Table of Contents
Trust Indenture Act of 1939
(Revised through November 15, 1990)
Codified to 15 USC 77aaa through 15 USC 77bbbb
Section 402 of title IV of the Act of November 15, 1990 (Pub. L. No. 101-550; 104 Stat. 2722)
Effective November 15, 1990
Trust Indenture Act of 1939
Section 301 Short Title
Section 302 Necessity for
Regulation
Section 303 Definitions
Section 304 Exempted Securities and
Transactions
Section 305 Securities Required to be
Registered Under Securities Act
Section 306 Securities Not
Registered Under Securities Act
Section 307 Qualification of
Indentures Covering Securities Not Required to be Registered
Section 308 Integration of Procedure
With Securities Act and Other Acts
Section 309 When Qualification Becomes
Effective; Effect of Qualification
Section 310 Eligibility and
Disqualification of Trustee
Section 311 Preferential Collection of
Claims Against Obligor
Section 312 Bondholders Lists
Section 313 Reports by Indenture
Trustee
Section 314 Reports by Obligor;
Evidence of Compliance With Indenture Provisions
Section 315 Duties and
Responsibility of the Trustee
Section 316 Direction and Waivers
by Bondholders; Prohibition of Impairment of Holder's Right to Payment
Section 317 Special Powers of Trustee;
Duties of Paying Agents
Section 318 Effect of Prescribed
Indenture Provisions
Section 319 Rules, Regulations,
and Orders
Section 320 Hearings by Commission
Section 321 Special Powers of the
Commission
Section 322 Court Review of
Orders; Jurisdiction of Offenses and Suits
Section 323 Liability for
Misleading Statements
Section 324 Unlawful
Representations
Section 325 Penalties
Section 326 Effect on Existing Law
Section 327 Contrary Stipulations
Void
Section 328 Separability of
Provisions
SEC Rules Under Section 304 Of The
Trust Indenture Act Of 1939
SEC Regulation A - Conditional Small Issues Exemption
Trust Indenture Act Of 1939
As Amended
AN ACT To provide for the regulation of the sale of certain
securities in interstate and foreign commerce and through the mails, and the regulation of
the trust indentures under which the same are issued, and for other purposes.
Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled, the Act entitled "An Act to
provide full and fair disclosure of the character of securities sold in interstate and
foreign commerce and through the mails, and to prevent frauds in the sale thereof, and for
other purposes", approved May 27, 1933, as amended, is amended by adding at the
end thereof the following:
TITLE III1
1 Title I of this act is the Securities
Act of 1933. Title II is the Corporation of Foreign Security Holders Act.
Section 301 Short Title
This title, divided into sections as follows, may be cited
as the "Trust Indenture Act of 1939". [Codified to 15 USC 77aaa]
[Source: Section 301 of title III of the Act
of May 27, 1933 (Pub. L. No. 22, 48 Stat. 74), effective
May 27, 1933, as added by section 301 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1149), effective
August 3, 1939]
Section 302 Necessity for Regulation
(a) Upon the basis of facts disclosed by the reports of
the Securities and Exchange Commission made to the Congress pursuant to section 211
of the Securities Exchange Act of 1934 and otherwise disclosed and ascertained, it is
hereby declared that the national public interest and the interest of investors in notes,
bonds, debentures, evidences of indebtedness, and certificates of interest or
participation therein, which are offered to the public, are adversely affected -
(1) when the obligor fails to provide a trustee to
protect and enforce the rights and to represent the interests of such investors,
notwithstanding the fact that -
(A) individual action by such investors for the purpose
of protecting and enforcing their rights is rendered impracticable by reason of the
disproportionate expense of taking such action, and
(B) concerted action by such investors in their common interest through
representatives of their own selection is impeded by reason of the wide dispersion of such
investors through many States, and by reason of the fact that information as to the names
and addresses of such investors generally is not available to such investors;
(2) when the trustee does not have adequate rights and
powers, or adequate duties and responsibilities, in connection with matters relating to
the protection and enforcement of the rights of such investors; when, notwithstanding the
obstacles to concerted action by such investors, and the general and reasonable assumption
by such investors that the trustee is under an affirmative duty to take action for the
protection and enforcement of their rights, trust indentures -
(A) generally provide that the trustee shall be under no
duty to take any such action, even in the event of default, unless it receives notice of
default, demand for action, and indemnity, from the holders of substantial percentages of
the securities outstanding thereunder, and
(B) generally relieve the trustee from liability even
for its own negligent action or failure to act;
(3) when the trustee does not have resources
commensurate with its responsibilities, or has any relationship to or connection with the
obligor or any underwriter of any securities of the obligor, or holds, beneficially or
otherwise, any interest in the obligor or any such underwriter, which relationship,
connection, or interest involves a material conflict with the interests of such investors;
(4) when the obligor is not obligated to furnish to the
trustee under the indenture and to such investors adequate current information as to its
financial condition, and as to the performance of its obligations with respect to the
securities outstanding under such indenture; or when the communication of such information
to such investors is impeded by the fact that information as to the names and addresses of
such investors generally is not available to the trustee and to such investors;
(5) when the indenture contains provisions which are
misleading or deceptive, or when full and fair disclosure is not made to prospective
investors of the effect of important indenture provisions; or
(6) when, by reason of the fact that trust indentures
are commonly prepared by the obligor or underwriter in advance of the public offering of
the securities to be issued thereunder, such investors are unable to participate in the
preparation thereof, and, by reason of their lack of understanding of the situation, such
investors would in any event be unable to procure the correction of the defects enumerated
in this subsection.
(b) Practices of the character above enumerated have
existed to such an extent that, unless regulated, the public offering of notes, bonds,
debentures, evidences of indebtedness, and certificates of interest or participation
therein, by the use of means and instruments of transportation and communication in
interstate commerce and of the mails, is injurious to the capital markets, to investors,
and to the general public; and it is hereby declared to be the policy of this title, in
accordance with which policy all the provisions of this title shall be interpreted, to
meet the problems and eliminate the practices, enumerated in this section, connected with
such public offerings. [Codified to 15 USC 77bbb]
[Source: Section 302 of title III of the Act
of May 27, 1933 (Pub. L. No. 22, 48 Stat. 74), effective
May 27, 1933, as added by section 302 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1150), effective
August 3, 1939]
Section 303 Definitions
When used in this title, unless the context otherwise
requires -
(1) Any term defined in section 2 of the Securities
Act of 1933, and not otherwise defined in this section, shall have the meaning assigned to
such term in such section 2.
(2) The terms "sale", "sell",
"offer to sell", "offer for sale", and "offer" shall include
all transactions included in such terms as provided in paragraph (3) of
section 2 of the Securities Act of 1933, except that an offer or sale of a
certificate of interest or participation shall be deemed an offer or sale of the security
or securities in which such certificate evidences an interest or participation if and only
if such certificate gives the holder thereof the right to convert the same into such
security or securities.
(3) The term "prospectus" shall have the
meaning assigned to such term in paragraph (10) of section 2 of the Securities
Act of 1933, except that in the case of securities which are not registered under the
Securities Act of 1933, such term shall not include any communication -
(A) if it is proved that prior to or at the same time
with such communication a written statement if any required by section 306
was sent or given to the persons to whom the communication was made, or
(B) if such communication states from whom such
statement may be obtained (if such statement is required by rules or regulations under
paragraphs (1) or (2) of subsection (b) of section 306) and, in addition,
does no more than identify the security, state the price thereof, state by whom orders
will be executed and contain such other information as the Commission, by rules or
regulations deemed necessary or appropriate in the public interest or for the protection
of investors, and subject to such terms and conditions as may be prescribed therein, may
permit.
(4) The term "underwriter" means any person
who has purchased from an issuer with a view to, or offers or sells for an issuer in
connection with, the distribution of any security, or participates or has a direct or
indirect participation in any such undertaking, or participates or has a participation in
the direct or indirect underwriting of any such undertaking; but such term shall not
include a person whose interest is limited to a commission from an underwriter or dealer
not in excess of the usual and customary distributors' or sellers' commission.
(5) The term "director" means any director of
a corporation, or any individual performing similar functions with respect to any
organization whether incorporated or unincorporated.
(6) The term "executive officer" means the
president, every vice president, every trust officer, the cashier, the secretary, and the
treasurer of a corporation, and any individual customarily performing similar functions
with respect to any organization whether incorporated or unincorporated, but shall not
include the chairman of the board of directors.
(7) The term "indenture" means any mortgage,
deed of trust, trust or other indenture, or similar instrument or agreement (including any
supplement or amendment to any of the foregoing), under which securities are outstanding
or are to be issued, whether or not any property, real or personal, is, or is to be,
pledged, mortgaged, assigned, or conveyed thereunder.
(8) The term "application" or
"application for qualification" means the application provided for in section 305 or 307, and includes any
amendment thereto and any report, document, or memorandum accompanying such application or
incorporated therein by reference.
(9) The term "indenture to be qualified" means
-
(A) the indenture under which there has been or is to be issued a
security in respect of which a particular registration statement has been filed, or
(B) the indenture in respect of which a particular application has been
filed.
(10) The term "indenture trustee" means each
trustee under the indenture to be qualified, and each successor trustee.
(11) The term "indenture security" means any
security issued or issuable under the indenture to be qualified
(12) The term "obligor", when used with
respect to any such indenture security, means every person (including a guarantor) who is
liable thereon, and, if such security is a certificate of interest or participation, such
term means also every person (including a guarantor) which such certificate evidences an
interest or participation; but such term shall not include the trustee under an indenture
under which certificates of interest or participation, equipment trust certificates, or
like securities are outstanding.
(13) The term "paying agent", when used with
respect to any such indenture security, means any person authorized by an obligor thereon
-
(A) to pay the principal of or interest on such security on behalf of
such obligor, or
(B) if such security is a certificate of interest or participation,
equipment trust certificate, or like security, to make such payment on behalf of the
trustee.
(14) The term "State" means any State of the
United States.
(15) The term "Commission" means the
Securities and Exchange Commission.
(16) The term "voting security" means any
security presently entitling the owner or holder thereof to vote in the direction or
management of the affairs of a person, or any security issued under or pursuant to any
trust, agreement, or arrangement whereby a trustee or trustees or agent or agents for the
owner or holder of such security are presently entitled to vote in the direction or
management of the affairs of a person; and a specified percentage of the voting securities
of a person means such amount of the outstanding voting securities of such person as
entitled the holder or holders thereof to cast such specified percentage of the aggregate
votes which the holders of all the outstanding voting securities of such person are
entitled to cast in the direction or management of the affairs of such person.
(17) The terms "Securities Act of 1933",
"Securities Exchange Act of 1934", and "Public Utility Holding Company Act
of 1935" shall be deemed to refer, respectively, to such Acts, as amended, whether
amended prior to or after the enactment of this title.
(18) The term "Bankruptcy Act" means the
Bankruptcy Act or title 11.
[Codified to 15 USC 77ccc]
[Source: Section 303 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 303 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1151), effective
August 3, 1939; as amended by section 301 of title III of the Act of
August 10, 1954 (Pub. L. No. 577; 68 Stat. 687), effective
October 9, 1954; section 307 of title III of the Act of November 6,
1978 (Pub. L. (No. 95-598; 92 Stat. 2674), effective October 1,
1979; sections 501 and 502 of title V of the Act of December 4, 1987
(Pub. L. No. 100-181; 101 Stat. 1260), effective December 4,
1987; and section 402 of title IV of the Act of November 15, 1990
(Pub. L. No. 101-550; 104 Stat. 2722), effective November 15,
1990]
Section 304
Exempted Securities and Transactions
(a) The provisions of this title shall not apply to any of the following securities:
(1) any security other than -
(A) a note, bond, debenture, or evidence of indebtedness, whether or not
secured, or
(B) a certificate of interest or participation in any such note, bond,
debenture, or evidence of indebtedness, or
(C) a temporary certificate for, or guarantee of, any such note, bond,
debenture, evidence of indebtedness, or certificate;
(2) any certificate of interest or participation in two or more
securities having substantially different rights and privileges, or a temporary
certificate for any such certificate;
(3) Reserved.
(4) (A) any security exempted from the provisions of the
Securities Act of 1933 by
paragraph (2), (3), (4), (5), (6), (7), (8),
or (11) of subsection 3(a) thereof;
(B) any security exempted from the provisions of the
Securities Act of 1933, as amended, by paragraph (2) of subsection 3(a) thereof,
as amended by section 401 of the Employment Securities Amendments of 1970.
(5) any security issued under a mortgage indenture as to
which a contract of insurance under the National Housing Act is in effect; and any such
security shall be deemed to be exempt from the provisions of the Securities Act of 1933 to
the same extent as though such security were specifically enumerated in
section 3(a)(2) of such Act;
(6) any note, bond, debenture, or evidence of
indebtedness issued or guaranteed by a foreign government or by a subdivision, department,
municipality, agency, or instrumentality thereof;
(7) any guarantee of any security which is exempted by
this subsection;
(8) any security which has been
or is to be issued otherwise than under an indenture, but this exemption shall not be
applied within a period of twelve consecutive months to an aggregate principal amount of
securities of the same issuer greater than the figure stated in section 3(b) of the
Securities Act of 1933 [15 USC 77c(b)] limiting exemptions thereunder, or such
lesser amount as the Commission may establish by its rules and regulations;
(9) any security which has been
or is to be issued under an indenture which limits the aggregate principal amount of
securities at any time outstanding thereunder to $10,000,000, or such lesser amount as the
Commission may establish by its rules and regulations, but this exemption shall not be
applied within a period of thirty-six consecutive months to more than $10,000,000
aggregate principal amount of securities of the same issuer, or such lesser amount as the
Commission may establish by its rules and regulations; or
(10) any security issued under a mortgage or trust deed
indenture as to which a contract of insurance under title XI of the National Housing
Act is in effect: and any such security shall be deemed to be exempt from the provisions
of the Securities Act of 1933 to the same extent as though such security were specifically
enumerated in section 3(a)(2), as amended, of the Securities Act of 1933.
In computing the aggregate principal amount of
securities to which the exemptions provided by paragraphs (8) and (9) may be applied,
securities to which the provisions of sections 305 and 306 would not have applied,
irrespective of the provisions of those paragraphs, shall be disregarded.
(b) The provisions of sections 305
and 306 shall not apply -
(1) to any of the transactions exempted from the
provisions of section 5 of the Securities Act of 1933 by section 4 thereof, or
(2) to any transaction which would be so exempted but
for the last sentence of paragraph (11) of section 2 of such Act.
(c) The Commission shall, on application by the issuer
and after opportunity for hearing thereon, by order exempt from any one or more provisions
of this title any security issued or proposed to be issued under any indenture under
which, at the time such application is filed, securities referred to in paragraph (3)
of subsection (a) of this section are outstanding or on January 1, 1959, such
securities were outstanding, if and to the extent that the Commission finds that
compliance with such provision or provisions, through the execution of a supplemental
indenture or otherwise -
(1) would require, by reason of the provisions of such indenture, or the
provisions of any other indenture or agreement made prior to the enactment of this title,
or the provisions of any applicable law, the consent of the holders of securities
outstanding under any such indenture or agreement; or
(2) would impose an undue burden on the issuer, having due regard to the
public interest and the interests of investors.
(d) The Commission may, by rules
or regulations upon its own motion, or by order on application by an interested person,
exempt conditionally or unconditionally any person, registration statement, indenture,
security or transaction, or any class or classes of persons, registration statements,
indentures, securities, or transactions, from any one or more of the provisions of this
title, if and to the extent that such exemption is necessary or appropriate in the public
interest and consistent with the protection of investors and the purposes fairly intended
by this title. The Commission shall by rules and regulations determine the procedures
under which an exemption under this subsection shall be granted, and may, in its sole
discretion, decline to entertain any application for an order of exemption under this
subsection.
(e) The Commission may from time to time by its rules
and regulations, and subject to such terms and conditions as may be prescribed herein, add
to the securities exempted as provided in this section any class of securities issued
by a small business investment company under the Small Business Investment Act of 1958 if
it finds, having regard to the purposes of that Act, that the enforcement of this Act with
respect to such securities is not necessary in the public interest and for the protection
of investors.
[Codified to 15 USC 77ddd]
[Source: Section 304 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 304 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1153), effective
August 3, 1939; as amended by section 302 of title III of the Act of
August 10, 1954 (Pub. L. No. 577; 68 Stat. 687), effective
October 9, 1954; section 307(b) of title III of the Act of August 21,
1958 (Pub. L. No. 85-699; 72 Stat. 689), effective-August 21,
1958; the Act of September 13, 1960 (Pub. L. No. 86-760;
74 Stat. 902), effective-September 13, 1960; section 504(b) of title V
of the Act of November 3, 1966 (Pub. L. No. 89-754;
80 Stat. 1278), effective November 3, 1966; section 6(c) of the Act of
December 22, 1970 (Pub . L. No. 91-567; 84 Stat. 1499), effective
with respect to securities sold after January 1, 1970; section 302 of title III
of the Act of October 21, 1980 (Pub. L. No. 96-477;
94 Stat. 2291), effective October 21, 1980; and section 403 of
title IV of the Act of November 15, 1990 (Pub. L. No. 101-550;
104 Stat. 2722), effective November 15, 1990]
Section 305 Securities Required to be
Registered Under Securities Act
(a) Subject to the provisions of section 304,
a registration statement relating to a security shall include the following information
and documents, as though such inclusion were required by the provisions of section 7
of the Securities Act of 1933 -
(1) such information and documents as the Commission may
by rules and regulations prescribe in order to enable the Commission to determine whether
any person designated to act as trustee under the indenture under which such security has
been or is to be is eligible to act as such under subsection (a) of section 310;
and
(2) an analysis of any provisions of such indenture with
respect to -
(A) the definition of what shall constitute a default under such
indenture, and the withholding of notice to the indenture security holders of any such
default,
(B) the authentication and delivery of the indenture securities and the
application of the proceeds thereof,
(C) the release or the release and substitution of any property subject
to the lien of the indenture,
(D) the satisfaction and discharge of the indenture, and
(E) the evidence required to be furnished by the obligor upon the
indenture securities to the trustee as to compliance with the conditions and covenants
provided for in such indenture.
The information and documents required by
paragraph (1) of this subsection with respect to the person designated to act as
indenture trustee shall be contained in a separate part of such registration statement,
which part shall be signed by such person. Such part of the registration statement shall
be deemed to be a document filed pursuant to this title, and the provisions of sections
11, 12, 17, and 24 of the Securities Act of 1933 shall not apply to statements therein or
omissions therefrom.
(b) (1) Except as may be
permitted by paragraph (2) of this subsection, the Commission shall issue an order
prior to the effective date of registration refusing to permit such a registration
statement to become effective, if it finds that -
(A) the security to which such registration statement
relates has not been or is not to be issued under an indenture; or
(B) any person designated as trustee under such
indenture is not eligible to act as such under subsection (a) of section 310;
but no such order shall be issued except after notice and opportunity for hearing within
the periods and in the manner required with respect to refusal orders pursuant to
section 8(b) of the Securities Act of 1933. If and when the Commission deems that the
objections on which such order was based have been met, the Commission shall enter an
order rescinding such refusal order, and the registration shall become effective at the
time provided in section 8(a) of the Securities Act of 1933, or upon the date of such
rescission, whichever shall be later.
(2) In the case of securities registered under the
Securities Act of 1933, which securities are eligible to be issued, offered, or sold on a
delayed basis by or on behalf of the registrant, the Commission shall not be required to
issue an order pursuant to paragraph (1) of subsection (b) of section 305
for failure to designate a trustee eligible to act under subsection (a)
of section 310 if, in accordance with such rules and regulations as may be
prescribed by the Commission, the issuer of such securities files an application for the
purpose of determining such trustee's eligibility under subsection (a) of
section 310. The Commission shall issue an order prior to the effective date of such
application refusing to permit the application to become effective, if it finds that any
person designated as trustee under such indenture is not eligible to act as such under subsection (a) of section 310, but no order shall be
issued except after notice and opportunity for hearing within the periods and in the
manner required with respect to refusal orders pursuant to section 8(b) of the
Securities Act of 1933. If after notice and opportunity for hearing the Commission issues
an order under this provision, the obligor shall within 5 calendar days appoint a
trustee meeting the requirements of subsection (a) of section 310. No such
appointment shall be effective and such refusal order shall be rescinded by the Commission
until a person eligible to act as trustee under subsection (a) of section 310
has been appointed. If no order is issued, an application filed pursuant to this paragraph
shall be effective the tenth day after filing thereof or such earlier date as the
Commission may determine, having due regard to the adequacy of information provided
therein, the public interest, and the protection of investors.
(c) A prospectus relating to any
such security shall include to the extent the Commission may prescribe by rules and
regulations as necessary and appropriate in the public interest or for the protection of
investors, as though such inclusion were required by section 10 of the Securities Act
of 1933, a written statement containing the analysis set forth in the registration
statement, of any indenture provisions with respect to the matters specified in
paragraph (2) of subsection (a) of this section, together with a supplementary
analysis, prepared by the Commission, of such provisions and of the effect thereof, if, in
the opinion of the Commission, the inclusion of such supplementary analysis is necessary
or appropriate in the public interest or for the protection of investors, and the
Commission so declares by order after notice and, if demanded by the issuer, opportunity
for hearing thereon. Such order shall be entered prior to the effective date of
registration, except that if opportunity for hearing thereon is demanded by the issuer
such order shall be entered within a reasonable time after such opportunity for hearing.
(d) The provisions of sections 11, 12, 17, and 24 of the
Securities Act of 1933, and the provisions of sections 323 and 325 of this title, shall
not apply to statements in or omissions from any analysis required under the provisions of
this section or section 306 or 307.
[Codified to 15 USC 77eee]
[Source: Section 305 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 305 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1154), effective
August 3, 1939; as amended by section 303 of title III of the Act of
August 10, 1954 (Pub. L. No. 577; 68 Stat. 687), effective
October 11, 1954; section 404 of title IV of the Act of November 15,
1990 (Pub. L. No. 101-550; 104 Stat. 2722), effective
November 15, 1990]
Section 306
Securities Not Registered Under Securities Act
(a) In the case of any security which is not registered
under the Securities Act of 1933 and to which this subsection is applicable
notwithstanding the provisions of section 304, unless such
security has been or is to be issued under an indenture and an application for
qualification is effective as to such indenture, it shall be unlawful for any person,
directly or indirectly -
(1) to make use of any means or instruments of
transportation or communication in interstate commerce or of the mails to sell such
security through the use or medium of any prospectus or otherwise; or
(2) to carry or cause to be carried through the mails or
in interstate commerce, by any means or instruments of transportation, any such security
for the purpose of sale or for delivery after sale.
(b) In case of any security which is not registered
under the Securities Act of 1933, but which has been or is to be issued under an indenture
as to which an application for qualification is effective, it shall be unlawful for any
person, directly, or indirectly -
(1) to make use of any means or instruments of
transportation or communication in interstate commerce or of the mails to carry or
transmit any prospectus relating to any such security, unless such prospectus, to the
extent the Commission may prescribe by rules and regulations as necessary and appropriate
in the public interest or for the protection of investors, includes or is accompanied by a
written statement that contains the information specified in subsection (c)
of section 305; or
(2) to carry or to cause to be carried through the mails
or interstate commerce any such security for the purpose of sale or for delivery after
sale, unless, to the extent the Commission may prescribe by rules and regulations as
necessary or appropriate in the public interest or for the protection of investors,
accompanied or preceded by a written statement that contains the information specified in subsection (c) of section 305.
(c) It shall be unlawful for any person, directly or
indirectly, to make use of any means or instruments of transportation or communication in
interstate commerce or of the mails to offer to sell through the use or medium of any
prospectus or otherwise any security which is not registered under the Securities Act of
1933 and to which this subsection is applicable notwithstanding the provisions of section 304, unless such security has been or is to be issued
under an indenture and an application for qualification has been filed as to such
indenture, or while the application is the subject of a refusal order or stop order or
(prior to qualification) any public proceeding or examination under section 307(c).
[Codified to 15 USC 77fff]
[Source: Section 306 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 306 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1155), effective
August 3, 1939; as amended by section 304 of title III of the Act of
August 10, 1954 (Pub. L. No. 577; 68 Stat. 687), effective
October 9, 1954]
Section 307
Qualification of Indentures Covering Securities Not Required to be Registered
(a) In the case of any security which is not required to
be registered under the Securities Act of 1933 and to which subsection (a)
of section 306 is applicable notwithstanding the provisions of section 304, an application for qualification of the indenture
under which such security has been or is to be issued shall be filed with the Commission
by the issuer of such security. Each such application shall be in such form, and shall be
signed in such manner, as the Commission may by rules and regulations prescribe as
necessary or appropriate in the public interest or for the protection of investors. Each
such application shall include the information and documents required by subsection (a) of section 305. The information and
documents required by paragraph (1) of such subsection with respect to the person
designated to act as indenture trustee shall be contained in a separate part of such
application, which part shall be signed by such person. Each such application shall also
include such of the other information and documents which would be required to be filed in
order to register such indenture security under the Securities Act of 1933 as the
Commission may by rules and regulations prescribe as necessary or appropriate in the
public interest or for the protection of investors. An application may be withdrawn by the
applicant at any time prior to the effective date thereof. Subject to the provisions of section 321, the information and documents contained in or filed
with any application shall be made available to the public under such regulations as the
Commission may prescribe, and copies thereof, photostatic or otherwise, shall be furnished
to every applicant therefore at such reasonable charge as the Commission may prescribe.
(b) The filing with the Commission of an application, or
of an amendment to an application, shall be deemed to have taken place upon the receipt
thereof by the Commission, but, in the case of an application, only if it is accompanied
or preceded by payment to the Commissioner of a filing fee in the amount of $100, such
payment to be made in cash of by United States postal money order or certified or bank
check, or in such other medium of payment as the Commission may authorize by rule and
regulation.
(c) The provisions of
section 8 of the Securities Act of 1933 and the provisions of subsection (b)
of section 305 of this title shall apply with respect to every such application,
as though such application were a registration statement filed pursuant to the provisions
of such Act.
[Codified to 15 U.S.C 77ggg]
[Source: Section 307 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 307 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1156), effective
August 3, 1939]
Section 308 Integration of Procedure
With Securities Act and Other Acts
(a) The Commission, by such rules and regulations or
orders as it deems necessary or appropriate in the public interest or for the protection
of investors, shall authorize the filing of any information or documents required to be
filed with the Commission under this title, or under the Securities Act of 1933, the
Securities Exchange Act of 1934, or the Public Utility Holding Company Act of 1935, by
incorporating by reference any information or documents on file with the Commission under
this title or under any such Act.
(b) The Commission, by such rules and regulations or
orders as it deems necessary or appropriate in the public interest or for the protection
of investors, shall provide for the consolidation of applications, reports, and
proceedings under this title with registration statements, applications, reports, and
proceedings under the Securities Act of 1933, the Securities Exchange Act of 1934, or the
Public Utility Holding Company Act of 1935.
[Codified to 15 USC 77hhh]
[Source: Section 308 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 308 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1156), effective
August 3, 1939]
Section 309 When Qualification Becomes
Effective; Effect of Qualification
(a) The indenture under which a security has been or is
to be issued shall be deemed to have been qualified under this title -
(1) when registration becomes effective as to such
security; or
(2) when an application for the qualification of such
indenture becomes effective, pursuant to section 307.
(b) After qualification has become effective as to the
indenture under which a security has been or is to be issued, no stop order shall be
issued pursuant to section 8(d) of the Securities Act of 1933, suspending the
effectiveness of the registration statement relating to such security or of the
application for qualification of such indenture, except on one or more of the grounds
specified in section 8 of such Act, or the failure of the issuer to file an
application as provided for by section 305(b)(2).
(c) The making, amendment, or rescission of a rule,
regulation, or order under the provisions of this title (except to the extent authorized
by subsection (a) of section 314 with respect to rules
and regulations prescribed pursuant to such subsection) shall not affect the
qualification, form, or interpretation of any indenture as to which qualification became
effective prior to the making, amendment, or rescission of such rule, regulation, or
order.
(d) No trustee under an indenture which has been
qualified under this title shall be subject to any liability because of any failure of
such indenture to comply with any of the provisions of this title, or any rule,
regulation, or order thereunder.
(e) Nothing in this title shall be construed as
empowering the Commission to conduct an investigation or other proceeding for the purpose
of determining whether the provisions of an indenture which has been qualified under this
title are being complied with, or to enforce such provisions.
[Codified to 15 USC 77iii]
[Source: Section 309 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 309 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1157), effective
August 3, 1939; as amended by section 405 of title IV of the Act of
November 15, 1990 (Pub. L. No. 101-550; 104 Stat. 2723),
effective November 15, 1990]
Section 310 Eligibility and
Disqualification of Trustee
(a) Persons Eligible for Appointment as Trustee
(1) There shall at all times be
one or more trustees under every indenture qualified or to be qualified pursuant to this
title, at least one of whom shall at all times be a corporation organized and doing
business under the laws of the United States or of any State or Territory or of the
District of Columbia or a corporation or other person permitted to act as trustee by the
Commission (referred to in this title as the institutional trustee), which -
(A) is authorized under such laws to exercise corporate trust powers,
and
(B) is subject to supervision or examination by Federal, State,
Territorial, or District of Columbia authority.
The Commission may, pursuant to such rules and
regulations as it may prescribe, or by order on application, permit a corporation or other
person organized and doing business under the laws of a foreign government to act as sole
trustee under an indenture qualified or to be qualified pursuant to this title, if such
corporation or other person
(A) is authorized under such laws to exercise corporate trust powers,
and
(B) is subject to supervision or examination by authority of such
foreign government or a political subdivision thereof substantially equivalent to
supervision or examination applicable to United States institutional trustees.
In prescribing such rules and regulations or making such
order, the Commission shall consider whether under such laws, a United States
institutional trustee is eligible to act as sole trustee under an indenture relating to
securities sold within the jurisdiction of such foreign government.
(2) Such institution*
trustee shall have at all times a combined capital and surplus of a specified minimum
amount, which shall not be less than $150,000. If such institutional trustee publishes
reports of condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, the indenture may provide that, for the purposes of
this paragraph, the combined capital and surplus of such trustee shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition so
published.
* So in statute. Should probably be
"institutional."
(3) If the indenture to be qualified requires or permits
the appointment of one or more co-trustees in addition to such institutional trustee, the
rights, powers, duties, and obligations conferred or imposed upon the trustees or any of
them shall be conferred or imposed upon and exercised or performed by such institutional
trustee, or such institutional trustee and such co-trustees jointly, except to the extent
that under any law of any jurisdiction in which any particular act or acts are to be
performed, such institutional trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations shall be exercised
and performed by such co-trustees.
(4) In the case of certificates of interest or
participation, the indenture trustee or trustees shall have the legal power to exercise
all of the rights, powers, and privileges of a holder of the security or securities in
which such certificates evidence an interest or participation.
(5) No obligor upon the indenture securities or person
directly or indirectly controlling, controlled by, or under common control with such
obligor shall serve as trustee upon such indenture securities.
(b) Disqualification of
Trustee. If any indenture trustee has or shall acquire any conflicting interest as
hereinafter defined -
(i) then, within 90 days
after ascertaining that it has such conflicting interest, and if the default (as defined
in the next sentence) to which such conflicting interest relates has not been cured or
duly waived or otherwise eliminated before the end of such 90-day period, such trustee
shall either eliminate such conflicting interest or, except as otherwise provided below in
this subsection, resign, and the obligor upon the indenture securities shall take prompt
steps to have a successor appointed in the manner provided in the indenture;
(ii) in the event that such trustee shall fail to comply
with the provisions of clause (i) of this subsection, such trustee shall, within 10
days after the expiration of such 90-day period, transmit notice of such failure to the
indenture security holders in the manner and to the extent provided in subsection (c) of section 313; and
(iii) subject to the provisions of subsection (e)
of section 315, unless such trustee's duty to resign is stayed as provided below
in this subsection, any security holder who has been a bona fide holder of indenture
securities for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of such trustee,
and the appointment of a successor, if such trustee fails, after written request thereof
by such holder to comply with the provisions of clause (i) of this subsection.
For the purposes of this subsection, an indenture
trustee shall be deemed to have a conflicting interest if the indenture securities are in
default (as such term is defined in such indenture, but exclusive of any period of grace
or requirement of notice) and -
(1) such trustee is trustee
under another indenture under which any other securities, or certificates of interest or
participation in any other securities, of an obligor upon the indenture securities are
outstanding or is trustee for more than one outstanding series of securities, as hereafter
defined, under a single indenture of an obligor, unless -
(A) the indenture securities are collateral trust notes
under which the only collateral consists of securities issued under such other indenture,
(B) such other indenture is a collateral trust indenture
under which the only collateral consists of indenture securities, or
(C) such obligor has no substantial unmortgaged assets
and is engaged primarily in the business of owning, or of owning and developing and/or
operating, real estate, and the indenture to be qualified and such other indenture are
secured by wholly separate and distinct parcels of real estate:
Provided, That the indenture to be qualified shall
automatically be deemed (unless it is expressly provided therein that such provision is
excluded) to contain a provision excluding from the operation of this paragraph other
series under such indenture, and any other indenture or indentures under which other
securities, or certificates of interest or participation in other securities, of such an
obligor are outstanding, if -
(i) the indenture to be qualified and any such other
indenture or indentures (and all series of securities issuable thereunder) are wholly
unsecured and rank equally, and such other indenture or indentures (and such series) are
specifically described in the indenture to be qualified or are thereafter qualified under
this title, unless the Commission shall have found and declared by order pursuant to subsection (b) of section 305 or subsection (c)
of section 307 that differences exist between the provisions of the indenture (or
such series) to be qualified and the provisions of such other indenture or indentures (or
such series) which are so likely to involve a material conflict of interest as to make it
necessary in the public interest or for the protection of investors to disqualify such
trustee from acting as such under one of such indentures, or
(ii) the issuer shall have sustained the burden of
proving, on application to the Commission and after opportunity for hearing thereon, that
trusteeship under the indenture to be qualified and such other indenture or under more
than one outstanding series under a single indenture is not so likely to involve a
material conflict of interest as to make it necessary in the public interest or for the
protection of investors to disqualify such trustee from acting as such under one of such
indentures or with respect to such series;
(2) such trustee or any of its
directors or executive officers is an underwriter for an obligor upon the indenture
securities;
(3) such trustee directly or
indirectly controls or is directly or indirectly controlled by or is under direct or
indirect common control with an underwriter for an obligor upon the indenture securities;
(4) such trustee or any of its
directors or executive officers is a director, officer, partner, employee, appointee, or
representative of an obligor upon the indenture securities, or of an underwriter (other
than the trustee itself) for such an obligor who is currently engaged in the business of
underwriting, except that -
(A) one individual may be a director and/or an executive
officer of the trustee and a director and/or an executive officer of such obligor, but may
not be at the same time an executive officer of both the trustee and of such obligor,
(B) if and so long as the number of directors of the
trustee in office is more than nine, one additional individual may be a director and/or an
executive officer of the trustee and a director of such obligor, and
(C) such trustee may be designated by any such obligor
or by any underwriter for any such obligor, to act in the capacity of transfer agent,
registrar, custodian, paying agent, fiscal agent, escrow agent, or depositary, or in any
other similar capacity, or, subject to the provisions of paragraph (1) of this
subsection, to act as trustee, whether under an indenture or otherwise;
(5) 10 per centum or more of
the voting securities of such trustee is beneficially owned either by an obligor upon the
indenture securities or by any director, partner or executive officer thereof, or 20 per
centum or more of such voting securities is beneficially owned, collectively by any two or
more of such persons; or 10 per centum or more of the voting securities of such trustee is
beneficially owned either by an underwriter for any such obligor or by any director,
partner, or executive officer thereof, or is beneficially owned, collectively, by any two
or more such persons;
(6) such trustee is the
beneficial owner of, or holds as collateral security for an obligation which is in default
as hereinafter defined -
(A) 5 per centum or more of the voting securities, or 10 per centum or
more of any other class of security, of an obligor upon the indenture securities, not
including indentures securities and securities issued under any other indenture under
which such trustee is also trustee, or
(B) 10 per centum or more of any class of security of an underwriter for
any such obligor;
(7) such trustee is the
beneficial owner of, or holds as collateral security for an obligation which is in default
as hereafter defined, 5 per centum or more of the voting securities of any person who, to
the knowledge of the trustee, owns 10 per centum or more of the voting securities of, or
controls directly or indirectly or is under direct or indirect common control with, an
obligor upon the indenture securities;
(8) such trustee is the
beneficial owner of, or holds as collateral security for an obligation which is in default
as hereinafter defined, 10 per centum or more of any class of security of any person who,
to the knowledge of the trustee, owns 50 per centum or more of the voting securities of an
obligor upon the indenture securities;
(9) such trustee owns, on the
date of default upon the indenture securities (as such term is defined in such indenture
but exclusive of any period of grace or requirement of notice) or any anniversary of such
default while such default upon the indenture securities remains outstanding, in the
capacity of executor, administrator, testamentary or inter vivos trustee, guardian,
committee or conservator, or in any other similar capacity, an aggregate of 25 per centum
or more of the voting securities, or of any class of security, of any person, the
beneficial ownership of a specified percentage of which would have constituted a
conflicting interest under paragraph (6), (7), or (8) of this subsection.
As to any such securities of which the indenture trustee acquired ownership through
becoming executor, administrator or testamentary trustee of an estate which include them,
the provisions of the preceding sentence shall not apply for a period of not more than
2 years from the date of such acquisition, to the extent that such securities
included in such estate do not exceed 25 per centum of such voting securities or 25 per
centum of any such class of security. Promptly after the dates of any such default upon
the indenture securities and annually in each succeeding year that the indenture
securities remain in default the trustee shall make a check of its holding of such
securities in any of the above-mentioned capacities as of such dates. If the obligor upon
the indenture securities fails to make payment in full of principal or interest under such
indenture when and as the same becomes due and payable, and such failure continues for
30 days thereafter, the trustee shall make a prompt check of its holdings of such
securities in any of the above-mentioned capacities as of the date of the expiration of
such 30-day period, and after such date, notwithstanding the foregoing provisions of this
paragraph, all such securities so held by the trustee, with sole or joint control over
such securities vested in it, shall be considered as though beneficially owned by such
trustee, for the purposes of paragraphs (6), (7), and (8) of this
subsection; or
(10) except under the
circumstances described in paragraphs (1), (3), (4), (5) or (6)
of section 311(b) of this title, the trustee shall be or
shall become a creditor of the obligor.
For purposes of paragraph (1) of this subsection,
and of section 316(a) of this title, the term "series of
securities" or "series" means a series, class or group of securities
issuable under an indenture pursuant to whose terms holders of one such series may vote to
direct the indenture trustee, or otherwise take action pursuant to a vote of such holders,
separately from holders of another such series:
Provided, That "series of securities" or
"series" shall not include any series of securities issuable under an indenture
if all such series rank equally and are wholly unsecured.
The specification of percentages in paragraphs (5)
to (9), inclusive, of this subsection shall not be construed as indicating that the
ownership of such percentages of the securities of a person is or is not necessary or
sufficient to constitute direct or indirect control for the purposes of paragraph (3)
or (7) of this subsection.
For the purposes of
paragraphs (6), (7), (8), and (9) of this subsection -
(A) the terms "security" and
"securities" shall include only such securities as are generally known as
corporate securities, but shall not include any note or other evidence of indebtedness
issued to evidence an obligation to repay moneys lent to a person by one or more banks,
trust companies, or banking firms, or any certificate of interest or participation in any
such note or evidence of indebtedness;
(B) an obligation shall be deemed to be in default when
a default in payment of principal shall have continued for thirty days or more, and shall
not have been cured; and
(C) the indenture trustee shall not be deemed the owner
or holder of -
(i) any security which it holds as collateral security (as trustee or
otherwise) for any obligation which is not in default as above defined, or
(ii) any security which it holds as collateral security under the
indenture to be qualified, irrespective of any default thereunder, or
(iii) any security which it holds as agent for collection, or as
custodian, escrow agent or depositary, or in any similar representative capacity.
For the purposes of this subsection, the term
"underwriter" when used with reference to an obligor upon the indenture
securities means every person who, within one year prior to the time as of which the
determination is made, was an underwriter of any security of such obligor outstanding at
the time of the determination.
Except in the case of a default in the payment of the
principal of or interest on any indenture security, or in the payment of any sinking or
purchase fund installment, the indenture trustee shall not be required to resign as
provided by this subsection if such trustee shall have sustained the burden of proving, on
application to the Commission and after opportunity for hearing thereon, that -
(i) the default under the indenture may be cured or
waived during a reasonable period and under the procedures described in such application,
and
(ii) a stay of the trustee's duty to resign will not be
inconsistent with the interests of holders of the indenture securities. The filing of such
an application shall automatically stay the performance of the duty to resign until the
Commission orders otherwise.
Any resignation of an indenture trustee shall become
effective only upon the appointment of a successor trustee and such successor's acceptance
of such an appointment.
(c) Applicability of Section. The Public Utility
Holding Company Act of 1935 shall not be held to establish or authorize the establishment
of any standards regarding the eligibility and qualifications of any trustee or
prospective trustee under an indenture to be qualified under this title, or regarding the
provisions to be included in any such indenture with respect to the eligibility and
qualifications of the trustee thereunder, other than those established by the provisions
of this section.
[Codified to 15 USC 77jjj]
[Source: Section 310 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 310 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1157), effective
August 3, 1939; as amended by sections 406, 407, and 408 of title IV of the Act
of November 15, 1990 (Pub. L. No. 101-550; 104 Stat. 2723),
effective November 15, 1990]
Section 311 Preferential Collection of
Claims Against Obligor
(a) Subject to the provisions of subsection (b)
of this section, if the indenture trustee shall be, or shall become, a creditor, directly
or indirectly, secured or unsecured, of an obligor upon the indenture securities, within
three months prior to a default as defined in the last paragraph of this subsection, or
subsequent to such a default, then, unless and until such a default shall be cured, such
trustee shall set apart and hold in a special account for the benefit of the trustee
individually and the indenture security holders -
(1) an amount equal to any and all reductions in the
amount due and owing upon any claim as such creditor in respect of principal or interest,
effected after the beginning of such three months' period and valid as against such
obligor and its other creditors, except any such reduction resulting from the receipt or
disposition of any property described in paragraph (2) of this subsection, or from
the exercise of any right of set-off which the trustee could have exercised if a petition
in bankruptcy had been filed by or against such obligor upon the date of such default; and
(2) all property received in respect of any claim as
such creditor, either as security therefore, or in satisfaction or composition thereof, or
otherwise, after the beginning of such three months' period, or an amount equal to the
proceeds of any such property, if disposed of, subject, however, to the rights, if any, of
such obligor and its other creditors in such property or such proceeds.
Nothing herein contained shall affect the right of the
indenture trustee -
(A) to retain for its own account -
(i) payments made on account of any such claim by any
person (other than such obligor) who is liable thereon, and
(ii) the proceeds of the bona fide sale of any such
claim by the trustee to a third person, and
(iii) distributions made in cash, securities, or other
property in respect of claims filed against such obligor in bankruptcy or receivership or
in proceedings for reorganization pursuant to the Bankruptcy Act or applicable State law;
(B) to realize, for its own account, upon any property
held by it as security for any such claim, if such property was so held prior to the
beginning of such three months' period;
(C) to realize, for its own account, but only to the
extent of the claim hereinafter mentioned, upon any property held by it as security for
any such claim, if such claim was created after the beginning of such three months' period
and such property period was received as security therefor simultaneously with the
creation thereof, and if the trustee shall sustain the burden of proving that at the time
such property was so received the trustee had no reasonable cause to believe that a
default as defined in the last paragraph of this subsection would occur within three
months; or
(D) to receive payment on any claim referred to in
paragraph (B) or (C), against the release of any property held as security for
such claim as provided in paragraph (B) or (C), as the case may be, to the
extent of the fair value of such property.
For the purposes of paragraphs (B), (C),
and (D), property substituted after the beginning of such three months' period for
property held as security at the time of such substitution shall, to the extent of the
fair value of the property released, have the same status as the property released, and,
to the extent that any claim referred to in any of such paragraphs is created in renewal
of or in substitution for or for the purpose of repaying or refunding any preexisting
claim of the indenture trustee as such creditor, such claim shall have the same status as
such preexisting claim.
If the trustee shall be required to account, the funds
and property held in such special account and the proceeds thereof shall be apportioned
between the trustee and the indenture security holders in such manner that the trustee and
the indenture security holders realize, as a result of payments from such special account
and payments of dividends on claims filed against such obligor in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Bankruptcy Act or
applicable State law, the same percentage of their respective claims, figured before
crediting to the claim of the trustee anything on account of the receipt by it from such
obligor of the funds and property in such special account and before crediting to the
respective claims of the trustee and the indenture security holders dividends on claims
filed against such obligor in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Bankruptcy Act or applicable State law, but after crediting
thereon receipts on account of the indebtedness represented by their respective claims
from all sources other than from such dividends and from the funds and property so held in
such special account. As used in this paragraph, with respect to any claim, the term
"dividends" shall include any distribution with respect to such claim, in
bankruptcy or receivership or in proceedings for reorganization pursuant to the Bankruptcy
Act or applicable State law, whether such distribution is made in cash, securities, or
other property, but shall not include any such distribution with respect to the secured
portion, if any, of such claim. The court in which such bankruptcy, receivership, or
proceeding for reorganization is pending shall have jurisdiction -
(i) to apportion between the indenture trustee and the
indenture security holders, in accordance with the provisions of this paragraph, the funds
and property held in such special account and the proceeds thereof, or
(ii) in lieu of such apportionment, in whole or in part,
to give to the provisions of this paragraph due consideration in determining the fairness
of the distributions to be made to the indenture trustee and the indenture security
holders with respect to their respective claims, in which event it shall not be necessary
to liquidate or to appraise the value of any securities or other property held in such
special account or as security for any such claim, or to make a specific allocation of
such distributions as between the secured and unsecured portions of such claims, or
otherwise to apply the provisions of this paragraph as a mathematical formula.
Any indenture trustee who has resigned or been removed
after the beginning of such three months' period shall be subject to the provisions of
this subsection as though such resignation or removal had not occurred. Any indenture
trustee who has resigned or been removed prior to the beginning of such three months'
period shall be subject to the provisions of this subsection if and only if the following
conditions exist -
(i) the receipt of property or reduction of claim which
would have given rise to the obligation to account, if such indenture trustee had
continued as trustee, occurred after the beginning of such three months' period; and
(ii) such receipt of property or reduction of claim
occurred within three months after such resignation or removal.
As used in this subsection, the term "default"
means any failure to make payment in full of principal or interest, when and as the same
becomes due and payable, under any indenture which has been qualified under this title,
and under which the indenture trustee is trustee and the person of whom the indenture
trustee is directly or indirectly a creditor is an obligor; and the term "indenture
security holder" means all holders of securities outstanding under any such indenture
under which any such default exists. In any case commenced under the Bankruptcy Act of
July 1, 1898, or any amendment thereto enacted prior to November 6, 1978, all
references to periods of three months shall be deemed to be references to periods of four
months.
(b) The indenture to be
qualified shall automatically be deemed (unless it is expressly provided therein that any
such provision is excluded) to contain provisions excluding from the operation of
subsection (a) of this section a creditor relationship arising from -
(1) the ownership or acquisition of securities issued
under any indenture, or any security or securities having a maturity of one year or more
at the time of acquisition by the indenture trustee;
(2) advances authorized by a receivership or bankruptcy
court of competent jurisdiction, or by the indenture, for the purpose of preserving the
property subject to the lien of the indenture or of discharging tax liens or other prior
liens or encumbrances on the trust estate, if notice of such advance and of the
circumstances surrounding the making thereof is given to the indenture security holders at
the time and in the manner provided in the indenture;
(3) disbursements made in the ordinary course of
business in the capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar capacity.
(4) an indebtedness created as a result of services
rendered or premises rented; or an indebtedness created as a result of goods or securities
sold in a cash transaction as defined in the indenture;
(5) the ownership of stock or of other securities of a
corporation organized under the provisions of section 25(a) of the Federal Reserve
Act, as amended, which is directly or indirectly a creditor of an obligor upon the
indenture securities; or
(6) the acquisition, ownership, acceptance, or
negotiation of any drafts, bills of exchange, acceptances, or obligations which fall
within the classification of self-liquidating paper as defined in the indenture.
(c) In the exercise by the Commission of any
jurisdiction under the Public Utility Holding Company Act of 1935 regarding the issue or
sale, by any registered holding company or a subsidiary company thereof, of any security
of such issuer or seller or of any other company to a person which is trustee under an
indenture or indentures of such issuer or seller or other company, or of a subsidiary or
associate company or affiliate of such issuer or seller or other company (whether or not
such indenture or indentures are qualified or to be qualified under this title), the fact
that such trustee will thereby become a creditor, directly or indirectly, of any of the
foregoing shall not constitute a ground for the Commission taking adverse action with
respect to any application or declaration, or limiting the scope of any rule or regulation
which would otherwise permit such transaction to take effect; but in any case in which
such trustee is trustee under an indenture of the company of which it will thereby become
a creditor, or of any subsidiary company thereof, this subsection shall not prevent the
Commission from requiring (if such requirement would be authorized under the provisions of
the Public Utility Holding Company Act of 1935) that such trustee, as such, shall
effectively and irrevocably agree in writing, for the benefit of the holders from time to
time of the securities from time to time outstanding under such indenture, to be bound by
the provisions of this section, subsection (c) of
section 315, and, in case of default (as such term is defined in such indenture),
subsection (d) of section 315, as fully as though such
provisions were included in such indenture. For the purposes of this subsection the terms
"registered holding company", "subsidiary company", "associate
company", and "affiliate" shall have the respective meanings assigned to
such terms in section 2(a) of the Public Utility Holding Company Act of 1935.
[Codified to 15 USC 77kkk]
[Source: Section 311 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 311 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1161), effective
August 3, 1939; as amended by section 409 of title IV of the Act of
November 15, 1990 (Pub. L. No. 101-550; 104 Stat. 2728),
effective November 15, 1990]
Section 312
Bondholders Lists
(a) Each obligor upon the
indenture securities shall furnish or cause to be furnished to the institutional trustee
thereunder at stated intervals of not more than six months, and at such other times as
such trustee may request in writing, all information in the possession or control of such
obligor, or of any of its paying agents, as to the names and addresses of the indenture
security holders, and requiring such trustee to preserve, in as current a form as is
reasonably practicable, all such information so furnished to it or received by it in the
capacity of paying agent.
(b) Within five business days
after the receipt by the institutional trustee of a written application by any three or
more indenture holders stating that the applicants desire to communicate with other
indenture security holders with respect to their rights under such indenture or under the
indenture securities, and accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, and by reasonable proof that each
such applicant has owned an indenture security for a period of at least six months
preceding the date of such application, such institutional trustee shall, at its election,
either -
(1) afford to such applicants access to all information
so furnished to or received by such trustee; or
(2) inform such applicants as to the approximate number
of indenture security holders according to the most recent information so furnished to or
received by such trustee, and as to the approximate cost of mailing to such indenture
security holders the form of proxy or other communication, if any, specified in such
application.
If such trustee shall elect not to afford to such
applicants access to such information, such trustee shall, upon the written request of
such applicants, mail to all such indenture security holders copies of the form of proxy
or other communication which is specified in such request, with reasonable promptness
after a tender to such trustee of the material to be mailed and of payment, or provision
for the payment, of the reasonable expenses of such mailing, unless within five days after
such tender, such trustee shall mail to such applicants, and file with the Commission
together with a copy of the material to be mailed, a written statement to the effect that,
in the opinion of such trustee, such mailing would be contrary to the best interests of
the indenture security holders or would be in violation of applicable law. Such written
statement shall specify the basis of such opinion. After opportunity for hearing upon the
objections specified in the written statement so filed , the Commission may, and if
demanded by such trustee or by such applicants shall, enter an order either sustaining one
or more of such objections or refusing to sustain any of them. If the Commission shall
enter an order refusing to sustain any of such objections, or if, after the entry of an
order sustaining one or more of such objections, the Commission shall find, after notice
and opportunity for hearing, that all objections so sustained have been met, and shall
enter an order so declaring, such trustee shall mail copies of such material to all such
indenture security holders with reasonable promptness after the entry of such order and
the renewal of such tender.
(c) The disclosure of any such information as to the
names and addresses of the indenture security holders in accordance with the provisions of
this section, regardless of the source from which such information was derived, shall not
be deemed to be a violation of any existing law, or of any law hereafter enacted which
does not specifically refer to this section, nor shall such trustee be held accountable by
reason of mailing any material pursuant to a request made under subsection (b) of
this section.
[Codified to 15 USC 77lll]
[Source: Section 312 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 312 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1164), effective
August 3, 1939; as amended by section 410 of title IV of the Act of
November 15, 1990 (Pub. L. No. 101-550; 104 Stat. 2728),
effective November 15, 1990]
Section 313
Reports by Indenture Trustee
(a) The indenture trustee shall transmit to the
indenture security holders as hereinafter provided, at stated intervals of not more than
12 months, a brief report with respect to any of the following events which may have
occurred within the previous 12 months (but if no such event has occurred within such
period no report need be transmitted):
(1) any change to its eligibility and its qualifications
under section 310;
(2) the creation of or any material change to a
relationship specified in paragraph (1) through (10) of
section 310(b);
(3) the character and amount of any advances made by it,
as indenture trustee, which remain unpaid on the date of such report, and for the
reimbursement of which it claims or may claim a lien or charge, prior to that of the
indenture securities, on the trust estate or on property or funds held or collected by it
as such trustee, if such advances so remaining unpaid aggregate more than one-half of 1
per centum of the principal amount of the indenture securities outstanding on such date;
(4) the amount, interest rate, and maturity date of all
other indebtedness owing to it in its individual capacity, on the date of such report, by
the obligor upon the indenture securities, with a brief description of any property held
as collateral security therefor, except an indebtedness based upon a creditor relationship
arising in any manner described in paragraphs (2), (3), (4),
or (6) of subsection (b) of section 311;
(5) any change to the property and funds physically in
its possession as indenture trustee on the date of such report;
(6) any change to any release, or release and
substitution, of property subject to the lien of the indenture (and the consideration
therefor, if any) which it has not previously reported;
(7) any additional issue of indenture securities which
it has not previously reported; and
(8) any action taken by it in the performance of its
duties under the indenture which it has not previously reported and which in its opinion
materially affects the indenture securities or the trust estate, except action in respect
of a default, notice of which has been or is to be withheld by it in accordance with an
indenture provision authorized by subsection (b) of
section 315.
(b) The indenture trustee shall
transmit to the indenture security holders as hereinafter provided, within the times
hereinafter specified, a brief report with respect to -
(1) the release, or release and substitution, of
property subject to the lien of the indenture (and the consideration therefor, if any)
unless the fair value of such property, as set forth in the certificate or opinion
required by paragraph (1) of subsection (d) of
section 314, is less than 10 per centum of the principal amount of indenture
securities outstanding at the time of such release, or such release and substitution, such
report to be so transmitted within 90 days after such time; and
(2) the character and amount of any advances made by it
as such since the date of the last report transmitted pursuant to the provisions of
subsection (a) (or if no such report has yet been so transmitted, since the date of
execution of the indenture), for the reimbursement of which it claims or may claim a lien
or charge, prior to that of the indenture securities, on the trust estate or on property
or funds held or collected by it as such trustee, and which it has not previously reported
pursuant to this paragraph, if such advances remaining unpaid at any time aggregate more
than 10 per centum of the principal amount of indenture securities outstanding at such
time, such report to be so transmitted within 90 days after such time.
(c) Reports pursuant to this
section shall be transmitted by mail -
(1) to all registered holders of indenture securities,
as the names and addresses of such holders appear upon the registration books of the
obligor upon the indenture securities;
(2) to such holders of indenture securities as have,
within the two years preceding such transmission, filed their names and addresses with the
indenture trustee for that purpose; and
(3) except in the case of reports pursuant to
subsection (b) of this section, to all holders of indenture securities whose names
and addresses have been furnished to or received by the indenture trustee pursuant to section 312.
(d) A copy of each such report shall, at the time of
such transmission to indenture security holders, be filed with each stock exchange upon
which the indenture securities are listed, and also with the Commission.
[Codified to 15 USC 77mmm]
[Source: Section 313 of title III of the Act
of May 27, 1933 (Pub L. No. 22; 48 Stat. 74), effective May 27,
1933, as added by section 313 of title III of the Act of August 3, 1939
(Pub. L. No. 253; 53 Stat. 1165), effective August 3, 1939; as
amended by sections 411 and 412 of title IV of the Act of November 15, 1990
(Pub. L. No. 101-550; 104 Stat. 2729), effective November 15,
1990]
Section 314
Reports by Obligor; Evidence of Compliance With Indenture Provisions
(a) Periodic Reports. Each person who, as set
forth in the registration statement or application, is or is to be an obligor upon the
indenture securities covered thereby shall -
(1) file with the indenture trustee copies of the annual
reports and of the information, documents, and other reports (or copies of such portions
of any of the foregoing as the Commission may by rules and regulations prescribe) which
such obligor is required to file with the Commission pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934; or, if the obligor is not
required to file information, documents, or reports pursuant to either of such sections,
then to file with the indenture trustee and the Commission, in accordance with rules and
regulations prescribed by the Commission, such of the supplementary and periodic
information, documents, and reports which may be required pursuant to section 13 of
the Securities Exchange Act of 1934, in respect of a security listed and registered on a
national securities exchange as may be prescribed in such rules and regulations;
(2) file with the indenture trustee and the Commission,
in accordance with rules and regulations prescribed by the Commission, such additional
information, documents, and reports with respect to compliance by such obligor with the
conditions and covenants provided for in the indenture, as may be required by such rules
and regulations, including, in the case of annual reports, if required by such rules and
regulations, certificates or opinions of independent public accountants, conforming to the
requirements of subsection (e) of this section, as to compliance with conditions or
covenants, compliance with which is subject to verification by accountants, but no such
certificate or opinion shall be required as to any matter specified in
clauses (A), (B), or (C) of paragraph (3) of subsection (c);
(3) transmit to the holders of the indenture securities
upon which such person is an obligor, in the manner and to the extent provided in subsection (c) of section 313, such summaries of any
information, documents, and reports required to be filed by such obligor pursuant to the
provisions of paragraph (1) or (2) of this subsection as may be required by
rules and regulations prescribed by the Commission; and
(4) furnish to the indenture trustee, not less often
than annually, a brief certificate from the principal executive officer, principal
financial officer or principal accounting officer as to his or her knowledge of such
obligor's compliance with all conditions and covenants under the indenture. For purposes
of this paragraph, such compliance shall be determined without regard to any period of
grace or requirement of notice provided under the indenture.
The rules and regulations prescribed under this
subsection shall be such as are necessary or appropriate in the public interest or for the
protection of investors, having due regard to the types of indentures, and the nature of
business of the class of obligors affected thereby, and the amount of indenture securities
outstanding under such indentures, and, in the case of any such rules and regulations
prescribed after the indentures to which they apply have been qualified under this title,
the additional expense, if any, of complying with such rules and regulations. Such rules
and regulations may be prescribed either before or after qualification becomes effective
as to any such indenture.
(b) Evidence of Recording
Indenture. If the indenture to be qualified is or is to be secured by the mortgage or
pledge of property, the obligor upon the indenture securities shall furnish to the
indenture trustee -
(1) promptly after the execution and delivery of the
indenture, an opinion of counsel (who may be of counsel for such obligor) either stating
that in the opinion of such counsel the indenture has been properly recorded and filed so
as to make effective the lien intended to be created thereby, and reciting the details of
such action, or stating that in the opinion of such counsel no such action is necessary to
make such lien effective; and
(2) at least annually after the execution and delivery
of the indenture, an opinion of counsel (who may be of counsel for such obligor) either
stating that in the opinion of such counsel such action has been taken with respect to the
recording, filing, rerecording, and refiling of the indenture as is necessary to maintain
the lien of such indenture, and reciting the details of such action, or stating that in
the opinion of such counsel no such action is necessary to maintain such lien.
(c) Evidence of Compliance With Conditions Precedent.
The obligor upon the indenture securities shall furnish to the indenture trustee evidence
of compliance with the conditions precedent, if any, provided for in the indenture
(including any covenants compliance with which constitutes a condition precedent) which
relate to the authentication and delivery of the indenture securities, to the release or
the release and substitution of property subject to the lien of the indenture, to the
satisfaction and discharge of the indenture, or to any other action to be taken by the
indenture trustee at the request or upon the application of such obligor. Such evidence
shall consist of the following:
(1) certificates or opinions made by officers of such
obligor who are specified in the indenture, stating that such conditions precedent have
been complied with;
(2) an opinion of counsel (who may be of counsel for
such obligor) stating that in his opinion such conditions precedent have been complied
with; and
(3) in the case of conditions precedent compliance with
which is subject to verification by accountants (such as conditions with respect to the
preservation of specified ratios, the amount of net quick assets, negative-pledge clauses,
and other similar specific conditions), a certificate or opinion of an accountant, who, in
the case of any such conditions precedent to the authentication and delivery of indenture
securities, and not otherwise, shall be an independent public accountant selected or
approved by the indenture trustee in the exercise of reasonable care, if the aggregate
principal amount of such indenture securities and of other indenture securities
authenticated and delivered since the commencement of the then current calendar year
(other than those with respect to which a certificate or opinion of an accountant is not
required or with respect to which a certificate or opinion of an independent public
accountant has previously been furnished) is 10 per centum o r more of the aggregate
amount of the indenture securities at the time outstanding; but no certificate or opinion
need be made by any person other than an officer or employee of such obligor who is
specified in the indenture, as to -
(A) dates or periods not covered by annual reports
required to be filed by the obligor, in the case of conditions precedent which depend upon
a state of facts as of a date or dates or for a period or periods different from that
required to be covered by such annual reports, or
(B) the amount and value of property additions, except
as provided in paragraph (3) of subsection (d), or (C) the adequacy of
depreciation, maintenance, or repairs.
(d) Certificates of Fair
Value. If the indenture to be qualified is or is to be secured by the mortgage or
pledge of property or securities, the obligor upon the indenture securities shall furnish
to the indenture trustee a certificate or opinion of an engineer, appraiser, or other
expert as to the fair value -
(1) of any property or securities to be released from
the lien of the indenture, which certificate or opinion shall state that in the opinion of
the person making the same the proposed release will not impair the security under such
indenture in contravention of the provisions thereof, and requiring further that such
certificate or opinion shall be made by an independent engineer, appraiser, or other
expert, if the fair value of such property or securities and of all other property or
securities released since the commencement of the then current calendar year, as set forth
in the certificates or opinions required by this paragraph, is 10 per centum or more of
the aggregate principal amount of the indenture securities at the time outstanding; but
such a certificate or opinion of an independent engineer, appraiser, or other expert shall
not be required in the case of any release of property or securities, if the fair value
thereof as set forth in the certificate or opinion required by this paragraph is
less than $25,000 or less than 1 per centum of the aggregate principal amount of the
indenture securities at the time outstanding;
(2) to such obligor of any securities (other than
indenture securities and securities secured by a lien prior to the lien of the indenture
upon property subject to the lien of the indenture), the deposit of which with the trustee
is to be made the basis for the authentication and delivery of indenture securities, the
withdrawal of cash constituting a part of the trust estate or the release of property or
securities subject to the lien of the indenture, and requiring further that if the fair
value to such obligor of such securities and of all other such securities made the basis
of any such authentication and delivery, withdrawal, or release since the commencement of
the then current calendar year, as set forth in the certificates or opinions required by
this paragraph, is 10 per centum or more of the aggregate principal amount of
the indenture securities at the time outstanding, such certificate or opinion shall be
made by an independent engineer, appraiser, or other expert and, in the case of the
authentication and delivery of indenture securities, shall cover the fair value to such
obligor of all other such securities so deposited since the commencement of the current
calendar year as to which a certificate or opinion of an independent engineer, appraiser,
or other expert has not previously been furnished; but such a certificate of an
independent engineer, appraiser, or other expert shall not be required with respect to any
securities so deposited, if the fair value thereof to such obligor as set forth in the
certificate or opinion required by this paragraph is less than $25,000 or less than 1 per
centum of the aggregate principal amount of the indenture securities at the time
outstanding; and
(3) to such obligor of any property the subjection of
which to the lien of the indenture is to be made the basis for the authentication and
delivery of indenture securities, the withdrawal of cash constituting a part of the trust
estate, or the release of property or securities subject to the lien of the indenture, and
requiring further that if
(A) within six months prior to the date of acquisition
thereof by such obligor, such property has been used or operated, by a person or persons
other than such obligor, in a business similar to that in which it has been or is to be
used or operated by such obligor, and
(B) the fair value to such obligor of such property as
set forth in such certificate or opinion is not less than $25,000 and not less than 1 per
centum of the aggregate principal amount of the indenture securities at the time
outstanding, such certificate or opinion shall be made by an independent engineer,
appraiser, or other expert and, in the case of the authentication and delivery of
indenture securities, shall cover the fair value to the obligor of any property so used or
operated which has been so subjected to the lien of the indenture since the commencement
of the then current calendar year, and as to which a certificate or opinion of an
independent engineer, appraiser, or other expert has not previously been furnished.
The indenture to be qualified shall automatically be
deemed (unless it is expressly provided therein that such provision is excluded) to
provide that any such certificate or opinion may be made by an officer or employee of the
obligor upon the indenture securities who is duly authorized to make such certificate or
opinion by the obligor from time to time, except in cases in which this subsection
requires that such certificate or opinion be made by an independent person. In such cases,
such certificate or opinion shall be made by an independent engineer, appraiser, or other
expert selected or approved by the indenture trustee in the exercise of reasonable care.
(e) Recitals as to Basis of Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or covenant
provided for in the indenture (other than certificates provided pursuant to
subsection (a)(4) of this section) shall include -
(1) a statement that the person making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he
has made such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been complied with;
and
(4) a statement as to whether or not, in the opinion of
such person, such condition or covenant has been complied with.
(f) Parties May Provide for Additional Evidence.
Nothing in this section shall be construed either as requiring the inclusion in the
indenture to be qualified of provisions that the obligor upon the indenture securities
shall furnish to the indenture trustee any other evidence of compliance with the
conditions and covenants provided for in the indenture than the evidence specified in this
section, or as preventing the inclusion of such provisions in such indenture, if the
parties so agree.
[Codified to 15 USC 77nnn]
[Source: Section 314 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 314 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1167), effective
August 3, 1939; as amended by section 413 of title IV of the Act of
November 15, 1990 (Pub. L. No. 101-550; 104 Stat. 2729),
effective November 15, 1990]
Section 315
Duties and Responsibility of the Trustee
(a) Duties Prior to Default. The indenture to be
qualified shall automatically be deemed (unless it is expressly provided therein that any
such provision is excluded) to provide that, prior to default (as such term is defined in
such indenture) -
(1) the indenture trustee shall not be liable except for
the performance of such duties as are specifically set out in such indenture; and
(2) the indenture trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed therein, in the
absence of bad faith on the part of such trustee, upon certificates or opinions conforming
to the requirements of the indenture;
but the indenture trustee shall examine the evidence
furnished to it pursuant to section 314 to determine whether
or not such evidence conforms to the requirements of the indenture.
(b) Notice of Defaults.
The indenture trustee shall give to the indenture security holders, in the manner and the
extent provided in subsection (c) of section 313,
notice of all defaults known to the trustee, within ninety days after the occurrence
thereof; Provided That such indenture shall automatically be deemed (unless it is
expressly provided therein that such provision is excluded) to provide that, except in the
case of default in the payment of the principal of or interest on any indenture security,
or in the payment of any sinking or purchase fund installment, the trustee shall be
protected in withholding such notice if and so long as the board of directors, the
executive committee, or a trust committee of directors and/or responsible officers, of the
trustee in good faith determine that the withholding of such notice is in the interests of
the indenture security holders.
(c) Duties of the Trustee in
Case of Default. The indenture trustee shall exercise in case of default (as such term
is defined in such indenture) such of the rights and powers vested in it by such
indenture, and to use the same degree of care and skill in their exercise, as a prudent
man would exercise or use under the circumstances in the conduct of his own affairs.
(d) Responsibility of the
Trustee. The indenture to be qualified shall not contain any provisions relieving the
indenture trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that -
(1) such indenture shall automatically be deemed (unless
it expressly provided therein that any such provision is excluded) to contain the
provisions authorized by paragraphs (1) and (2) of subsection (a) of this
section;
(2) such indenture shall automatically be deemed (unless
it is expressly provided therein that any such provision is excluded) to contain
provisions protecting the indenture trustee from liability for any error of
judgment made
in good faith by a responsible officer or officers of such trustee, unless it shall be
proved that such trustee was negligent in ascertaining the pertinent facts; and
(3) such indenture shall automatically be deemed (unless
it is expressly provided therein that any such provision is excluded) to contain
provisions protecting the indenture trustee with respect to any action taken or omitted to
be taken by it in good faith in accordance with the direction of the holders of not less
than a majority in principal amount of the indenture securities at the time outstanding
(determined as provided in subsection (a) of section 316)
relating to the time, method, and place of conducting any proceeding for any remedy
available to such trustee, or exercising any trust or power conferred upon such trustee,
under such indenture.
(e) Undertaking for Costs.
The indenture to be qualified shall automatically be deemed (unless it is expressly
provided therein that any such provision is excluded) to contain provisions to the effect
that all parties thereto, including the indenture security holders, agree that the court
may in its discretion require, in any suit for the enforcement of any right or remedy
under such indenture, or in any suit against the trustee for any action taken or omitted
by it as trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party litigant:
Provided, That the provisions of this subsection shall not apply to any suit instituted by
such trustee, to any suit instituted by any indenture security holder, or group of
indenture security holders, holding in the aggregate more than 10 per centum in
principal amount of the indenture securities outstanding, or to any suit instituted by any
indenture security holder for the enforcement of the payment of the principal of or
interest on any indenture security, on or after the respective due dates expressed in such
indenture security.
[Codified to 15 USC 77ooo]
[Source: Section 315 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933), as added by section 315 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1171), effective
August 3, 1939; as amended by section 414 of title IV of the Act of
November 15, 1990 (Pub. L. No. 101-550; 104 Stat. 2730),
effective November 15, 1990]
Section 316
Direction and Waivers by Bondholders; Prohibition of Impairment of Holder's Right to
Payment
(a) The indenture to be qualified -
(1) shall automatically be deemed (unless it is
expressly provided therein that any such provision is excluded) to contain provisions
authorizing the holders of not less than a majority in principal amount of the indenture
securities or if expressly specified in such indenture, of any series of securities at the
time outstanding -
(A) to direct the time, method, and place of conducting
any proceeding for any remedy available to such trustee, or exercising any trust or power
conferred upon such trustee, under such indenture, or
(B) on behalf of the holders of all such indenture
securities, to consent to the waiver of any past default and its consequences; or
(2) may contain provisions authorizing the holders of
not less than 75 per centum in principal amount of the indenture securities or if
expressly specified in such indenture, of any series of securities at the time outstanding
to consent on behalf of the holders of all such indenture securities to the postponement
of any interest payment for a period not exceeding three years from its due date.
For the purposes of this subsection and paragraph (3) of subsection (d) of section 315, in
determining whether the holders of the required principal amount of indenture securities
have concurred in any such direction or consent, indenture securities owned by any obligor
upon the indenture securities, or by any person directly or indirectly controlling or
controlled by or under direct or indirect common control with any such obligor, shall be
disregarded, except that for the purpose of determining whether the indenture trustee
shall be protected in relying on any such direction or consent, only indenture securities
which such trustee knows are so owned shall be so disregarded.
(b) Notwithstanding any other provision of the indenture
to be qualified, the right of any holder of any indenture security to receive payment of
the principal of and interest on such indenture security, on or after the respective due
dates expressed in such indenture security, or to institute suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or affected
without the consent of such holder, except as to a postponement of an interest payment
consented to as provided in paragraph (2) of subsection (a), and except that
such indenture may contain provisions limiting or denying the right of any such holder to
institute any such suit, if and to the extent that the institution or prosecution thereof
or the entry of judgment therein would, under applicable law, result in the surrender,
impairment, waiver, or loss of the lien of such indenture upon any property subject to
such lien.
(c) The obligor upon any indenture qualified under this
title may set a record date for purposes of determining the identity of indenture security
holders entitled to vote or consent to any action by vote or consent authorized or
permitted by subsection (a) of this section. Unless the indenture provides otherwise,
such record date shall be the later of 30 days prior to the first solicitation of
such consent or the date of the most recent list of holders furnished to the trustee
pursuant to section 312 of this title prior to such
solicitation.
[Codified to 15 USC 77ppp]
[Source: Section 316 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933), as added by section 316 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1172), effective
August 3, 1939; as amended by section 415 of title IV of the Act of
November 15, 1990 (Pub. L. No. 101-550; 104 Stat. 2731),
effective November 15, 1990]
Section 317 Special Powers of Trustee;
Duties of Paying Agents
(a) The indenture trustee shall be authorized -
(1) in the case of a default in payment of the principal
of any indenture security, when and as the same shall become due and payable, or in the
case of a default in payment of the interest on any such security, when and as the same
shall become due and payable and the continuance of such default for such period as may be
prescribed in such indenture, to recover judgment, in its own name and as trustee of an
express trust, against the obligor upon the indenture securities for the whole amount of
such principal and interest remaining unpaid; and
(2) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of such trustee and
of the indenture security holders allowed in any judicial proceedings relative to the
obligor upon the indenture securities, its creditors, or its property.
(b) Each paying agent shall hold in trust for the
benefit of the indenture security holders or the indenture trustee all sums held by such
paying agent for the payment of the principal of or interest on the indenture securities,
and shall give to such trustee notice of any default by an obligor upon the indenture
securities in the making of any such payment.
[Codified to 15 USC 77qqq]
[Source: Section 317 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 317 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1173), effective
August 3, 1939; as amended by section 416 of title IV of the Act of
November 15, 1990 (Pub. L. No. 101-550; 104 Stat. 2731),
effective November 15, 1990]
Section 318 Effect of Prescribed
Indenture Provisions
(a) if any provision of the indenture to be qualified
limits, qualifies, or conflicts with the duties impose by operation of subsection (c)
of this section, the imposed duties shall control.
(b) The indenture to be qualified may contain, in
addition to provision specifically authorized under this title to be included therein, any
other provisions the inclusion of which is not in contravention of any provision of this
title.
(c) The provisions of sections 310 to and including 317
that impose duties on any person (including provisions automatically deemed included in an
indenture unless the indenture provides that such provisions are excluded) are a part of
and govern every qualified indenture, whether or not physically contained therein, shall
be deemed retroactively to govern each indenture heretofore qualified, and prospectively
to govern each indenture hereafter qualified under this title and shall be deemed
retroactively to amend and supersede inconsistent provisions in each such indenture
heretofore qualified. The foregoing provisions of this subsection shall not be deemed to
effect the inclusion (by retroactive amendment or otherwise) in the text of any indenture
heretofore qualified of any of the optional provisions contemplated by section 310(b)(1), 311(b), 314(d), 315(a), 315(b),
315(d), 315(e), or 316(a)(1).
[Codified to 15 USC 77rrr]
[Source: Section 318 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 318 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1173), effective
August 3, 1939; as amended by section 417 of title IV of the Act of
November 15, 1990 (Pub. L. No. 101-550; 104 Stat. 2731),
effective November 15, 1990]
Section 319
Rules, Regulations, and Orders
(a) The Commission shall have authority from time to
time to make, issue, amend, and rescind such rules and regulations and such orders as it
may deem necessary or appropriate in the public interest or for the protection of
investors to carry out the provisions of this title, including rules and regulations
defining accounting, technical, and trade terms used in this title. Among other things,
the Commission shall have authority -
(1) by rules and regulations, to prescribe for the
purposes of section 310(b) the method (to be fixed in
indentures to be qualified under this title) of calculating percentages of voting
securities and other securities;
(2) by the rules and regulations, to prescribe the
definitions of the terms "cash transaction" and "self-liquidating
paper" which shall be included in indentures to be qualified under this title, which
definitions shall include such of the creditor relationships referred to in paragraphs (4) and (6) of subsection (b) of
section 311 as to which the Commission determines that the application of
subsection (a) of such section is not necessary in the public interest or for the
protection of investors, having due regard for the purposes of such subsection; and
(3) for the purposes of this title, to prescribe the
form or forms in which information required in any statement, application, report, or
other document filed with the Commission shall be set forth.
For the purpose of its rules or regulations the
Commission may classify persons, securities, indentures, and other matters within its
jurisdiction and prescribe different requirements for different classes of persons,
securities, indentures, or matters.
(b) Subject to the provisions of the Federal Register
Act and regulations prescribed under the authority thereof, the rules and regulations of
the Commission under this title shall be effective upon publication in the manner which
the Commission shall prescribe, or upon such later date as may be provided in such rules
and regulations.
(c) No provision of this title imposing any liability
shall apply to any act done or omitted in good faith in conformity with any rule,
regulation, or order of the Commission, notwithstanding that such rule, regulation, or
order may, after such act or omission, be amended or rescinded or be determined by
judicial or other authority to be invalid for any reason.
[Codified to 15 USC 77sss]
[Source: Section 319 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 319 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1173), effective
August 3, 1939]
Section 320 Hearings by Commission
Hearings may be public and may be held before the
Commission, any member or members thereof, or any officer or officers of the Commission
designated by it, and appropriate records thereof shall be kept.
[Codified to 15 USC 77ttt]
[Source: Section 320 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 320 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1174), effective
August 3, 1939]
Section 321 Special Powers of the
Commission
(a) For the purpose of any investigation or any other
proceeding which, in the opinion of the Commission, is necessary and proper for the
enforcement of this title, any member of the Commission, or any officer thereof designated
by it, is empowered to administer oaths and affirmations, subpoena witnesses, compel their
attendance, take evidence, and require the production of any books, papers,
correspondence, memoranda, contracts, agreements, or other records which the Commission
deems relevant or material to the inquiry. Such attendance of witnesses and the production
of any such books, papers, correspondence, memoranda, contracts, agreements, or other
records may be required from any place in the United States or in any Territory at any
designated place of investigation or hearing. In addition, the Commission shall have the
powers with respect to investigations and hearings, and with respect to the enforcement
of, and offenses and violations under, this title and rules and regulations and orders
prescribed under the authority thereof, provided in sections 20, 22(b), and 22(c) of the
Securities Act of 1933.
(b) The Treasury Department, the Comptroller of the
Currency, the Board of Governors of the Federal Reserve system, the Federal Reserve Banks,
and the Federal Deposit Insurance Corporation are hereby authorized, under such conditions
as they may prescribe, to make available to the Commission such reports, records, or other
information as they may have available with respect to trustees or prospective trustees
under indentures qualified or to be qualified under this title, and to make through their
examiners or other employees for the use of the Commission, examinations of such trustees
or prospective trustees. Every such trustee or prospective trustee shall, as a condition
precedent to qualification of such indenture, consent that reports of examinations by
Federal, State, Territorial, or District authorities may be furnished by such authorities
to the Commission upon request therefore.
Notwithstanding any provision of this title, no report,
record, or other information made available to the Commission under this subsection, no
report of an examination made under this subsection for the use of the Commission, no
report of an examination made of any trustee or prospective trustee by any Federal, State,
Territorial, or District authority having jurisdiction to examine or supervise such
trustee, no report made by any such trustee or prospective trustee to any such authority,
and no correspondence between any such authority and any such trustee or prospective
trustee, shall be divulged or made known or available by the Commission or any member,
officer, agent, or employee thereof, to any person other than a member, officer, agent, or
employee of the Commission: Provided, That the Commission may make available to the
Attorney General of the United States, in confidence, any information obtained from such
records, reports of examination, other reports, or correspondence , and deemed necessary
by the Commission, or requested by him, for the purpose of enabling him to perform his
duties under this title.
(c) Any investigation of a prospective trustee, or any
proceeding or requirement for the purpose of obtaining information regarding a prospective
trustee, under any provision of this title, shall be limited -
(1) to determining whether such prospective trustee is
qualified to act as trustee under the provisions of subsection (b) of
section 310;
(2) to requiring the inclusion in the registration
statement or application of information with respect to the eligibility of such
prospective trustee under paragraph (1) of subsection (a)
of such section 310; and statement or application of the most recent published
report of condition of such prospective trustee, as described in paragraph (2)
of such subsection (a), or, if the indenture does not contain the provision with
respect to combined capital and surplus authorized by the last sentence of
paragraph (2) of subsection (a) of such section 310, to determining whether
such prospective trustee is eligible to act as such under such paragraph (2).
(d) The provisions of section 4(b) of the
Securities Exchange Act of 1934 shall be applicable with respect to the power of the
Commission -
(1) to appoint and fix the compensation of such
employees as may be necessary for carrying out its functions under this title, and
(2) to lease and allocate such real property as may be
necessary for carrying out its functions under this title.
[Codified to 15 USC 77uuu]
[Source: Section 321 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 321 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1174), effective
August 3, 1939; as amended by section 104(b) of title I of the Act of
November 15, 1990 (Pub. L. No. 101-550; 104 Stat. 2714),
effective November 15, 1990]
Section 322
Court Review of Orders; Jurisdiction of Offenses and Suits
(a) Orders of the Commission under this title (including
orders pursuant to the provisions of sections 305(b) and 307(c)) shall be subject to review in the same manner, upon the same
conditions, and to the same extent, as provided in section 9 of the Securities Act of
1933, with respect to orders of the Commission under such Act.
(b) Jurisdiction of offenses and violations under, and
jurisdiction and venue of suits and actions brought to enforce any liability or duty
created by, this title, or any rules or regulations or orders prescribed under the
authority thereof, shall be as provided in section 22(a) of the Securities Act of
1933.
[Codified to 15 USC 77vvv]
[Source: Section 322 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 322 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1175), effective
August 3, 1939; as amended by section 418 of title IV of the Act of
November 15, 1990 (Pub. L. No. 101-550; 104 Stat. 2732),
effective November 15, 1990]
Section 323
Liability for Misleading Statements
(a) Any person who shall make or cause to be made any
statement in any application, report, or document filed with the Commission pursuant to
any provisions of this title, or any rule, regulation, or order thereunder, which
statement was at the time and in the light of the circumstances under which it was made
false or misleading with respect to any material fact, or who shall omit to state any
material fact required to be stated therein or necessary to make the statements therein
not misleading, shall be liable to any person (not knowing that such statement was false
or misleading or of such omission) who, in reliance upon such statement or omission, shall
have purchased or sold a security issued under the indenture to which such application,
report, or document relates, for damages caused by such reliance, unless the person sued
shall prove that he acted in good faith and had no knowledge that such statement was false
or misleading or of such omission. A person seeking to enforce such liability may sue at
law or in equity in any court of competent jurisdiction. In any such suit the court may,
in its discretion, require an undertaking for the payment of the costs of such suit and
assess reasonable costs, including reasonable attorney's fees, against either party
litigant, having due regard to the merits and good faith of the suit or defense. No action
shall be maintained to enforce any liability created under this section unless brought
within one year after the discovery of the facts constituting the cause of action and
within three years after such cause of action accrued.
(b) The rights and remedies provided by this title shall
be in addition to any and all other rights and remedies that may exist under the
Securities Act of 1933, or the Securities Exchange Act of 1934, or the Public Utility
Holding Company Act of 1935, or otherwise at law or in equity; but no person permitted to
maintain a suit for damages under the provisions of this title shall recover, through
satisfaction of judgment in one or more actions, a total amount in excess of his actual
damages on account of the act complained of.
[Codified to 15 USC 77www]
[Source: Section 323 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 323 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1176), effective
August 3, 1939]
Section 324
Unlawful Representations
It shall be unlawful for any person in offering,
selling, or issuing any security to represent or imply in any manner whatsoever that any
action or failure to act by the Commission in the administration of this title means that
the Commission has in any way passed upon the merits of, or given approval to, any
trustee, indenture or security, or any transaction or transactions therein, or that any
such action or failure to act with regard to any statement or report filed with or
examined by the Commission pursuant to this title or any rule, regulation, or order
thereunder, has the effect of a finding by the Commission that such statement or report is
true and accurate on its face or that it is not false or misleading.
[Codified to 15 USC 77xxx]
[Source: Section 324 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 324 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1176), effective
August 3, 1939; as amended by section 305 of title III of the Act of
August 10, 1954 (Pub. L. No. 577; 68 Stat. 688), effective
October 9, 1954]
Section 325
Penalties
Any person who willfully violates any provision of this
title or any rule, regulation, or order thereunder, or any person who willfully, in any
application, report, or document filed or required to be filed under the provisions of
this title or any rule, regulation, or order thereunder, makes any untrue statement of a
material fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, shall upon conviction be fined
not more than $10,000 or imprisoned not more than five years, or both.
[Codified to 15 USC 77yyy]
[Source: Section 325 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 325 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1177), effective
August 3, 1939; as amended by section 27(d) of the Act of June 4, 1975
(Pub. L. No. 94-29; 89 Stat. 163), effective June 5, 1975]
Section 326
Effect on Existing Law
Except as otherwise expressly provided, nothing in this
title shall affect -
(1) the jurisdiction of the Commission under the
Securities Act of 1933, or the Securities Exchange Act of 1934, or the Public Utility
Holding Company Act of 1935, over any person, security, or contract, or
(2) the rights, obligations, duties, or liabilities of
any person under such Acts; nor shall anything in this title affect the jurisdiction of
any other commission, board, agency, or officer of the United States or of any State or
political subdivision of any State, over any person or security, insofar as such
jurisdiction does not conflict with any provision of this title or any rule, regulation,
or order thereunder.
[Codified to 15 USC 77zzz]
[Source: Section 326 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 326 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1177), effective
August 3, 1939]
Section 327
Contrary Stipulations Void
Any condition, stipulation, or provision binding any
person to waive compliance with any provision of this title or with any rule, regulation,
or order thereunder shall be void.
[Codified to 15 USC 77aaaa]
[Source: Section 327 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 327 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1177), effective
August 3, 1939]
Section 328
Separability of Provisions
If any provision of this title or the application of
such provision to any person or circumstance shall be held invalid, the remainder of the
title and the application of such provision to persons or circumstances other than those
as to which it is held invalid shall not be affected thereby.
[Codified to 15 USC 77bbbb]
[Source: Section 328 of title III of the Act
of May 27, 1933 (Pub. L. No. 22; 48 Stat. 74), effective
May 27, 1933, as added by section 328 of title III of the Act of
August 3, 1939 (Pub. L. No. 253; 53 Stat. 1177), effective
August 3, 1939]
SEC Rules Under Section 304 Of The
Trust Indenture Act Of 1939
(17 CFR 260.4a-1 and -2)
Section 260.4a-1 Exempted securities under section 304(a)(8).
The provisions of the Trust Indenture Act of 1939 shall
not apply to any security which has been or is to be issued otherwise than under an
indenture. The same issuer may not claim this exemption within a period of twelve
consecutive months for more than $5,000,000 aggregate principal amount of any securities
of the same issuer. [Codified to 17 CFR 260.4a-1] (Issued 12-31-81 at
46 FR 63256, Revised 8-13-92 at 57 FR 36501.)
Section 260.4a-2 Exempted securities under section 304(d).
The provisions of the Trust Indenture Act of 1939 shall
not apply to any security that has been issued or will be issued in accordance with the
provisions of Regulation A (17 CFR 230.251 et seq.) under the
Securities Act of 1933. [Codified to 17 CFR 260.4a-2] (Issued 8-13-92 at
57 FR 36501.)
Section 260.4a-3 Exempted securities under section 304(a)(9).
The provisions of the Trust Indenture Act of 1939 shall
not apply to any security which has been or is to be issued under an indenture which
limits the aggregate principal amount of securities at any time outstanding thereunder to
$10,000,000 or less, but this exemption shall not be applied within a period of thirty-six
consecutive months to more than $10,000,000 aggregate principal amount of securities of
the same issuer. [Codified to 17 CFR 260.4a-3, formerly
17 CFR 260.4a-2] (Issued 12-31-81 at 46 FR 63256, Revised 8-13-92 at
57 FR 36501.)
SEC Regulation
A -
Conditional Small Issues Exemption
Codified to 17 CFR 230.251
(Issued 8-13-92 at 57 FR 36468)
Section 230.251 Scope of Exemption.
A public offer or sale of securities that meets the
following terms and conditions shall be exempt under section 3(b) from the
registration requirements of the Securities Act of 1933 (the "Securities Act"):
(a) Issuer. The issuer of the securities:
(1) is an entity organized under the laws of the United
States or Canada, or any State, Province, Territory or possession thereof, or the District
of Columbia, with its principal place of business in the United States or Canada;
(2) is not subject to section 13 or 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act") (15 USC 78a et
seq.) immediately before the offering;
(3) is not a development stage company that either has
no specific business plan or purpose, or has indicated that its business plan is to merge
with an unidentified company or companies;
(4) is not an investment company registered or required
to be registered under the Investment Company Act of 1940 (15 USC 80a-1 et
seq.);
(5) is not issuing fractional undivided interests in oil
or gas rights as defined in oil or gas rights as defined in § 230.300, or a similar
interest in other mineral rights; and
(6) is not disqualified because of § 230.262.
* * *
Note: The balance of the regulation has been omitted.
* * *
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