§80a–20 Proxies; voting trusts; circular ownership

Summary

Makes it illegal to ask for or use someone's name to get a proxy, consent, or authorization for a security issued by a registered investment company if that asking breaks rules the Commission makes to protect investors. It also makes it illegal for a registered investment company, a related person, the issuer of a voting-trust certificate, or an underwriter to offer, sell, or deliver such voting-trust certificates in a public offering by mail, across state lines, or by any other means. A registered investment company must not buy a voting security if it knows that cross-ownership or circular ownership exists or will exist because of the purchase. Cross-ownership: two companies each own more than 3 percent of the other's voting stock. Circular ownership: three or more companies in a group each own more than 3 percent of another in the group, and each has more than 3 percent of its own voting stock owned by another (or others) in the group. If such ownership starts when the company buys the securities, the company must stop it within one year after it first learns about it.