July 2, 1991
TO: STATE LIAISON COMMITTEE NO. 16-91
UNIT INVESTMENT TRUST COMMITTEE NO. 25-91
RE: OHIO PROPOSES AMENDMENTS TO REGISTRATION RULES
__________________________________________________________
For the past few years, the Institute has been working with
the Ohio Securities Division on amendments to certain of its
administrative rules, particularly with respect to retroactive
registration of investment company securities. We are pleased to
inform you that the Securities Division recently published for
public comment the attached proposed rules.
The following proposed rules relate to registration of
mutual fund and unit trust securities:
Amendments to Rule 1301:6-3-09 - Registration by Qualification
(pages 12 through 17):
(1) Paragraph (B)(2)(E) is a new provision that requires the
issuer, during the period of effectiveness, to advise the
division of any change in the stated investment policies,
objectives or restrictions of the registration. The
proposed rule does not set forth a time period in which the
notification must be received by the division.
(2) Paragraph (E) of the rule sets forth the restrictions
relating to investment companies that apply regardless of
the manner in which the securities are registered. Most of
these provisions -- prohibited transactions, disclosure
requirements, custodial arrangements, valuation,
purchasing, borrowing, restrictions on transferability,
sales load restrictions, expense limitation and redemption
-- have not been substantively amended.
However, subparagraph (h) of the proposed rule amends the
diversification provision to prohibit the purchase of
securities of any issuer, if as to 75% of the assets of the
company at the time of the purchase, more than 10% of the
voting securities of any issuer would be held by the
company.
In addition, it appears that subparagraph (l) amends the
investment limitation to prohibit the investment of more
than 10% of the company's total assets in only the
securities of issuers with less than three years of
operation; the current language prohibiting investment of
more than 10% of the company's total assets in restricted
securities appears to have been deleted.
(3) Paragraph (H) of the rule sets forth the procedure for
renewal of a mutual fund or registration of additional
series of a unit trust. A mutual fund may renew its
registration by submitting an application, the appropriate
fee, a copy of itscurrent prospectus, a statement setting
forth any material change since the previous filing, a
consent to service of process and a copy of each
undertaking.
A unit trust may register additional series of the trust by
submitting an application, the appropriate fee, a copy of
its preliminary prospectus, a consent to service of process
a notice of effectiveness or automatic effectivenesss and a
copy of the final prospectus.
Amendments to Rule 1301:6-3-391 - Retroactive exemption,
qualification or registration (pages 33 through 35):
The amendments to this rule set forth the procedure for
retroactive registration. Paragraph (B)(7) of the rule has been
added to specifically provide that an investment company may file
an application to retroactively register securities due to
"excusable neglect." The definition of "excusable neglect"
includes the failure of an investment company to file an
application to register securities within six months of the
earliest date of the sale of unregistered securities which had
been previously registered with the division, or the failure to
of an investment company to file an application to register a
sufficient number of securities.
It should be noted that this procedure for retroactive
registration may be claimed no more than two times in a twelve
month period by the issuer or its counsel unless the issuer or
its counsel establishes, in writing, to the division that there
is good cause to include the failure to timely or properly file
within excusable neglect.
* * *
Please contact me by Friday, July 19, 1991 if you have any
comments with respect to the proposed rules. A public hearing on
the proposed rules will be held in Columbus, Ohio on July 30,
1991 at 10:00 a.m.
We will keep you advised of developments.
Patricia Louie
Assistant General Counsel
Attachment