nonetheless is deemed to be an investment company
for purposes of the limitations set forth in section
12(d)(1)(A)(i) and (B)(i) governing the purchase or
other acquisition by such issuer of any security is-
sued by any registered investment company and the
sale of any security issued by any registered open-
end investment company to any such issuer.’’;
(2) in subparagraph (A) of paragraph (1)—
(A) by inserting after ‘‘issuer,’’ the first
place it appears the following: ‘‘and is or, but
for the exception in this paragraph or para-
graph (7), would be an investment company,’’;
and
(B) by striking all that follows the words
‘‘(other than short-term paper)’’ and inserting a
period; and
(3) by striking paragraph (7) and inserting the
following:
‘‘(7) Any issuer whose outstanding securities
are owned exclusively by persons who, at the time of
acquisition of such securities, are qualified pur-
chasers. Such issuer nonetheless is deemed to be an
investment company for purposes of the limitations
set forth in section 12(d)(1)(A)(i) and (B)(i) govern-
ing the purchase or other acquisition by such issuer
of any security issued by any registered investment
company and the sale of any security issued by any
registered open-end investment company to any such
issuer.’’.
(b) DEFINITION OF QUALIFIED PURCHASER.—Sec-
tion 2(a) of the Investment Company Act of 1940 (15
U.S.C. 80a–2(a)) is amended by inserting after paragraph
(50) the following new paragraph:
‘‘(51) ‘Qualified purchaser’ means—
‘‘(A) any natural person who owns at least
$10,000,000 in securities of issuers, each of
which is not an affiliated person, as defined in
section 2(a)(3)(C), of such person; or
‘‘(B) any person, acting for its own ac-
count or the accounts of other qualified pur-
chasers, who in the aggregate owns and invests
on a discretionary basis, not less than
$100,000,000 in securities of issuers, each of
which is not an affiliated person, as defined in
section 2(a)(3)(C), of such person.
The Commission also may adopt such rules and reg-
ulations governing the persons specified in subpara-
graphs (A) and (B) as it determines are necessary
or appropriate in the public interest and for the pro-
tection of investors.’’.
(c) CONFORMING AMENDMENT.—The last sentence
of section 3(a) of the Investment Company Act of 1940
(15 U.S.C. 80a–3(a)) is amended by inserting before the
period the following: ‘‘or relying on the exclusion from the
definition of investment company in subsection (c)(1) or
(c)(7) of this section’’.
SEC. 9. FUNDS OF FUNDS.
Section 12(d)(1) of the Investment Company Act of
1940 (15 U.S.C. 80a–12(d)(1)) is amended by—
(1) redesignating existing subparagraphs (G)
and (H) as subparagraphs (H) and (I), respectively;
(2) inserting after subparagraph (F) the follow-
ing new subparagraph:
‘‘(G) The provisions of this paragraph (1) shall not
apply to securities of a registered open-end investment
company (the ‘acquired company’) purchased or otherwise
acquired by a registered open-end investment company
(the ‘acquiring company’) if—
‘‘(i) the acquired company and the acquiring
company are part of the same group of investment
companies;
‘‘(ii) the securities of the acquired company, se-
curities of other registered open-end investment
companies that are part of the same group of invest-
ment companies, and short-term paper are the only
investment securities held by the acquiring company;
‘‘(iii)(I) the acquiring company does not pay
and is not assessed any charges or fees for distribu-
tion-related activities with respect to securities of the
acquired company unless the acquiring company
does not charge a sales load or other fees or charges
for distribution-related activities; or
‘‘(II) any sales loads and other distribution-re-
lated fees charged with respect to securities of the
acquiring company, when aggregated with any sales
load and distribution-related fees paid by the acquir-
ing company with respect to securities of the ac-
quired fund, are not excessive under rules adopted
pursuant to either section 22(b) or section 22(c) of
this title by a securities association registered under
section 15A of the Securities Exchange Act of 1934
or the Commission;
‘‘(iv) the acquired company shall have a fun-
damental policy that prohibits it from acquiring any
securities of registered open-end investment compa-
nies in reliance on this subparagraph or subpara-
graph (F) of this subsection;
‘‘(v) the acquiring company shall exercise voting
rights by proxy or otherwise with respect to the se-
curities of the acquired company purchased or ac-
quired in the manner prescribed by subparagraph
(E) of this subsection; and
‘‘(vi) such acquisition is not in contravention of
such rules and regulations as the Commission may
have prescribed with respect to acquisitions in ac-
cordance with this subparagraph as necessary and
appropriate for the protection of investors.
For purposes of this subparagraph, a ‘group of investment
companies’ shall mean any two or more registered invest-
ment companies that hold themselves out to investors as
related companies for purposes of investment and investor
services.’’; and
(3) adding at the end the following new sub-
paragraph:
‘‘(J) The Commission, by rules and regulations upon
its own motion or by order upon application, may condi-
tionally or unconditionally exempt any person, security or
transaction, or any class or classes of persons, securities
or transactions from any provisions of this subsection, if
and to the extent such exemption is consistent with the
protection of investors.’’.
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HR 1495 IH——2