§80a–5 — Title 15 Commerce and Trade | U.S. Code

Summary

The law sorts investment-management companies into two sets of labels. Open-end companies are those that offer or still have shares investors can sell back to the company. Closed-end companies are any management companies that are not open-end. Diversified companies must keep at least 75% of their assets in cash, government or certain other securities (including receivables), and no more than 5% of total assets or 10% of an issuer’s voting stock can come from any one issuer. Non-diversified companies are those that do not meet the diversified rules. A company that was registered as diversified when it qualified keeps that status even if later asset values change, as long as any mismatch right after it buys something was not caused by that purchase.

Title 15, §80a–5

Commerce and Trade — Source: USLM XML via OLRC

(a)For the purposes of this subchapter, management companies are divided into open-end and closed-end companies, defined as follows:

(1)“Open-end company” means a management company which is offering for sale or has outstanding any redeemable security of which it is the issuer.

(2)“Closed-end company” means any management company other than an open-end company.

(b)Management companies are further divided into diversified companies and non-diversified companies, defined as follows:

(1)“Diversified company” means a management company which meets the following requirements: At least 75 per centum of the value of its total assets is represented by cash and cash items (including receivables), Government securities, securities of other investment companies, and other securities for the purposes of this calculation limited in respect of any one issuer to an amount not greater in value than 5 per centum of the value of the total assets of such management company and to not more than 10 per centum of the outstanding voting securities of such issuer.

(2)“Non-diversified company” means any management company other than a diversified company.

(c)A registered diversified company which at the time of its qualification as such meets the requirements of paragraph (1) of subsection (b) shall not lose its status as a diversified company because of any subsequent discrepancy between the value of its various investments and the requirements of said paragraph, so long as any such discrepancy existing immediately after its acquisition of any security or other property is neither wholly nor partly the result of such acquisition.

Notes & Related Subsidiaries

Editorial Notes

Amendments

1987—Subsec. (a)(2). Pub. L. 100–181 substituted “Closed-end” for “Close-end”.

Executive Documents

Transfer of Functions

For

Transfer of Functions

of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title.

§80a–5 Subclassification of management companies

Summary

Title 15, §80a–5

Notes & Related Subsidiaries

Editorial Notes

Amendments

Executive Documents

Transfer of Functions

Transfer of Functions

Citations & Metadata