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Title 15, Commerce and TradeRelease 119-110

§80a–15 Contracts of Advisers and Underwriters

Title 15 › CHAPTER 2D — INVESTMENT COMPANIES AND ADVISERS › SUBCHAPTER I — INVESTMENT COMPANIES › § 80a–15

Last updated Sep 22, 2026|Official source

Summary

No one may serve as the investment adviser of a registered investment company unless there is a written contract that the holders of more than half of the company’s outstanding voting shares approve. The contract must clearly state all pay and fees. If it lasts longer than two years, the board or the holders must reapprove it at least once a year. The contract must say the board or the holders can end it at any time without penalty by giving 60 days or less written notice. The contract must also end automatically if it is transferred to someone else. If the company has a board, most of the directors who are not connected to the adviser must also approve the contract at a meeting called for that vote. Directors must ask for and get the information they need from the adviser to judge the deal. Directors may not consider the price paid or other payments related to certain sales or changes of the adviser when they decide. For common-law trusts, a majority of outstanding beneficial shares works like a majority of voting securities. Advisory boards and their members are not required to act under these rules. An adviser (or its affiliate) may receive money from a sale or control change only if, for three years afterward, at least 75% of the board members are not interested persons of the adviser or its predecessor, and the deal does not place an unfair burden on the company (including certain payments during the two years after the deal). The SEC may consider big differences in asset size when deciding on exemptions. Certain transfers of a controlling block to the public or to affiliates are exempt if the transferees are natural persons and they owned more than 25% of the voting shares for at least six months before the transfer.

Full Legal Text

Title 15, §80a–15

Commerce and Trade, Source: USLM XML via OLRC

(a)Written contract to serve or act as investment adviser; contents
It shall be unlawful for any person to serve or act as investment adviser of a registered investment company, except pursuant to a written contract, which contract, whether with such registered company or with an investment adviser of such registered company, has been approved by the vote of a majority of the outstanding voting securities of such registered company, and— (1)
(2)shall continue in effect for a period more than two years from the date of its execution, only so long as such continuance is specifically approved at least annually by the board of directors or by vote of a majority of the outstanding voting securities of such company;
(3)provides, in substance, that it may be terminated at any time, without the payment of any penalty, by the board of directors of such registered company or by vote of a majority of the outstanding voting securities of such company on not more than sixty days’ written notice to the investment adviser; and
(4)provides, in substance, for its automatic termination in the event of its assignment.
(b)Written contract with company for sale by principal underwriter of security of which company is issuer; contents
It shall be unlawful for any principal underwriter for a registered open-end company to offer for sale, sell, or deliver after sale any security of which such company is the issuer, except pursuant to a written contract with such company, which contract—
(1)shall continue in effect for a period more than two years from the date of its execution, only so long as such continuance is specifically approved at least annually by the board of directors or by vote of a majority of the outstanding voting securities of such company; and
(2)provides, in substance, for its automatic termination in the event of its assignment.
(c)Approval of contract to undertake service as investment adviser or principal underwriter by majority of noninterested directors
In addition to the requirements of subsections (a) and (b) of this section, it shall be unlawful for any registered investment company having a board of directors to enter into, renew, or perform any contract or agreement, written or oral, whereby a person undertakes regularly to serve or act as investment adviser of or principal underwriter for such company, unless the terms of such contract or agreement and any renewal thereof have been approved by the vote of a majority of directors, who are not parties to such contract or agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval. It shall be the duty of the directors of a registered investment company to request and evaluate, and the duty of an investment adviser to such company to furnish, such information as may reasonably be necessary to evaluate the terms of any contract whereby a person undertakes regularly to serve or act as investment adviser of such company. It shall be unlawful for the directors of a registered investment company, in connection with their evaluation of the terms of any contract whereby a person undertakes regularly to serve or act as investment adviser of such company, to take into account the purchase price or other consideration any person may have paid in connection with a transaction of the type referred to in paragraph (1), (3), or (4) of subsection (f).
(d)Equivalent of vote of majority of outstanding voting securities in case of common-law trust
In the case of a common-law trust of the character described in section 80a–16(c) of this title, either written approval by holders of a majority of the outstanding shares of beneficial interest or the vote of a majority of such outstanding shares cast in person or by proxy at a meeting called for the purpose shall for the purposes of this section be deemed the equivalent of the vote of a majority of the outstanding voting securities, and the provisions of paragraph (42) of section 80a–2(a) of this title as to a majority shall be applicable to the vote cast at such a meeting.
(e)Exemption of advisory boards or members from provisions of this section (f) Receipt of benefits by investment adviser from sale of securities or other interest in such investment adviser resulting in assignment of investment advisory contract
Nothing contained in this section shall be deemed to require or contemplate any action by an advisory board of any registered company or by any of the members of such a board.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

1987—Subsec. (d). Pub. L. 100–181, § 611(1), substituted “paragraph (42)” for “paragraph (40)”. Subsec. (f)(3)(B). Pub. L. 100–181, § 611(2), substituted a comma for the period at end. 1975—Subsec. (c). Pub. L. 94–29, § 28(2), inserted provisions making it unlawful for the directors of a registered investment company, in connection with their evaluation of the terms of any contract whereby a person undertakes regularly to serve or act as investment adviser of such company, to take into account the purchase price or other consideration any person may have paid in connection with a transaction of the type referred to in paragraph (1), (3), or (4) of subsec. (f). Subsec. (d). Pub. L. 94–29, § 28(4), substituted “section 80a–16(c) of this title” for “subsection (b) of section 80a–16 of this title”. Subsec. (f). Pub. L. 94–29, § 28(1), added subsec. (f). 1970—Subsec. (a). Pub. L. 91–547, § 8(a), struck out introductory phrase “After one year from the

Effective Date

of this subchapter” and “unless in effect prior to March 15, 1940,” before “has been approved”, and “by the investment adviser” after “assignment” in item (4), and substituted “It” for “it”. Subsec. (b). Pub. L. 91–547, § 8(b), struck out introductory phrase “After one year from the

Effective Date

of this subchapter,” and concluding phrase “, unless in effect prior to
March 15, 1940” after “which contract” before item (1), struck out “by such underwriter” after “assignment” in item (2), and substituted “It” for “it”. Subsec. (c). Pub. L. 91–547, § 8(c), made it the duty of the directors of a registered investment company to request and evaluate, and the duty of an investment adviser to such company to furnish, such information as may reasonably be necessary to evaluate the terms of any contract whereby a person undertakes regularly to serve or act as investment adviser of such company, substituted “interested persons” for “affiliated persons”, and struck out “except a written agreement which was in effect prior to
March 15, 1940,” after “written or oral,”, item (1) designation following “have been approved” and item “or (2) by the vote of a majority of the outstanding voting securities of such company” after “any such party,”, and inserted “the vote” in phrase “by the vote of a majority”, and provision respecting voting “cast in person at a meeting called for the purpose of voting on such approval”. Subsecs. (d) to (f). Pub. L. 91–547, § 8(d), redesignated subsecs. (e) and (f) as (d) and (e), respectively, and struck out former subsec. (d) which prohibited any person after
March 15, 1945, from acting as investment adviser to, or principal underwriter for, any registered investment company pursuant to a written contract in effect prior to
March 15, 1940, unless such contract was renewed prior to
March 15, 1945, in such form as to make it comply with subsecs. (a) or (b).

Statutory Notes and Related Subsidiaries

Effective Date

of 1975 AmendmentAmendment by Pub. L. 94–29 effective June 4, 1975, see section 31(a) of Pub. L. 94–29, set out as a note under section 78b of this title.

Effective Date

of 1970 AmendmentAmendment by Pub. L. 91–547 effective on expiration of one year after Dec. 14, 1970, see section 30(1) of Pub. L. 91–547, set out as a note under section 80a–52 of this title.

Reference

Citations & Metadata

Citation

15 U.S.C. § 80a–15

Title 15, Commerce and Trade

Last Updated

Sep 22, 2026

Release point: 119-110