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ACCORDING TO THE INVESTMENT COMPANY ACT
1940 :
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AS PER SECTION 3
OF INVESTMENT COMPANY THE "Investment company"
means any issuer which- |
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is or holds itself out as being engaged primarily,
or proposes to engage primarily, in the business
of investing, reinvesting, or trading in securities;
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is engaged or proposes to engage in the business
of issuing face-amount certificates of the installment
type, or has been engaged in such business and
has any such certificate outstanding; or
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is engaged or proposes to engage in the business
of investing, reinvesting, owning, holding,
or trading in securities, and owns or proposes
to acquire investment securities having a value
exceeding 40 percentum of the value of such
issuer's total assets (exclusive of Government
securities and cash items) on an unconsolidated
basis.
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FUNCTIONS AND
ACTIVITIES OF INVESTMENT COMPANY :
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Purchase of securities on margin; joint trading
accounts; short sales of securities; exceptions.
It shall be unlawful for any registered investment
company, in contravention of such rules and
regulations or orders as the Commission may
prescribe as necessary or appropriate in the
public interest or for the protection of investors
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- to purchase any
security on margin, except such short-term credits
as are necessary for the clearance of transactions;
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- to participate on a joint or a joint and
several basis in any trading account in securities,
except in connection with an underwriting in
which such registered company is a participant;
or
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- to effect a short
sale of any security, except in connection with
an underwriting in which such registered company
is a participant. |
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Distribution by investment company of securities
of which it is issuer. It shall be unlawful
for any registered open-end company (other than
a company complying with the provisions of section
10(d) [15 USCS § 80a-10(d)]) to act as
a distributor of securities of which it is the
issuer, except through an underwriter, in the
contravention of such rules and regulations
as the Commission may prescribe as necessary
or appropriate in the public interest or for
the protection of investors.
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Limitations on commitments as underwriter. It
shall be unlawful for any registered diversified
company to make any commitment as underwriter,
if immediately thereafter the amount of its
outstanding underwriting commitments, plus the
value of its investments in securities of issuers
(other than investment companies) of which it
owns more than 10 per centum of the outstanding
voting securities, exceeds 25 per centum of
the value of its total assets.
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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 Act,
any registered face-amount certificate company
may organize not more than two face-amount certificate
companies 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
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 28 [15 USCS §
80a-28(a)(1)] for a face-amount company organized
on or after March 15, 1940: And provided further,
That the aggregate cost to such registered company
of all such capital stock issued by face-amount
certificate companies organized or otherwise
created under laws other than the laws of the
United States or any State thereof shall not
exceed twice the amount of the minimum capital
stock requirement provided in subdivision (1)
of subsection (a) of section 28 [15 USCS §
80a-28(a)(1)] for a company 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 if the
original purchase was made by such registered
face-amount certificate company in good faith
for investment and not for resale.
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Exceptions to limitation on ownership by investment
company of securities of insurance company.
Notwithstanding the provisions of this section
any registered investment company and any company
or companies controlled by such registered company
may purchase or otherwise acquire from another
investment company or any company or companies
controlled by such registered company more than
10 per centum of the total outstanding voting
stock of any insurance company owned by any
such company or companies, or may acquire the
securities of any insurance company if the Commission
by order determines that such acquisition is
in the public interest because the financial
condition of such insurance company 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 or the
acquisition of the securities of any newly created
insurance company by a registered investment
company, alone or with other persons. 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, or to affect
the right under State law of any insurance company
to acquire securities of any other insurance
company or insurance companies.
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