15/77z–2.md?p=i-2) only;
  - (2) That the aggregate cost of the [securities](/usc/15/80a–2.md?p=a-36) of such corporation purchased by such registered [investment company](/usc/15/77z–2.md?p=i-2) does not exceed 5 per centum of the value of the total assets of such registered [company](/usc/15/80a–2.md?p=a-8) at the time of any [purchase](/usc/15/78c–5.md?p=g) or acquisition of such [securities](/usc/15/80a–2.md?p=a-36); and
  - (3) That the aggregate paid-in capital and surplus of such corporation does not exceed $100,000,000.

  For the purpose of paragraph (1) of [section 80a–5(b) of this title](/usc/15/80a–5.md?p=b) any investment in any such corporation shall be deemed to be an investment in an [investment company](/usc/15/77z–2.md?p=i-2).

- (f) **Organization and ownership by one registered face-amount certificate company of all or part of capital stock of not more than two other face-amount certificate companies; limitations—** Notwithstanding any provisions of this chapter, any registered [face-amount certificate company](/usc/15/80a–4.md?p=1) may organize not more than two [face-amount certificate companies](/usc/15/80a–4.md?p=1) and acquire and own all or any part of the capital stock thereof only if such stock is acquired and held for investment: Provided, That the aggregate cost to such registered [company](/usc/15/80a–2.md?p=a-8) of all such stock so acquired shall not exceed six times the amount of the minimum capital stock requirement provided in subdivision (1) of subsection (a) of [section 80a–28 of this title](/usc/15/80a–28.md) for a face-amount [company](/usc/15/80a–2.md?p=a-8) organized on or after March 15, 1940: And provided further, That the aggregate cost to such registered [company](/usc/15/80a–2.md?p=a-8) of all such capital stock issued by [face-amount certificate companies](/usc/15/80a–4.md?p=1) organized or otherwise created under laws other than the laws of the United States or any [State](/usc/15/80a–2.md?p=a-39) thereof shall not exceed twice the amount of the minimum capital stock requirement provided in subdivision (1) of [subsection (a)](#a) of said [section 80a–28](/usc/15/80a–28.md) for a [company](/usc/15/80a–2.md?p=a-8) organized on or after March 15, 1940. Nothing contained in this subsection shall be deemed to prevent the sale of any such stock to any other [person](/usc/15/80a–2.md?p=a-28) if the original [purchase](/usc/15/78c–5.md?p=g) was made by such registered [face-amount certificate company](/usc/15/80a–4.md?p=1) in good faith for investment and not for resale.
- (g) **Exceptions to limitation on ownership by investment company of securities of insurance com­pany—** Notwithstanding the provisions of this section any registered [investment company](/usc/15/77z–2.md?p=i-2) and any [company](/usc/15/80a–2.md?p=a-8) or [companies](/usc/15/80a–2.md?p=a-8) controlled by such registered [company](/usc/15/80a–2.md?p=a-8) may [purchase](/usc/15/78c–5.md?p=g) or otherwise acquire from another [investment company](/usc/15/77z–2.md?p=i-2) or any [company](/usc/15/80a–2.md?p=a-8) or [companies](/usc/15/80a–2.md?p=a-8) controlled by such registered [company](/usc/15/80a–2.md?p=a-8) more than 10 per centum of the total outstanding voting stock of any [insurance company](/usc/15/80a–2.md?p=a-17) owned by any such [company](/usc/15/80a–2.md?p=a-8) or [companies](/usc/15/80a–2.md?p=a-8), or may acquire the [securities](/usc/15/80a–2.md?p=a-36) of any [insurance company](/usc/15/80a–2.md?p=a-17) if the [Commission](/usc/15/80a–2.md?p=a-7) by [order](/usc/15/8702.md?p=14) determines that such acquisition is in the public interest because the financial condition of such [insurance company](/usc/15/80a–2.md?p=a-17) will be improved as a result of such acquisition or any plan contemplated as a result thereof. This section shall not be deemed to prohibit the promotion of a new [insurance company](/usc/15/80a–2.md?p=a-17) or the acquisition of the [securities](/usc/15/80a–2.md?p=a-36) of any newly created [insurance company](/usc/15/80a–2.md?p=a-17) by a registered [investment company](/usc/15/77z–2.md?p=i-2), alone or with other [persons](/usc/15/80a–2.md?p=a-28). Nothing contained in this section shall in any way affect or derogate from the powers of any insurance commissioner or similar official or agency of the United States or any [State](/usc/15/80a–2.md?p=a-39), or to affect the right under [State](/usc/15/80a–2.md?p=a-39) law of any [insurance company](/usc/15/80a–2.md?p=a-17) to acquire [securities](/usc/15/80a–2.md?p=a-36) of any other [insurance company](/usc/15/80a–2.md?p=a-17) or [insurance companies](/usc/15/80a–2.md?p=a-17).

## Source credit

(Aug. 22, 1940, ch. 686, title I, § 12, 54 Stat. 808; Pub. L. 91–547, § 7, Dec. 14, 1970, 84 Stat. 1417; Pub. L. 100–181, title VI, § 610, Dec. 4, 1987, 101 Stat. 1261; Pub. L. 104–290, title II, § 202, Oct. 11, 1996, 110 Stat. 3426; Pub. L. 105–353, title III, § 301(c)(3), Nov. 3, 1998, 112 Stat. 3236; Pub. L. 111–203, title IX, § 985(d)(3), July 21, 2010, 124 Stat. 1934.)

## Notes

### Editorial Notes

### References in Text

The Securities Exchange Act of 1934, referred to in subsec. (d)(1)(B), (E)(i), is act June 6, 1934, ch. 404, 48 Stat. 881, which is classified generally to 2B (§ 78a et seq.) of this title. For complete classification of this Act to the Code, see section 78a of this title and Tables.

### Amendments

2010—Subsec. (d)(1)(J). Pub. L. 111–203 substituted “any provision of this paragraph” for “any provision of this subsection”.

1998—Subsec. (d)(1)(G)(i)(III)(bb). Pub. L. 105–353 substituted “the acquired company” for “the acquired fund”.

1996—Subsec. (d)(1)(D), (E). Pub. L. 104–290, § 202(3), substituted “this paragraph” for “this paragraph (1)”.

Subsec. (d)(1)(E)(iii). Pub. L. 104–290, § 202(1)(A), struck out “in the event such investment company is not a registered investment company,” after “(iii)”.

Subsec. (d)(1)(E)(iii)(bb). Pub. L. 104–290, § 202(1)(B), inserted “in the event that such investment company is not a registered investment company,” after “(bb)”.

Subsec. (d)(1)(F). Pub. L. 104–290, § 202(3), substituted “this paragraph” for “this paragraph (1)”.

Subsec. (d)(1)(G). Pub. L. 104–290, § 202(2), (4), added subpar. (G). Former subpar. (G) redesignated (H).

Subsec. (d)(1)(H). Pub. L. 104–290, § 202(3), substituted “this paragraph” for “this paragraph (1)”.

Pub. L. 104–290, § 202(2), redesignated subpar. (G) as (H). Former subpar. (H) redesignated (I).

Subsec. (d)(1)(I). Pub. L. 104–290, § 202(3), substituted “this paragraph” for “this paragraph (1)” wherever appearing.

Pub. L. 104–290, § 202(2), redesignated subpar. (H) as (I).

Subsec. (d)(1)(J). Pub. L. 104–290, § 202(5), added subpar. (J).

1987—Subsec. (d)(1)(A)(iii). Pub. L. 100–181, § 610(1), substituted “treasury” for “Treasury”.

Subsec. (d)(1)(G). Pub. L. 100–181, § 610(2), substituted “is reasonably possible” for “it reasonably possible”.

Subsec. (f). Pub. L. 100–181, § 610(3), substituted “thereof only” for “only thereof”.

1970—Subsec. (d)(1). Pub. L. 91–547 substituted provisions designated as subpars. (A) to (C) and (E) to (H) for former introductory provisions reading “It shall be unlawful for any registered investment company and any company or companies controlled by such registered investment company to purchase or otherwise acquire after August 22, 1940, any security issued by or any other interest in the business of—” and subpar. (1) reading “any other investment company of which such registered investment company and company or companies controlled by such registered company shall not at the time of such purchase or acquisition own in the aggregate at least 25 per centum of the total outstanding voting stock, if such registered investment company and any company or companies controlled by it own in the aggregate or as a result of such purchase or acquisition will own in the aggregate more than 5 per centum of the total outstanding voting stock of such other investment company if the policy of such other investment company is the concentration of investments in a particular industry or group of industries, or more than 3 per centum of the total outstanding voting stock of such other investment company if the policy of such other investment company is not the concentration of investments in a particular industry or group of industries, except and cl. (B) exception reading “a security purchased with the proceeds of payments on periodic payment plan certificates, pursuant to the terms of the trust indenture under which such certificates are issued”, cl. (A) of such subpar. (1) being incorporated in subpar. (D) of this par. (1).

Subsec. (d)(2). Pub. L. 91–547 incorporated existing introductory text and subpar. (2) provisions in provisions redesignated as par. (2) and struck out “after August 22, 1940,” after “purchase or otherwise acquire”.

Subsec. (d)(3). Pub. L. 91–547 incorporated existing introductory text and subpar. (3) provisions in provisions redesignated as par. (3) and struck out “after August 22, 1940,” after “purchase or otherwise acquire”.

### Statutory Notes and Related Subsidiaries

### Effective Date of 2010 Amendment

Amendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of Title 12, Banks and Banking.

### 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.

### Executive Documents

### 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, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title.