January 23, 1992
TO: STATE SECURITIES MEMBERS NO. 5-92
UNIT INVESTMENT TRUST MEMBERS NO. 7-92
RE: OHIO AMENDS REGISTRATION RULES
__________________________________________________________
As you know, for the past several years, the Institute has
been working with the Ohio Securities Divisions on amendments to
certain of its administrative rules, particularly with respect to
the provisions specifically relating to retroactive registration
of investment company securities and investment restrictions on
mutual funds. (See Memorandum to State Securities Members No.
35-91, dated August 20, 1991.)
We are pleased to inform you that, effective January 17,
1992, the Ohio Securities Division adopted amendments to certain
of the registration provisions for mutual funds and unit trusts.
In addition, the Division redefined the term "excusable neglect"
to apply to the failure to file the appropriate registration
forms within a specified time period or the failure to register a
sufficient number of shares in Ohio. Finally, non-substantive
changes in language and internal section number references were
adopted. A copy of the amended rules is attached.
The following amendments relate specifically to the
registration of mutual fund and unit trust securities:
Rule 1301:6-3-09 - Registration by Qualification (pages 22
through 28):
(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.
(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 (i.e., registration by
description or qualification). 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 (8) of the 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. Previously,
this limitation applied to 100% of a fund's
portfolio.
In addition, although it appears that subparagraph
(12) of the rule amends the 10% investment
limitation to apply only to investments in
unseasoned companies, the limitation also applies
to investing in restricted securities. The
Institute was advised by the staff of the Division
that the language "securities of issuers which are
restricted as to disposition" was inadvertently
deleted from the published version of the final and
proposed rules and the staff will be taking the
necessary action to correct this error in the near
future.
(3) Paragraph (H) of the rule sets forth the procedure
for renewal of a mutual fund registration 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 its current 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 effectiveness and a copy
of the final prospectus.
Rule 1301:6-3-391 - Retroactive exemption, qualification or
registration (pages 51-53):
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 of
an investment company to file an application to register a
sufficient number of securities.
Please note 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 the definition of "excusable neglect."
* * *
The Institute will continue to work with the Division on
amendments to Ohio's administrative rules, particularly those
which impose non-uniform investment restrictions on investment
companies. We will keep you advised of developments.
Patricia Louie
Assistant General Counsel
Attachment