PUBLIC LAWS--CH. 68S -AUG. 22 . 1940 Solicitation ofproxies, etc. Voting-trust certifi- cate. Cross or circular ownership of voting security. Eliminations. Unlawful loans. PROXIES; VOTING TRUSTS; CIRCULAR OWNERSHIP SEC. 20. (a) It shall be unlawful for any person, by use of the mails or any means or instrumentality of interstate commerce or otherwise, to solicit or to permit the use of his name to solicit any proxy or consent or authorization in respect of any security of which a registered investment company is the issuer in contravention of such rules and regulations as the Commission may prescribe as neces- sary or appropriate in the public interest or for the protection of investors. (b) It shall be unlawful for any registered investment company or affiliated person thereof, any issuer of a voting-trust certificate relating to any security of a registered investment company, or any underwriter of such a certificate, by use of the mails or any means or instrumentality of interstate commerce, or otherwise, to offer for sale, sell, or deliver after sale, in connection with a public offering, any such voting-trust certificate. The prohibitions of this subsec- tion shall not apply to a class of voting-trust certificates, if any certificate of such class was made the subject of a public offering by the issuer or by or through an underwriter prior to March 15, 1940. (c) No registered investment company shall purchase any voting security if, to the knowledge of such registered company, cross- ownership or circular ownership exists, or after such acquisition will exist, between such registered company and the issuer of such security. Cross-ownership shall be deemed to exist between two companies when each of such companies beneficially owns more than 3 per centum of the outstanding voting securities of the other com- pany. Circular ownership shall be deemed to exist between two companies if such companies are included within a group of three or more companies, each of which- (1) beneficially owns more than 3 per centum of the out- standing voting securities of one or more other companies of the group; and (2) has more than 3 per centum of its own outstanding voting securities beneficially owned by another company, or by each of two or more other companies, of the group. (d) If on the effective date of this title cross-ownership or cir- cular ownership exists between a registered investment company and any other company or companies, it shall be the duty of such regis- tered company, within five years after such effective date, to eliminate such cross-ownership or circular ownership. If at any time after the effective date of this title cross-ownership or circular ownership between a registered investment company and any other company or companies comes into existence upon the purchase by a registered investment company of the securities of another company, it shall be the duty of such registered company, within one year after it first knows of the existence of such cross-ownership or circular ownership, to eliminate the same. LOANS SEC. 21 . It shall be unlawful for any registered management com- pany to lend money or property to any person, directly or indirectly, if- (a) the investment policies of such registered company, as recited in its registration statement and reports filed under this title, do not permit such a loan; or (b) such person controls or is under common control with such registered company; except that the provisions of this para- graph shall not apply to the extension or renewal of any such loan made prior to March 15, 1940, or to any loan from a reg- 822 [54 STAT.
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