Affiliations of directors, officers and employees.
Section 9
SEC. 9. Affiliations of directors, officers and employees.— After one year from the effective date of this Act, no registered investment company shall have a board of directors more than fifty per centum of the members of which are persons who are investment advisers of, or officers or employees of, such registered company. After one year from the effective date of this Act, no registered investment company shall— employ as regular broker any director, officer, or employee of such registered company, or any person of which any such director, officer, or employee is an affiliated person; use a principal underwriter of securities issued by it any director, officer, or employee of such registered company or any person of which any such director, officer, or employee is an affiliated person; or have as director, officer, or employee any investment banker, or any affiliated person of an investment banker. For the purposes of this paragraph, a person shall not be deemed an affiliated person of an investment banker solely by reason of the fact that he is an affiliated person of a company (A) all the outstanding securities of which (other than short-term paper, securities representing bank loans and directors' qualifying shares) are, or after such acquisition will be, owned by one or more registered investment companies; and (B) which is primarily engaged in the business of underwriting and distributing securities issued by other persons, selling securities to customers, or any one or more of such or related activities, and the gross income of such person normally is derived principally from such business or related activities. After the effective date of this Act no registered investment company shall have a majority of its board of directors consisting of persons who are officers or directors of any one bank: Provided, That, if prior to the effective date of this Act, any registered investment company shall have had a majority of its directors consisting of persons who are directors, officers, or employees of any one bank, such registered company may continue to have the same percentage of its board of directors consisting of persons who are directors, officers, or employees of such bank. If by reason of the death, disqualification, or bona fide resignation of any director or directors, the requirements of the foregoing provisions of this section in respect of directors shall not be met by a registered investment company, the operation of such provision shall be suspended as to such registered company for a period of thirty days if the vacancy or vacancies may be filled by action of the board of directors, and for a period of sixty days if a vote of stockholders is required to fill the vacancy or vacancies, or for such longer period as the Commission may prescribe, by rules and regulations upon its own motion or by order upon application, as not inconsistent with the protection of investors. No registered investment company shall knowingly purchase or otherwise acquire, during the existence of any underwriting or selling syndicate, any security (except a security of which such company is the issuer) a principal underwriter of which is an officer, director, member of an advisory board, investment adviser, or employee of such registered company, or is a person (other than a company of the character described in paragraphs (A) and (B) of subsection (b) (3) of which any such officer, director, member of an advisory board, investment adviser, or employee is an affiliated person, unless in acquiring such security such registered company is itself acting as a principal underwriter for the issuer. The Commission, by rules and regulations upon its own motion or by order upon application, may conditionally or unconditionally exempt any transaction or classes of transactions from any of the provisions of this subsection, if and to the extent that such exemption is consistent with the protection of investors. In the case of a registered investment company which has an advisory board, such board, as a distinct entity, shall be subject to the same restrictions as to its membership as are imposed upon a board of directors by this section. In the case of a registered investment company which does not have a board of directors, the provisions of this section shall apply as follows: the provisions of subsection (a), as modified by subsection (d), shall apply to the board of directors of the depositor of such company; the provisions of subsection (b) and (c), as modified by subsection (d), shall apply to the board of directors of the depositor and of every investment adviser of such company; and the provisions of subsection (e) shall apply to purchases and other acquisitions for the account of such company of securities a principal underwriter of which is the depositor or an investment adviser of such company, or an affiliated person of such depositor or investment adviser.