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15 U.S.C. § 80a–21 — Loans by management companies

submitted 86 years ago by ch. 686 to r/title-15-COMMERCE-AND-TRADE · 96 words · no verdicts yet

in plain englishAI-generated · not legal advice

A registered management company usually cannot lend money or property to any person. It cannot lend if the loan breaks its stated policies, or if the borrower controls it. One exception: it may lend to a company owning all its outstanding stock, except director shares.

It is illegal for a registered management company to lend money or property to any person, directly or indirectly, in two situations. (a) The company's investment policies, as stated in its registration statement and the reports it files under this subchapter, do not allow that kind of loan. (b) The person receiving the loan controls the company, or is under common control with it — meaning they share the same controller. There is one exception. This rule does not stop a registered company from lending to a company that owns all of the registered company's outstanding securities. The only shares excluded from that "all" are directors' qualifying shares — the small share amounts directors must hold to serve on the board.
the actual law source: uscode.house.gov ↗public domain

It shall be unlawful for any registered management company 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 subchapter, 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 paragraph shall not apply to any loan from a registered company to a company which owns all of the outstanding securities of such registered company, except directors’ qualifying shares.

Source credit: (Aug. 22, 1940, ch. 686, title I, § 21, 54 Stat. 822; Pub. L. 100–181, title VI, § 615, Dec. 4, 1987, 101 Stat. 1262.)

history & why it existsrecord from the source credit
  • 1940Enacted · Act of Aug. 22, 1940, ch. 686 · 54 Stat. 822
  • 1987Amended · Pub. L. 100-181 · 101 Stat. 1262

A history note hasn’t been published yet. The record shows enactment by ch. 686 on 1940-08-22.

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