Imágenes de páginas
PDF
EPUB

the Commission may still grant such application by exercising its general exemptive authority under section 6(c) of the act. Section 27(b) is therefore surplusage and is deleted.

SECTION 17, AMENDING SECTION 28 OF THE ACT—FACE-AMOUNT

CERTIFICATES

Section 17 of the bill would add a new subsection (i) to section 28 under which:

(1) The existing provisions of section 28 will continue to apply in all respects to all face-amount certificates issued prior to the subsection's effective date as well as to new certificates issued pursuant to the terms of such outstanding certificates.

(2) With respect to certificates issued after the effective date of the subsection

(a) The reserve payment or payments for the first 3 certificate years must amount to at least 80 percent of the required gross annual payment for those years, instead of the present 50 percent in the first year, with 93 percent in the second to the fifth years, inclusive.

(6) The reserve payment or payments for the fourth certificate year must amount to at least 90 percent of the gross annual payment required in the fourth year.

(c) The reserve payment or payments for the fifth certificate year must amount to at least 93 percent of the gross annual payment required in this year.

(d) Reserve payments for years subsequent to the fifth certificate year must amount to at least 96 percent of the required

gross annual payments. This new section 28(i) would substantially conform the law relating to face-amount certificates to that which the amendments to section 27 apply to contractual plans. The existing limit on the total charge paid by a completing certificate holder remains unchanged.

SECTION 6, AMENDING SECTION 11(b)(2)-DELETION OF SALES CHARGE

IN EXCHANGE OF SERIES SHARES

Section 6 would delete from the Investment Company Act section 11(b)(2) which permits series companies or their principal underwriters to charge an additional sales load when shareholders in one series exchange their shares for shares in another series. Section 11(a) of the act specifically prevents the imposition of sales charges when shareholders are induced to exchange their certificates for new certificates in the same or another investment company.

Part B-Banks and Insurance Companies

SECTION 2(4), ADDING

NEW SUBSECTION 2(a) (37)—DEFINITION OF
SEPARATE ACCOUNT

Section 2(4) of the bill would add to the Investment Company Act a new subsection 2(a) (37) which defines the term "separate account" established and maintained by an insurance company. The purpose of adding this new subsection is to provide a definitional base for the

exclusion from the act of certain separate accounts provided for in section 3(b)(6) of the bill.

The definition in the new subsection is based on the definition in Commission rule 3-3 promulgated under the act which, in turn, is based on the definitions in separate account legislation of certain States, including New York. The definition expressly includes separate accounts established and maintained pursuant to the laws of Canada or any Province thereof, but includes such separate accounts of Canadian insurance companies only if such companies are subject to supervision by State insurance officials as provided in section 2(a)(17) of the act.

SECTION 3(b) (6), AMENDING REDESIGNATED SECTION 3(C)(11)—EXCLU

SIONS FOR CERTAIN BANK COLLECTIVE TRUST FUNDS AND INSURANCE COMPANY SEPARATE ACCOUNTS

Section 3(b)(6) of the bill would expand a present exclusion from the definition of “investment company" in section 3(c)(13), redesignated section 3(c)(11), of the Investment Company Act to cover certain bank collective trust funds and certain insurance company separate accounts funding pension or profit-sharing plans which meet the requirements of section 401(a) of the Internal Revenue Code. As a purely technical matter the amendment would also delete the reference to section 165 of the code and substitute a reference to section 401(a) of the code which replaced it.

The amendment in section 3(b)(6) of the bill would codify the Commission's current basic position that bank collective trust funds, which consist solely of assets of employees' plans and which meet the conditions of section 401(a) of the code, are entitled to the exclusion which the act presently provides for “[a]ny employees' stock bonus, pension, or profit-sharing trust which meets the conditions of section 165 (now, 401(a)] of the Internal Revenue Code, as amended.”

The amendment would exclude only those bank collective trust funds which are maintained solely for the funding of employees' stock bonus, pension or profit-sharing plans including so-called #.R. 10 plans, and which are not used as a vehicle for direct investment by individual members of the public. For example, the amendment would not exclude a bank collective fund maintained for the collective, investment and reinvestment of assets contr buted thereto by such bank in its capacity as managing agent.

The amendment in section 3(b)(6) of the bill would also exclude from the definition of “investment company” under the act certain insurance company separate accounts, as defined in section 2(4) of the bill. The purpose of this amendment is to give life insurance companies the same treatment with respect to employees' pensions and profit-sharing plans, which meet the requirements of section 401(a) of the code as is provided for banks.

SECTION 5(d) AMENDING SECTION 10(d)-CERTAIN EXEMPTIONS FOR

BANK COLLECTIVE FUNDS FOR MANAGING AGENCY ACTS

Section 5(d) of the bill would amend section 10(d) of the Investment Company Act to exempt bank collective funds for managing agency accounts from the provisions of sections (10a), 10(b)(2), 10(b)(3), and 10(c) of the act and would permit a collective fund for managing agency accounts, maintained by a bank, to have only one director who is not an interested person of the bank. It extends to such collective funds, which would be required by section 12(d) of the bill to operate on a no-load basis, the same treatment accorded by section 10(d) of the act to no-load funds managed by investment advisers who are principally engaged in the investment supervisory, business. The amendment would also exempt such funds from section 10(a) of the act, which requires that 40 percent of those persons performing the functions of directors be persons who are not officers or directors of, or otherwise affiliated with, the bank managing the fund. This amendment would also exempt such funds from section 10(b)(3) of the act, which provides that at least a majority of the board of directors of an investment company shall be persons who are not affiliated with any investment banker.

Under section 10(a) of the Investment Company Act, an investment company is required to have 40 percent of its board of directors consist of persons who are unaffiliated with the company's investment adviser. Under section 10(d), however, mutual funds which operate on a noload basis and meet certain other conditions are permitted to have only one member of the board of directors who is unaffiliated with the investment adviser. Since it is expected that bank collective funds will be operated on a no-load basis, they should be accorded the same treatment as section 10(d) provides for no-load funds. The amendment, therefore, permits a bank collective fund for managing agency accounts operated on a no-load basis to have a board of directors which includes only one director who is not an interested person of the bank.

SECTION 9(b), AMENDING SECTION 17(g)—CUSTODY OF ASSETS OF BANK

COLLECTIVE FUNDS FOR MANAGING AGENCY ACCOUNTS

Section 9(b) of the bill would amend section 17(g) of the Investment Company Act to permit an officer or employee of a bank collective fund for managing agency accounts to have access to assets of the fund held in the custody of the bank if such access is "solely through position as an officer or employee of a bank.”

SECTION 12(d), ADDING NEW SUBSECTION 22(h)—PERMITTING BANKS

TO ENGAGE IN CERTAIN INVESTMENT COMPANY ACTIVITIES

Section 12(d) of the bill would add a new subsection 22(h) to the act to make it clear that no provision of law prohibits a bank from creating or operating a registered investment company which is a collective fund for the investment of managing agency accounts and for funding direct investments by individual members of the public. Such a fund, however, would be required to issue its securities at no sales load and must comply with applicable regulations of the Comptroller of the Currency.

This section would also allow banks to participate in the underwriting, distribution, and sale of securities issued by registered investment companies for sale through such banks if the securities are sold at a price which does not include a sales load. At present, there may be some doubt as to whether banks may engage in such activities except as an accommodation to their customers. This section is intended to remove any such doubt.

SECTION 27(a) ADDING NEW SUBSECTIONS 27(a) (13) AND (14) TO THE

SECURITIES ACT-DEFINITIONS OF "INSURANCE COMPANY" AND "SEPARATE ACCOUNT"

Section 27(a) of the bill would add to the Securities Act a new subsection 27(a)(13) of the act defining the term "insurance company'' and a new subsection 27(a)(14) of the act defining the term "separate account” established and maintained by an insurance company. The definition of the term “insurance company” is substantially the same as the definition of the term in section 2(a) (17) of the Investment Company Act. The definition of the term "separate account” is substantially the same as the definition of the term in section 2(4) of this bill. (The description of section 2(4) of the bill discusses the definition of the term "separate account.') These new paragraphs are added to the Securities Act to provide a definitional base for the exemption from the act for interests or participations in certain separate accounts provided under proposed section 27(b) of the bill. SECTION 27(d) ADDING NEW SUBSECTION 25(b) OF THE SECURITIES ACT-GRANT OF JURISDICTION TO FEDERAL BANKING AUTHORITIES

Section 27(d) of the bill would add new subsection 25(b) to the Securities Act to grant jurisdiction to the Federal banking authorities over interests or participations in collective trust funds maintained by banks for funding plans (known as H.R. 10 plans). Such collective trust funds must meet the requirements for qualification under section 401 of the Internal Revenue Code which cover employees, some or all of whom are employees within the meaning of section 401(c)(1) of the code. Section 27(b) of the bill would exempt from the registration requirements of the act interests or participations with respect to corporate plans which meet the requirements for qualification section 401 of the code, but not interests or participations with respect to H.R. 10 plans. Rather than subject such interests or participations with respect to H.R. 10 plans to the jurisdiction of the Commission, section 27(d) of the bill would subject them to the jurisdiction of the banking authorities.

SECTION 28(a), AMENDING SECTION 3(a)(12) OF THE SECURITIES EX

CHANGE ACT-EXEMPTIONS FOR CERTAIN BANK COMMON AND COLLECTIVE TRUST FUNDS AND INSURANCE COMPANY SEPARATE ACCOUNTS

Section 28(a) of the bill would expand the definition of the term "exempted securities” in section 3(a)(12) of the Securities Exchange Act to include interests or participations in certain bank common trust funds, certain bank collective funds, and certain insurance company separate accounts. The language of this amendment is identical with that of the amendment of section 27(b) in this regard, and the description of section 27(b) of the bill discusses the scope of the exemption language. As with other securities exempted under section 3(a)(12) of the act, the amendment would not exempt any brokerdealer dealing in such interests or participations from liability under the antifraud and antimanipulative provisions of section 15(c) of the act and would not exempt any person purchasing or selling such interests or participations from liability under section 10 of the act. SECTION 28(b), ADDING NEW SUBSECTION 3(a) (19) OF THE SECURITIES

EXCHANGE ACT_DEFINITION OF INVESTMENT COMPANY, AFFILIATED PERSON, INSURANCE COMPANY, AND SEPARATE ACCOUNT

Section 28(b) of the bill would add a new subsection 3(a)(19) to the Securities Exchange Act which provides that the terms "investment company,

" "affiliated person," insurance company," and "separate account have the same meaning as in the Investment Company Act. (Section 2(4) of the bill would add the definition of the term "separate account” to the Investment Company Act, and the description of section 2(4) of the bill discusses thắt definition.)

SECTION 28(c), ADDING NEW SUBSECTION 12(g) (2) (H) OF THE SECURITIES

EXCHANGE ACT-EXEMPTION FOR CERTAIN BANK COMMON AND COLLECTIVE TRUST FUNDS AND INSURANCE COMPANY SEPARATE ACCOUNTS

Section 28(c) of the bill would add new subsection 12(g)(2)(H) to the Securities Exchange Act to exempt from the registration requirements of section 12(g) of the act certain bank common trust funds, and certain bank collective trust funds. Certain insurance company separate accounts issuing interests or participations with respect to corporate plans which meet the requirements for qualification under section 401 of the Code, including plans (known as "H.R. 10 plans”) which cover employees, some or all of whom are employees within the meaning of section 401(c)(1) of the Code would also be exempt under this proposed section. Bank collective trust funds issuing interests or participations with respect to "H.R. 10 plans” would be made subject to the jurisdiction of the Federal banking authorities under section 28(d) of the bill. Insurance company separate accounts issuing interests or participations with respect to "H.R. 10 plans” would be required to register such interests or participations with the Commission as required in the Securities Act as amended by section 27(b) of the bill. In view of this fact and in view of the fact that such separate accounts would be subject to the reporting requirements of section 15(d) of the Securities Exchange Act, it is not necessary nor appropriate to require these separate accounts to be registered under section 12(g) of the Securities Exchange Act. Registration under the Securities Exchange Act would have subjected these separate accounts to the proxy requirements and insider trading provisions. However, there are generally no voting privileges provided for in connection with such interests or participations, and such interests or participations are not traded in the general securities market.

SECTION 28(d), AMENDING SECTION 12(i) OF THE SECURITIES EXCHANGE

ACT-GRANT OF JURISDICTION TO FEDERAL BANKING AUTHORITIES

Section 28(d) of the bill would amend section 12(i) of the Securities Exchange Act to grant jurisdiction to the Federal banking authorities over interests or participations in collective trust funds maintained by banks for funding plans (known as "H.R. 10 plans") which meet the requirements for qualification under section 401 of the Internal Revenue Code and which cover employees, some or all of whom are employees within the meaning of section 401(c)(1) of the Code.

« AnteriorContinuar »