---
kind: "section"
citation: "15 U.S.C. § 80a–16"
title: "15"
title_heading: "Commerce and Trade"
number: "80a–16"
heading: "Board of directors"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/15/80a-16"
units:
  - "Chapter 2D — Investment Companies and Advisers"
  - "Subchapter I — Investment Companies"
---

# §80a–16. Board of directors


(a) Election of [directors](/usc/15/80a–2.md?p=a-12)

No [person](/usc/15/80a–2.md?p=a-28) shall serve as a [director](/usc/15/80a–2.md?p=a-12) of a registered investment [company](/usc/15/80a–2.md?p=a-8) unless elected to that office by the holders of the outstanding [voting securities](/usc/15/80a–2.md?p=a-42) of such [company](/usc/15/80a–2.md?p=a-8), at an annual or a special meeting duly called for that purpose; except that vacancies occurring between such meetings may be filled in any otherwise legal manner if immediately after filling any such vacancy at least two-thirds of the [directors](/usc/15/80a–2.md?p=a-12) then holding office shall have been elected to such office by the holders of the outstanding [voting securities](/usc/15/80a–2.md?p=a-42) of the [company](/usc/15/80a–2.md?p=a-8) at such an annual or special meeting. In the event that at any time less than a majority of the [directors](/usc/15/80a–2.md?p=a-12) of such [company](/usc/15/80a–2.md?p=a-8) holding office at that time were so elected by the holders of the outstanding [voting securities](/usc/15/80a–2.md?p=a-42), the board of [directors](/usc/15/80a–2.md?p=a-12) or proper officer of such [company](/usc/15/80a–2.md?p=a-8) shall forthwith cause to be held as promptly as possible and in any event within sixty days a meeting of such holders for the purpose of electing [directors](/usc/15/80a–2.md?p=a-12) to fill any existing vacancies in the board of [directors](/usc/15/80a–2.md?p=a-12) unless the [Commission](/usc/15/80a–2.md?p=a-7) shall by order extend such period. The foregoing provisions of this subsection shall not apply to members of an [advisory board](/usc/15/80a–2.md?p=a-1).

Nothing herein shall, however, preclude a registered investment [company](/usc/15/80a–2.md?p=a-8) from dividing its [directors](/usc/15/80a–2.md?p=a-12) into classes if its charter, certificate of incorporation, articles of association, by-laws, trust indenture, or other instrument or the law under which it is organized, so provides and prescribes the tenure of office of the several classes: Provided, That no class shall be elected for a shorter period than one year or for a longer period than five years and the term of office of at least one class shall expire each year.

(b) Term vacancies

Any vacancy on the board of [directors](/usc/15/80a–2.md?p=a-12) of a registered investment [company](/usc/15/80a–2.md?p=a-8) which occurs in connection with compliance with [section 80a–15(f)(1)(A) of this title](/usc/15/80a–15.md?p=f-1-A) and which must be filled by a [person](/usc/15/80a–2.md?p=a-28) who is not an interested [person](/usc/15/80a–2.md?p=a-28) of either party to a transaction subject to [section 80a–15(f)(1)(A) of this title](/usc/15/80a–15.md?p=f-1-A) shall be filled only by a [person](/usc/15/80a–2.md?p=a-28) (1) who has been selected and proposed for election by a majority of the [directors](/usc/15/80a–2.md?p=a-12) of such [company](/usc/15/80a–2.md?p=a-8) who are not such interested [persons](/usc/15/80a–2.md?p=a-28), and (2) who has been elected by the holders of the outstanding [voting securities](/usc/15/80a–2.md?p=a-42) of such [company](/usc/15/80a–2.md?p=a-8), except that in the case of the death, disqualification, or bona fide resignation of a [director](/usc/15/80a–2.md?p=a-12) selected and elected pursuant to clauses (1) and (2) of this subsection (b), the vacancy created thereby may be filled as provided in subsection (a).

(c) Trustees of common-law trusts

The foregoing provisions of this section shall not apply to a common-law trust existing on August 22, 1940, under an indenture of trust which does not provide for the election of trustees by the shareholders. No natural [person](/usc/15/80a–2.md?p=a-28) shall serve as trustee of such a trust, which is registered as an investment [company](/usc/15/80a–2.md?p=a-8), after the holders of record of not less than two-thirds of the outstanding shares of beneficial interests in such trust have declared that he be removed from that office either by declaration in writing filed with the custodian of the [securities](/usc/15/80a–2.md?p=a-36) of the trust or by votes cast in [person](/usc/15/80a–2.md?p=a-28) or by proxy at a meeting called for the purpose. Solicitation of such a declaration shall be deemed a solicitation of a proxy within the meaning of [section 80a–20(a) of this title](/usc/15/80a–20.md?p=a).

The trustees of such a trust shall promptly call a meeting of shareholders for the purpose of voting upon the question of removal of any such trustee or trustees when requested in writing so to do by the record holders of not less than 10 per centum of the outstanding shares.

Whenever ten or more shareholders of record who have been such for at least six months preceding the date of application, and who hold in the aggregate either shares having a net asset value of at least $25,000 or at least 1 per centum of the outstanding shares, whichever is less, shall apply to the trustees in writing, stating that they wish to communicate with other shareholders with a view to obtaining signatures to a request for a meeting pursuant to this subsection and accompanied by a form of communication and request which they wish to transmit, the trustees shall within five business days after receipt of such application either—

(1) afford to such [applicants](/usc/15/7a.md?p=3) access to a list of the names and addresses of all shareholders as recorded on the books of the trust; or

(2) inform such [applicants](/usc/15/7a.md?p=3) as to the approximate number of shareholders of record, and the approximate cost of mailing to them the proposed communication and form of request.

If the trustees elect to follow the course specified in paragraph (2) of this subsection the trustees, upon the written request of such [applicants](/usc/15/7a.md?p=3), accompanied by a tender of the material to be mailed and of the reasonable expenses of mailing, shall, with reasonable promptness, mail such material to all shareholders of record at their addresses as recorded on the books, unless within five business days after such tender the trustees shall mail to such [applicants](/usc/15/7a.md?p=3) and file with the [Commission](/usc/15/80a–2.md?p=a-7), together with a copy of the material to be mailed, a written statement signed by at least a majority of the trustees to the effect that in their opinion either such material contains untrue statements of fact or omits to [state](/usc/15/80a–2.md?p=a-39) facts necessary to make the statements contained therein not misleading, or would be in violation of applicable law, and specifying the basis of such opinion.

After opportunity for hearing upon the objections specified in the written statement so filed, the [Commission](/usc/15/80a–2.md?p=a-7) may, and if demanded by the trustees or by such [applicants](/usc/15/7a.md?p=3) shall, enter an order either sustaining one or more of such objections or refusing to sustain any of them. If the [Commission](/usc/15/80a–2.md?p=a-7) shall enter an order refusing to sustain any of such objections, or if, after the entry of an order sustaining one or more of such objections, the [Commission](/usc/15/80a–2.md?p=a-7) shall find, after notice and opportunity for hearing, that all objections so sustained have been met, and shall enter an order so declaring, the trustees shall mail copies of such material to all shareholders with reasonable promptness after the entry of such order and the renewal of such tender.


## Source credit

(Aug. 22, 1940, ch. 686, title I, § 16, 54 Stat. 813; Pub. L. 94–29, § 28(3), June 4, 1975, 89 Stat. 165.)

## Notes

### Editorial Notes

### Amendments

1975—Subsecs. (b), (c). Pub. L. 94–29 added subsec. (b), redesignated former subsec. (b) as (c), and substituted “The foregoing provisions of this section” for “The provisions of subsection (a) of this section” in first sentence.

### Statutory Notes and Related Subsidiaries

### 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.

### 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.