54 STAT.] 76TH CONG. , 3D SESS.-CH. 68 - -AUG. 22, 1940 employee of a registered management investment company who may singly, or jointly with others, have access to securities or funds of any registered company, either directly or through authority to draw upon such funds or to direct generally the disposition of such securi- ties, be bonded by a reputable fidelity insurance company against larceny and embezzlement in such reasonable minimum amounts as the Commission may prescribe. (h) After one year from the effective date of this title, neither the charter, certificate of incorporation, articles of association, inden- ture of trust, nor the by-laws of any registered investment company, nor any other instrument pursuant to which such a company is organized or administered, shall contain any provision which pro- tects or purports to protect any director or officer of such company against any liability to the company or to its security holders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. In the event that any such instrument does not at the effective date of this Act comply with the requirements of this subsection (h) and is not amended to comply therewith prior to the expiration of said one year, such company may nevertheless continue to be a registered investment company and shall not be deemed to violate this subsec- tion if prior to said expiration date each such director or officer shall have filed with the Commission a waiver in writing of any protective provision of the instrument to the extent that it does not comply with this subsection, and each such person subsequently elected or appointed shall before assuming office file a similar waiver. (i) After one year from the effective date of this title no contract or agreement under which any person undertakes to act as investment adviser of, or principal underwriter for, a registered investment com- pany shall contain any provision which protects or purports to protect such person against any liability to such company or its security holders to which he would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence, in the per- formance of his duties, or by reason of his reckless disregard of his obligations and duties under such contract or agreement. In the event that any such contract or agreement does not at the effective date of this Act comply with the requirements of this sub- section (i) and is not amended to comply therewith prior to the expiration of said one year, this subsection shall not be deemed to have been violated if prior to said expiration date each such invest- ment adviser or principal underwriter shall have filed with the Colm- mission a waiver in writing of any protective provision of the contract or agreement to the extent that it does not comply with this subsection. CAPITAL STRUCTURE SEC. 18. (a) It shall be unlawful for any registered closed-end company to issue any class of senior security, or to sell any such security of which it is the issuer, unless- (1) if such class of senior security represents an indebted- ness-- (A) immediately after such issuance or sale, it will have an asset coverage of at least 300 per centum; (B) provision is made to prohibit the declaration of any dividend (except a dividend payable in stock of the issuer), or the declaration of any other distribution, upon any class of the capital stock of such investment company, or the purchase of any such capital stock, unless, in every such 193470o-41-PT. I--52 817 Liability of direc- tors, etc., for willful misfeasance. Exemption. Liability of invest- ment advisers, etc., for willful misfeasance. Exemption. Closed-end com- panies. Restriction on issu- ance, etc., of senior securities. Exceptions. If security repre- sents an indebtedness.