15 U.S.C. § 80a–10 — Affiliations or interest of directors, officers, and employees

(a) A registered investment company's board of directors cannot have more than 60% of its members be "interested persons" of the company — that is, people connected closely enough to the company to have a conflict of interest. (b) A registered investment company generally cannot: (1) use any of its own directors, officers, or employees (or anyone connected to them) as its regular broker, unless a majority of its board is made up of people who are not that broker or connected to that broker; (2) use any of its own directors, officers, or employees (or anyone connected to them) as the main underwriter selling its securities, unless a majority of its board is made up of people who are not that underwriter or connected to it; or (3) have an investment banker, or anyone connected to an investment banker, serve as a director, officer, or employee, unless a majority of its board is made up of people who are not investment bankers or connected to one. (Being connected to a certain type of holding company described in section 80a–12(d)(3)(A) and (B) does not, by itself, make someone "connected to an investment banker" for this rule.) (c) A registered investment company generally cannot have a majority of its board made up of officers, directors, or employees of just one bank (with its affiliates) or one bank holding company or savings and loan holding company (with their affiliates) — except that a company that already had that kind of board on March 15, 1940, can keep the same percentage of bank-connected directors it had then. (d) Despite subsections (a) and (b)(2), a registered open-end investment company can have a board where all but one member are connected to its investment adviser, or are its own officers or employees, if all of the following are true: the adviser is registered and mainly in the business of giving investment advice; the fund charges no sales load; any premium or discount from net asset value charged on issuing or redeeming shares totals no more than 2%; the fund pays no sales or promotion expenses (though costs of complying with securities laws don't count as such expenses); the fund has only this one adviser, and the adviser's management fee is no more than 1% per year of the fund's average net assets; the adviser pays all the fund's executive salaries, executive expenses, and office rent; and the fund has only one class of shares, with equal voting rights per unit. (e) If a director's death, disqualification, or honest resignation causes the company to briefly violate the director-composition rules above (or the similar rule in section 80a–15(f)(1)), that violation is excused — for 30 days if the board itself can fill the vacancy, for 60 days if shareholders must vote to fill it, or for a longer period the SEC allows if that's still consistent with protecting investors. (f) A registered investment company generally cannot knowingly buy a security (other than its own) during an underwriting period if one of its own officers, directors, advisory-board members, investment adviser, or employees (or someone connected to them) is a main underwriter of that security — unless the company is itself acting as a main underwriter for that same issuer. The SEC can exempt transactions from this rule if doing so still protects investors. (g) If a registered investment company has an advisory board, that board is subject to the same membership restrictions as its regular board of directors under this section. (h) For an unincorporated registered management company that has no board of directors: the rule in subsection (a) applies instead to the board of directors of the company's depositor; the rules in subsections (b) and (c) apply to the boards of both the depositor and every investment adviser to the company; and the rule in subsection (f) applies to purchases made for the company's account of securities underwritten by the depositor, an adviser, or someone connected to either of them.