PUBLIC LAWS-CH. 686-AUG. 22 , 1940 SUBCLASSIFICATION OF MANAGEMENT COMPANIES SEc. 5 . (a) For the purposes of this title, management companies are divided into open-end and closed-end companies, defined as follows: "Open-end corn- (1) "Open-end company" means a management company pany." which is offering for sale or has outstanding any redeemable security of which it is the issuer. "Closed-end cor- (2) "Close-end company" means any management company pay. other than an open-end company. (b) Management companies are further divided into diversified companies and non-diversified companies, defined as follows: "Diversifed co(1) "Diversified company" means a management company pans. which meets the following requirements: At least 75 per centum of the value of its total assets is represented by cash and cash items (including receivables), Government securities, securities of other investment companies, and other securities for the pur- poses of this calculation limited in respect of any one issuer to an amount not greater in value than 5 per centum of the value of the total assets of such management company and to not more than 10 per centum of the outstanding voting securities of such issuer. "Non-diversified company."e (2) "Non-diversified company" means any management com- pany other than a diversified company. tus asdiversified co (c) A registered diversified company which at the time of its pany. qualification as such meets the requirements of paragraph (1) of subsection (b) shall not lose its status as a diversified company because of any subsequent discrepancy between the value of its various investments and the requirements of said paragraph, so long as any such discrepancy existing immediately after its acquisition of any security or other property is neither wholly nor partly the result of such acquisition. EXEMPTIONS SEC. 6 . (a) The following investment companies are exempt from the provisions of this title: Companies under laws of un. . os- (1) Any company organized or otherwise created under the laws se; sions. of and having its principal office and place of business in Alaska, THawaii. Puerto Rico, the Philippine Islands, the Canal Zone, the emption. e Virgin Islands, or any other possession of the United States; but such exemption shall terminate if any security of which such com- pany is the issuer is offered for sale or sold after the effective date of this title, by such company or an underwriter therefor, to a resi- dent of any State other than the State in which such company is organized. ceoiversipset r (2) Any company for which, in a proceeding in any court of the United States or of a State, a receiver, trustee in bankruptcy, or similar officer had been appointed or elected prior to the effective date of this title, and every such officer so appointed or elected prior to the effective date of this title; but such exemption shall continue only so long as (A) the conduct of such company's business remains sub- ject to the supervision of such court or officer thereof, and (B) such company does not sell exclusively for cash any security of which it is the issuer, except short-term paper and ordinary receiver's or trus- tee's certificates. irgalzed cor- (3) Any company which since the effective date of this title or within five years prior to such date has been reorganized under the supervision of a court of competent jurisdiction, if (A) such com- pany was not an investment company at the commencement of such 800 [54 STAT.