54 STAT.] 76TH CONG. , 3D SESS.-CH. 686 -AUG. 22, 1940 such class of senior security which is a stock. The involuntary liqui- dation preference of a class of senior security which is a stock shall be deemed to mean the amount to which such class of senior security would be entitled on involuntary liquidation of the issuer in preference to a security junior to it. (i) Except as provided in subsection (a) of this section, or as other- wise required by law, every share of stock hereafter issued by a regis- tered management company (except a common-law trust of the char- acter described in section 16 (b)) shall be a voting stock and have equal voting rights with every other outstanding voting stock: Pro- vided, That this subsection shall not apply to shares issued pursuant to the terms of any warrant or subscription right outstanding on March 15, 1940, or any firm contract entered into before March 15, 1940, to purchase such securities from such company nor to shares issued in accordance with any rules, regulations, or orders which the Commis- sion may make permitting such issue. (j) Notwithstanding any provision of this title, it shall be unlawful, after the date of enactment of this title, for any registered face-amount certificate company- (1) to issue, except in accordance with such rules, regulations, or orders as the Commission may prescribe in the public interest or as necessary or appropriate for the protection of investors, any security other than (A) a face-amount certificate; (B) a common stock having a par value and being without preference as to divi- dends or distributions and having at least equal voting rights with any outstanding security of such company; or (C) short-term payment or promissory notes or other indebtedness issued in con- sideration of any loan, extension, or renewal thereof, made by a bank or other person and privately arranged and not intended to be publicly offered; (2) if such company has outstanding any security, other than such face-amount certificates, common stock, promissory notes, or other evidence of indebtedness, to make any distribution or declare or pay any dividend on any capital security in contra- vention of such rules and regulations or orders as the Commis- sion may prescribe in the public interest or as necessary or appro- priate for the protection of investors or to insure the financial integrity of such company, to prevent the impairment of the company's ability to meet its obligations upon its face-amount certificates; or (3) to issue any of its securities except for cash or securities including securities of which such company is the issuer. DIVIDENDS SEC. 19. It shall be unlawful for any registered investment com- pany to pay any dividend, or to make any distribution in the nature of a dividend payment, wholly or partly from any source other than- (1) such company's accumulated undistributed net income, determined in accordance with good accounting practice and not including profits or losses realized upon the sale of securities or other properties; or (2) such company's net income so determined for the current or preceding fiscal year; unless such payment is accompanied by a written statement which adequately discloses the source or sources of such payment. The Commission may prescribe the form of such statement by rules and regulations in the public interest and for the protection of investors. 821 Involuntary liqui- dation preference. Each share a voting stock, etc. Proviso. Inapplicable to des- ignated shares. Registered face- amount certificate company. Unlawful acts. Issuance of certain securities. Distribution, etc. Payment. Restriction on pay- ment ofdividends, etc. Exception.
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