15 U.S.C. § 77ccc — Definitions

Page 177 TITLE 15—COMMERCE AND TRADE § 77ccc (May 27, 1933, ch. 38, title III, § 301, as added Aug. 3, 1939, ch. 411, 53 Stat. 1149.) Statutory Notes and Related Subsidiaries SHORT TITLE OF 1990 AMENDMENT Pub. L. 101–550, title IV, § 401, Nov. 15, 1990, 104 Stat. 2721, provided that: ‘‘This title [amending sections 77ccc to 77eee, 77iii to 77rrr, and 77vvv of this title] may be cited as the ‘Trust Indenture Reform Act of 1990’.’’ § 77bbb. Necessity for regulation (a) Practices adversely affecting public Upon the basis of facts disclosed by the reports of the Securities and Exchange Commission made to the Congress pursuant to section 78jj of this title and otherwise disclosed and ascertained, it is hereby declared that the na- tional public interest and the interest of inves- tors in notes, bonds, debentures, evidences of in- debtedness, and certificates of interest or par- ticipation therein, which are offered to the pub- lic, are adversely affected— (1) when the obligor fails to provide a trust- ee to protect and enforce the rights and to rep- resent the interests of such investors, notwith- standing the fact that (A) individual action by such investors for the purpose of protecting and enforcing their rights is rendered imprac- ticable by reason of the disproportionate ex- pense of taking such action, and (B) concerted action by such investors in their common in- terest through representatives of their own se- lection is impeded by reason of the wide dis- persion of such investors through many States, and by reason of the fact that informa- tion as to the names and addresses of such in- vestors generally is not available to such in- vestors; (2) when the trustee does not have adequate rights and powers, or adequate duties and re- sponsibilities, in connection with matters re- lating to the protection and enforcement of the rights of such investors; when, notwith- standing 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 out- standing thereunder, and (B) generally relieve the trustee from liability even for its own neg- ligent 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 ob- ligor or any underwriter of any securities of the obligor, or holds, beneficially or otherwise, any interest in the obligor or any such under- writer, which relationship, connection, or in- terest involves a material conflict with the in- terests of such investors; (4) when the obligor is not obligated to fur- nish to the trustee under the indenture and to such investors adequate current information as to its financial condition, and as to the per- formance of its obligations with respect to the securities outstanding under such indenture; or when the communication of such informa- tion to such investors is impeded by the fact that information as to the names and address- es 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 prospec- tive investors of the effect of important inden- ture provisions; or (6) when, by reason of the fact that trust in- dentures are commonly prepared by the obli- gor or underwriter in advance of the public of- fering of the securities to be issued there- under, 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 enumer- ated in this subsection. (b) Declaration of policy Practices of the character above enumerated have existed to such an extent that, unless regu- lated, the public offering of notes, bonds, deben- tures, 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 sub- chapter, in accordance with which policy all the provisions of this subchapter shall be inter- preted, to meet the problems and eliminate the practices, enumerated in this section, connected with such public offerings. (May 27, 1933, ch. 38, title III, § 302, as added Aug. 3, 1939, ch. 411, 53 Stat. 1150.) Editorial Notes REFERENCES IN TEXT Section 78jj of this title, referred to in subsec. (a), was omitted from the Code. Executive Documents TRANSFER OF FUNCTIONS For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title. § 77ccc. Definitions When used in this subchapter, unless the con- text otherwise requires— (1) Any term defined in section 2 of the Secu- rities Act of 1933 [15 U.S.C. 77b], and not other- wise defined in this section shall have the meaning assigned to such term in such section 2 [15 U.S.C. 77b]. (2) The terms ‘‘sale’’, ‘‘sell’’, ‘‘offer to sell’’, ‘‘offer for sale’’, and ‘‘offer’’ shall include all transactions included in such terms as pro- vided in paragraph (3) of section 2(a) of the Se- curities Act of 1933 [15 U.S.C. 77b(a)], except that an offer or sale of a certificate of interest Page 178 TITLE 15—COMMERCE AND TRADE § 77ccc or participation shall be deemed an offer or sale of the security or securities in which such certificate evidences an interest or participa- tion 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(a) of the Securities Act of 1933 [15 U.S.C. 77b(a)], except that in the case of se- curities which are not registered under the Se- curities Act of 1933 [15 U.S.C. 77a et seq.], 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 77fff of this title was sent or given to the persons to whom the com- munication was made, or (B) if such commu- nication 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 77fff of this title) and, in addition, does no more than iden- tify 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 ap- propriate in the public interest or for the pro- tection of investors, and subject to such terms and conditions as may be prescribed therein, may permit. (4) The term ‘‘underwriter’’ means any per- son who has purchased from an issuer with a view to, or offers or sells for an issuer in con- nection with, the distribution of any security, or participates or has a direct or indirect par- ticipation in any such undertaking, or partici- pates or has a participation in the direct or in- direct 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 organi- zation whether incorporated or unincor- porated. (6) The term ‘‘executive officer’’ means the president, every vice president, every trust of- ficer, the cashier, the secretary, and the treas- urer of a corporation, and any individual cus- tomarily performing similar functions with re- spect to any organization whether incor- porated or unincorporated, but shall not in- clude the chairman of the board of directors. (7) The term ‘‘indenture’’ means any mort- gage, 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 out- standing 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 pro- vided for in section 77eee of this title or sec- tion 77ggg of this title, and includes any amendment thereto and any report, document, or memorandum accompanying such applica- tion 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 quali- fied, and each successor trustee. (11) The term ‘‘indenture security’’ means any security issued or issuable under the in- denture to be qualified. (12) The term ‘‘obligor’’, when used with re- spect to any such indenture security, means every person (including a guarantor) who is liable thereon, and, if such security is a cer- tificate of interest or participation, such term means also every person (including a guar- antor) who is liable upon the security or secu- rities in 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 partici- pation, 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 be- half of the trustee. (14) The term ‘‘State’’ means any State of the United States. (15) The term ‘‘Commission’’ means the Se- curities and Exchange Commission. (16) The term ‘‘voting security’’ means any security presently entitling the owner or hold- er thereof to vote in the direction or manage- ment of the affairs of a person, or any security issued under or pursuant to any trust, agree- ment, 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 entitles 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 per- son are entitled to cast in the direction or management of the affairs of such person. (17) The terms ‘‘Securities Act of 1933’’ [15 U.S.C. 77a et seq.] and ‘‘Securities Exchange Act of 1934’’ [15 U.S.C. 78a et seq.] shall be deemed to refer, respectively, to such Acts, as amended, whether amended prior to or after the enactment of this subchapter. (18) The term ‘‘Bankruptcy Act’’ means the Bankruptcy Act or title 11. (May 27, 1933, ch. 38, title III, § 303, as added Aug. 3, 1939, ch. 411, 53 Stat. 1151; amended Aug. 10, 1954, ch. 667, title III, § 301, 68 Stat. 686; Pub. L. 95–598, title III, § 307, Nov. 6, 1978, 92 Stat. 2674; Pub. L. 100–181, title V, §§ 501, 502, Dec. 4, 1987, 101 Page 179 TITLE 15—COMMERCE AND TRADE § 77ddd Stat. 1260; Pub. L. 101–550, title IV, § 402, Nov. 15, 1990, 104 Stat. 2722; Pub. L. 105–353, title III, § 301(e)(1), Nov. 3, 1998, 112 Stat. 3237; Pub. L. 111–203, title IX, § 986(b)(1), July 21, 2010, 124 Stat. 1935.) Editorial Notes REFERENCES IN TEXT The Securities Act of 1933, referred to in pars. (3) and (17), is act May 27, 1933, ch. 38, title I, 48 Stat. 74, which is classified generally to subchapter I (§ 77a et seq.) of this chapter. For complete classification of this Act to the Code, see section 77a of this title and Tables. The Securities Exchange Act of 1934, referred to in par. (17), is act June 6, 1934, ch. 404, 48 Stat. 881, which is classified principally to chapter 2B (§ 78a et seq.) of this title. For complete classification of this Act to the Code, see section 78a of this title and Tables. The Bankruptcy Act, referred to in par. (18), is act July 1, 1898, ch. 541, 30 Stat. 544, which was classified generally to former Title 11, Bankruptcy. The Act was repealed effective Oct. 1, 1979, by Pub. L. 95–598, §§ 401(a), 402(a), Nov. 6, 1978, 92 Stat. 2682, section 101 of which enacted revised Title 11. AMENDMENTS 2010—Par. (17). Pub. L. 111–203 added par. (17) and struck out former par. (17) which read as follows: ‘‘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 subchapter.’’ 1998—Pars. (2), (3). Pub. L. 105–353 substituted ‘‘sec- tion 2(a)’’ for ‘‘section 2’’. 1990—Par. (8). Pub. L. 101–550 inserted ‘‘section 77eee of this title or’’ after ‘‘provided for in’’. 1987—Par. (4). Pub. L. 100–181, § 501, substituted ‘‘un- dertaking’’ for ‘‘undertakng’’. Par. (12). Pub. L. 100–181, § 502, inserted ‘‘(including a guarantor)’’ after ‘‘person’’ in two places. 1978—Par. (18). Pub. L. 95–598 substituted ‘‘Bank- ruptcy Act or title 11’’ for ‘‘Act entitled ‘An Act to es- tablish a uniform system of bankruptcy throughout the United States’, approved July 1, 1898, as amended, whether amended prior to or after August 3, 1939’’. 1954—Pars. (1) to (4). Act Aug. 10, 1954, made formal changes in order to conform to amendments made by act Aug. 10, 1954, to sections 77b, 77e, and 77j of this title. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of Title 12, Banks and Banking. EFFECTIVE DATE OF 1978 AMENDMENT Amendment effective Oct. 1, 1979, see section 402(a) of Pub. L. 95–598 set out as an Effective Date note pre- ceding section 101 of Title 11, Bankruptcy. EFFECTIVE DATE OF 1954 AMENDMENT Amendment by act Aug. 10, 1954, effective 60 days after Aug. 10, 1954, see note under section 77b of this title. Executive Documents TRANSFER OF FUNCTIONS For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title. § 77ddd. Exempted securities and transactions (a) Specific securities exempted The provisions of this subchapter shall not apply to any of the following securities: (1) any security other than (A) a note, bond, debenture, or evidence of indebtedness, wheth- er or not secured, or (B) a certificate of inter- est or participation in any such note, bond, de- benture, or evidence of indebtedness, or (C) a temporary certificate for, or guarantee of, any such note, bond, debenture, evidence of indebt- edness, or certificate; (2) any certificate of interest or participa- tion in two or more securities having substan- tially different rights and privileges, or a tem- porary certificate for any such certificate; (3) Repealed. Pub. L. 101–550, title IV, § 403(1)(A), Nov. 15, 1990, 104 Stat. 2722. (4)(A) any security exempted from the provi- sions of the Securities Act of 1933 [15 U.S.C. 77a et seq.] by paragraphs (2) to (8), (11), or (13) of section 3(a) thereof [15 U.S.C. 77c(a)]; (B) any security exempted from the provi- sions of the Securities Act of 1933, as amended [15 U.S.C. 77a et seq.], by paragraph (2) of sub- section 3(a) thereof, as amended by section 401 of the Employment Security Amendments of 1970 [15 U.S.C. 77c(a)(2)]; (5) any security issued under a mortgage in- denture as to which a contract of insurance under the National Housing Act [12 U.S.C. 1701 et seq.] is in effect; and any such security shall be deemed to be exempt from the provisions of the Securities Act of 1933 [15 U.S.C. 77a et seq.] to the same extent as though such security were specifically enumerated in section 3(a)(2) of such Act [15 U.S.C. § 77c(a)(2)]; (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 ag- gregate principal amount of securities of the same issuer greater than the figure stated in section 3(b) of the Securities Act of 1933 [15 U.S.C. 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 ag- gregate principal amount of securities at any time outstanding thereunder to $10,000,000, or such lesser amount as the Commission may es- tablish 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 secu- rities 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 Hous- ing Act [12 U.S.C. 1749aaa et seq.] is in effect;