54 STAT.] 7rTH CONG. , 3D SESS.-CH. 686-AUG. 22 , 1940 is specifically approved at least annually by the board of direc- tors or by vote of a majority of the outstanding voting securities of such company; and (2) provides, in substance, for its automatic termination in the event of its assignment by such underwriter. (c) In addition to the requirements of subsections (a) and (b) it shall be unlawful for any registered investment company having a board of directors to enter into, renew, or perform any contract or agreement, written or oral, except a written agreement which was in effect prior to March 15, 1940, whereby a person undertakes regu- larly to serve or act as investment adviser of or principal under- writer for such company, unless the terms of such contract or agree- ment and any renewal thereof have been approved (1) by a majority of the directors who are not parties to such contract or agreement or affiliated persons of any such party, or (2) by the vote of a majority of the outstanding voting securities of such company. (d) It shall be unlawful for any person- (1) to serve or act as investment adviser of a registered invest- ment company, pursuant to a written contract which was in effect prior to March 15, 1940, after March 15, 1945 or the date of termination provided for m such contract, whichever is the prior date, or after assignment thereof subsequent to March 15, 1940, by the person acting as investment adviser thereunder; or (2) as principal underwriter for a registered open-end invest- ment company to offer for sale, sell, or deliver after sale any security of which such company is the issuer, pursuant to a written contract which was in effect prior to March 15, 1940, after March 15, 1945, or the date of termination provided for in such contract, whichever is the prior date, or after assignment thereof subsequent to March 15, 1940, by the person acting as principal underwriter thereunder: Provided, however, That the limitation to March 15, 1945, shall not apply in either case if prior to that date such contract is renewed in such form that it complies with the requirements of subsection (a) or (b) of this section, as the case may be, and is approved in the manner required by this section in respect of a contract of the same character made after March 15, 1940. (e) In the case of a common-law trust of the character described in subsection (b) of section 16, either written approval by holders of a majority of the outstanding shares of beneficial interest or the vote of a majority of such outstanding shares cast in person or by proxy at a meeting called for the purpose shall for the purposes of this section be deemed the equivalent of the vote of a majority of the outstanding voting securities, and the provisions of paragraph (40) of section 2 (a) as to a majority shall be applicable to the vote cast at such a meeting. (f) Nothing contained in this section shall be deemed to require or contemplate any action by an advisory board of any registered com- pany or by any of the members of such a board. CHANGES IN BOARD OF DIRECTORS; PROVISIONS RELATIVE TO STRICT TRUSTS SEC. 16. (a) No person shall serve as a director of a registered investment company unless elected to that office by the holders of the outstanding voting securities of such company, at an annual or a special meeting duly called for that purpose; except that vacancies occurring between such meetings may be filled in any otherwise legal manner if immediately after filling any such vacancy at least two- thirds of the directors then holding office shall have been elected to such office by the holders of the outstanding voting securities of the 813 Additional require ments. Contracts In Bflect prior to Maur 15, 1940. Investment adviser. Principal under- writer. Pr"o. Exception. Common-law trust. Majority vote con- strue.pt Exemption. Election, etc., re- quirements. Vacancies.
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