SEC
RULE 12b-1
17
C.F.R. § 270.12b-1 (1990)
(a)(1)
Except as provided in this section, it shall be unlawful for any registered
open-end management investment company (other than a company complying with the
provisions of section 10(d) of the Act (15 U.S.C. 80a-10(d))) to act as a
distributor of securities of which it is the issuer, except through an
underwriter.
(2) For
purposes of this section, such a company will be deemed to be acting as a
distributor of securities of which it is the issuer, other than through an
underwriter, if it engages directly or indirectly in financing any activity
which is primarily intended to result in the sale of shares issued by such
company, including, but not necessarily limited to, advertising, compensation
of underwriters, dealers, and sales personnel, the printing and mailing of
prospectuses to other than current shareholders, and the printing and mailing
of sales literature.
(b) A
registered, open-end management investment company ("Company") may
act as a distributor of securities of which it is the issuer: Provided, That
any payments made by such company in connection with such distribution are made
pursuant to a written plan describing all material aspects of the proposed
financing of distribution and that all agreements with any person relating to
implementation of the plan are in writing: And further provided, That:
(1)
Such plan has been approved by a vote of at least a majority of the outstanding
voting securities of such company;
(2)
Such plan, together with any related agreements, has been approved by a vote of
the board of directors of such company, and of the directors who are not
interested persons of the company and have no direct or indirect financial
interest in the operation of the plan or in any agreements related to the plan,
cast in person at a meeting called for the purpose of voting on such plan or
agreements; and
(3)
Such plan or agreement provides, in substance:
(i)
That it shall continue in effect for a period of more than one year from the
date of its execution or adoption only so long as such continuance is
specifically approved at least annually in the manner described in paragraph
(b)(2) of this section;
(ii)
That any person authorized to direct the disposition of monies paid or payable
by such company pursuant to the plan or any related agreement shall provide to
the company's board of directors, and the directors shall review, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made; and
(iii)
In the case of a plan, that it may be terminated at any time by vote of a
majority of the members of the board of directors of the company who are not
interested persons of the company and have no direct or indirect financial
interest in the operation of the plan or in any agreements related to the plan
or by vote of a majority of the outstanding voting securities of such company;
and
(iv) In
the case of an agreement related to a plan,
(A)
That it may be terminated at any time, without the payment of any penalty, by
vote of a majority of the members of the board of directors of such company who
are not interested persons of the company and have no direct or indirect
financial interest in the operation of the plan or in any agreements related to
the plan or by vote of a majority of the outstanding voting securities of such
company on not more than sixty days' written notice to any other party to the
agreement, and
(B) For
its automatic termination in the event of its assignment; and
(4)
Such plan provides that it may not be amended to increase materially the amount
to be spent for distribution without shareholder approval and that all material
amendments of the plan must be approved in the manner described in paragraph
(b)(2) of this section;
(5)
Such plan is implemented and continued in a manner consistent with the
provisions of paragraphs (c), (d), and (e) of this section;
(c) A
registered open-end management investment company may rely on the provisions of
paragraph (b) of this section only if selection and nomination of those
directors who are not interested persons of such company are committed to the
discretion of such disinterested directors;
(d) In
considering whether a registered open-end management investment company should
implement or continue a plan in reliance on paragraph (b) of this section, the
directors of such company shall have a duty to request and evaluate, and any
person who is a party to any agreement with such company relating to such plan
shall have a duty to furnish, such information as may reasonably be necessary
to an informed determination of whether such plan should be implemented or
continued; in fulfilling their duties under this paragraph the directors should
consider and give appropriate weight to all pertinent factors, and minutes
describing the factors considered and the basis for the decision to use company
assets for distribution must be made and preserved in accordance with paragraph
(f) of this section;
Note. - For a discussion of factors which may be
relevant to a decision to use company assets for distribution, see Investment
Company Act Releases Nos. 10862, September 7, 1979, and 11414, October 28,
1980.
(e) A
registered open-end management investment company may implement or continue a
plan pursuant to paragraph (b) of this section only if the directors who vote
to approve such implementation or continuation conclude, in the exercise of
reasonable business judgment and in light of their fiduciary duties under state
law and under sections 36(a) and (b)(15 U.S.C. 80a-35 (a) and (b)) of the Act,
that there is a reasonable likelihood that the plan will benefit the company
and its shareholders; and
(f) A
registered open-end management investment company must preserve copies of any
plan, agreement or report made pursuant to this section for a period of not
less than six years from the date of such plan, agreement or report, the first
two years in an easily accessible place.