54 STAT.] 70rH CONG., 3D SESS.-CH. 686 -AUG. 22, 1940 mailed, a written statement signed by at least a majority of the trustees to the effect that in their opinion either such material con- tains untrue statements of fact or omits to state facts necessary to make the statements contained therein not misleading, or would be in violation of applicable law, and specifying 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 the trustees or by such applicants shall, enter an order either sus- taining 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, the trustees shall mail copies of such material to all shareholders with reasonable promptness after the entry of such order and the renewal of such tender. TRANSACTIONS OF CERTAIN AFFILIATED PERSONS AND UNDERWRITERS SEC. 17. (a) It shall be unlawful for any affiliated person or pro- moter of or principal underwriter for a registered investment com- pany (other than a company of the character described in section 12 (d) (3) (A) and (B)), or any affiliated person of such a person, promoter, or principal underwriter, acting as principal- (1) knowingly to sell any security or other property to such registered company or to any company controlled by such regis- tered company, unless such sale involves solely (A) securities of which the buyer is the issuer, (B) securities of which the seller is the issuer and which are part of a general offering to the holders of a class of its securities, or (C) securities deposited with the trustee of a unit investment trust or periodic payment plan by the depositor thereof; (2) knowingly to purchase from such registered company, or from any company controlled by such registered company, any security or other property (except securities of which the seller is the issuer); or (3) to borrow money or other property from such registered company or from any company controlled by such registered company (unless the borrower is controlled by the lender) except as permitted in section 21 (b). (b) Notwithstanding subsection (a), any person may file witl the Commission an application for an order exempting a proposed transaction of the applicant from one or more provisions of that subsection. The Commission shall grant such application and issue such order of exemption if evidence establishes that- (1) the terms of the proposed transaction, including the con- sideration to be paid or received, are reasonable and fair and do not involve overreaching on the part of any person concerned; (2) the proposed transaction is consistent with the policy of each registered investment company concerned, as recited in its registration statement and reports filed under this title; and (3) the proposed transaction is consistent with the general purposes of this title. (c) Notwithstanding subsection (a), a person may, in the ordinary course of business, sell to or purchase from any company merchan- dise or may enter into a lessor-lessee relationship with any person and furnish the services incident thereto. 815 Entry of order by Commission. Unlawful transac- tions. Exemption, if tran. action fair, etc. Transactions al- lowed.