15 U.S.C. § 80a–6 — Exemptions

(a) Exemption of specified investment companies. Four kinds of companies are automatically exempt from the rules in this subchapter. (1) A company counts if it was reorganized under a court's supervision, either since this subchapter took effect or within five years before that. To qualify: (A) it wasn't an investment company when the reorganization started; (B) when the reorganization ended, all of its outstanding securities were owned by its creditors, or by people who got the securities because of creditors' claims; and (C) more than 50 percent of its voting securities, and more than 50 percent of its net asset value, are currently owned by no more than 25 people. The exemption ends if the company or an underwriter later sells any of its securities to the public. A new company created as part of the reorganization counts as the same company as the one before it. Ownership is counted the way section 80a-3(c)(1) counts it. (2) A company counts if the Federal Savings and Loan Insurance Corporation has filed a writing with the Commission saying the exemption serves the public interest and investor protection, because the company holds or plans to acquire assets set apart from an insured savings institution's assets, or assets tied to a plan to insure a company's accounts or convert a company into a federal savings and loan association. That writing expires when it's canceled by another filed writing, or after two years, whichever comes first — but the Corporation can file new writings for the same company. (3) A company counts if, before March 15, 1940, and still today, it was a wholly-owned subsidiary of a registered face-amount certificate company, organized and supervised under a state's insurance laws, and in the business — only for residents of that state — of selling and investing in securities backed by mortgages or other liens on real estate, or notes or bonds secured by them. (4)(A) A company counts if it doesn't issue redeemable securities, is regulated by a state law governing entities that give financial or managerial help to businesses in that state, and meets four conditions: (i) its organizing documents limit it to promoting economic, business, or industrial development in the state through such help, plus closely related activities; (ii) right after each sale of its securities, at least 80 percent of that class of securities are held by people who live in the state or have a substantial business presence there; (iii) its securities are sold only to "accredited investors" as defined in section 77b(a)(15), or to others the Commission allows by rule or order; and (iv) it doesn't buy securities issued by an investment company, or by a company that would be one except for certain exclusions, unless those are either qualifying low-risk debt securities the Commission approves, or shares of a registered open-end fund that must keep at least 65 percent of its assets in such debt. (B) Even with this exemption, section 80a-9 still applies to the company as if it were a registered investment company — and so do sections 80a-37 through 80a-50, to the extent needed to enforce section 80a-9. (C) The company must file a notice with the Commission saying it plans to use this exemption. (D) Once it files that notice, the company can rely on the exemption — unless and until the Commission orders otherwise because reliance isn't in the public interest or doesn't protect investors. (E) The Commission can attach extra conditions to this exemption by rule or order. (b) Exemption of employees' security company upon application. An employees' security company can ask the Commission for an exemption, and the Commission must grant one to the extent it protects investors. In deciding how much of an exemption to grant, the Commission weighs things like the company's organization and capital structure, who owns and controls its securities, the prices and sales charges on its securities, what it does with sale proceeds, what kinds of investments it holds, and its relationship to the issuer of any security it holds. (c) Exemption of persons, securities, or classes as necessary in the public interest. The Commission can exempt any person, security, or transaction — or any class of them — from any provision of this subchapter or its rules, if doing so is necessary or appropriate in the public interest and protects investors, consistent with what this subchapter is meant to accomplish. It can do this by rule or by order on request. (d) Exemption of closed-end investment companies. The Commission must exempt a closed-end investment company from this subchapter, subject to whatever conditions protect investors, if three things are true: (1) the money it has raised from selling its securities, plus the offering price of securities it still plans to sell, totals $10,000,000 or less (or another amount the Commission sets); (2) it hasn't sold, and doesn't plan to sell, any securities to the public outside the state where it was organized; and (3) the exemption doesn't hurt the public interest or investor protection. (e) Application of certain provisions to otherwise exempt companies. If the Commission exempts a company from section 80a-7 but decides investors need certain other provisions of this subchapter to still apply, those provisions apply to the company — and to everyone who deals with it — as if it were a registered investment company. (f) Exemption of closed-end company treated as a business development company. A closed-end company is exempt from sections 80a-1 through 80a-52 — except for sections 80a-58 through 80a-64 — if it either (1) elects to be treated as a business development company under section 80a-53, or (2) would otherwise be excluded from the definition of "investment company" under section 80a-3(c)(1), but is planning a public offering as a business development company and has told the Commission, in the Commission's required form, that it intends to file an election notice within 90 days.