54 SrAT.] 76TH CONG. , 3D SESS.-CH. 68 - -AUG. 22, 1940 istered company to a company which owns all of the outstand- ing securities of such registered company, except directors' qualifying shares. DISTRIBUTION, REDEMPTION, AND REPURCHASE OF REDEEMABLE SECURITIES SEC. 22 . (a) A securities association registered under section 15A of the Securities Exchange Act of 1934 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 com- pany 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 pre- scribe; and (2) a minimum period of time which must elapse after the sale or issue of such security before any resale to such com- pany 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 out- standing 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) Such a securities association may also, by rules adopted and in effect in accordance with said section 15A, and subject to all provisions of said section applicable to the rules of such an associa- tion, prohibit its members from purchasing, in connection with a primary distribution of redeemable securities of which any regis- tered 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 pre- scribe, in order that the price at which such security is offered or sold to the public shall not include an unconscionable or grossly excessive sales load. (c) After one year from the effective date of this Act, the Com- mission may make rules and regulations applicable to principal underwriters of, and dealers in, the redeemable securities of any registered investment company, whether or not members of any registered securities association, to the same extent, covering the same subject matter and for the accomplishment of the same ends as are prescribed in subsections (a) and (b) of this section in respect of the rules which may be made by a registered securities association governing its members; and 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. 823 Securities associa- tion. Rules for purchase, etc., of securities. 52 Stat. 1070. 15 U. S. C., Supp. V, § 780-3. Minimum and maximum price. Resale, etc. Protection against dilution, etc. Purchase of certain securities by mem- bers, restriction. Commission to make applicable rules.
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