101st CONGRESS
2d Session
H. R. 1396
AMENDMENT
TO
SENATE AMENDMENT
HR 1396 EAH
In the House of Representatives, U. S.,
October 1, 1990.
Resolved, That the House agree to the amendment of the Senate to the bill
(H.R. 1396) entitled `An Act to amend the Federal securities laws in
order to facilitate cooperation between the United States and foreign
countries in securities law enforcement', with the following
AMENDMENT:
In lieu of the matter inserted by said amendment, insert:

284ed623fbdba9b20eeaef70b82767229e8a945a2a240cc934302b6837bd8233

This Act may be cited as the `Securities Acts Amendments of 1990'.

fdbe3e8e9aff8e28357da2b37832c1d7438b1d1261af5ca570c61fa745029a81

This title may be cited as the `Securities and Exchange Commission
Authorization Act of 1990'.

796d67d8c6039c7fb95f027162c4d830b64d1cc5d4f2aab8f64def522549180e

TITLE I

-AUTHORIZATION

Section 35 of the Securities Exchange Act of 1934 (15 U.S.C. 78kk) is
amended to read as follows:
`AUTHORIZATION OF APPROPRIATIONS
`SEC. 35. There are authorized to be appropriated to carry out the functions,
powers, and duties of the Commission--
`(1) $178,023,000 for the fiscal year ending September 30, 1990; and
`(2) $212,609,000 for the fiscal year ending September 30, 1991.'.

f48b439c3b2a656901c233e9b6ce01df2836c61659760749053ec7b3f7e18406

This title may be cited as the `International Securities Enforcement
Cooperation Act of 1990'.

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TITLE II

-INTERNATIONAL SECURITIES LAW ENFORCEMENT

(a) IN GENERAL- Section 24 of the Securities Exchange Act of 1934 (15
U.S.C. 78x) is amended--
(1) in subsection (b), by striking `Nothing in this subsection shall
authorize the Commission to withhold information from the Congress.'; and
(2) by adding at the end thereof the following new subsections:
`(c) The Commission may, in its discretion and upon a showing that such
information is needed, provide all `records' (as defined in subsection (a))
and other information in its possession to such persons, both domestic and
foreign, as the Commission by rule deems appropriate if the person receiving
such records or information provides such assurances of confidentiality
as the Commission deems appropriate.
`(d) Except as provided in subsection (e), the Commission shall not be
compelled to disclose records obtained from a foreign securities authority
if (1) the foreign securities authority has in good faith determined and
represented to the Commission that public disclosure of such records would
violate the laws applicable to that foreign securities authority, and (2)
the Commission obtains such records pursuant to (A) such procedure as the
Commission may authorize for use in connection with the administration or
enforcement of the securities laws, or (B) a memorandum of understanding. For
purposes of section 552 of title 5, United States Code, this subsection
shall be considered a statute described in subsection (b)(3)(B) of such
section 552.
`(e) Nothing in this section shall--
`(1) alter the Commission's responsibilities under the Right to Financial
Privacy Act (12 U.S.C. 3401 et seq.), as limited by section 21(h) of this
Act, with respect to transfers of records covered by such statutes, or
`(2) authorize the Commission to withhold information from the Congress or
prevent the Commission from complying with an order of a court of the United
States in an action commenced by the United States or the Commission.'.
(b) CONFORMING AMENDMENTS-
(1) INVESTMENT COMPANY ACT OF 1940- Section 45(a) of the Investment
Company Act of 1940 (15 U.S.C. 80a-44) is amended by striking `It shall
be unlawful' and inserting `Except as provided in section 24(c) of the
Securities Exchange Act of 1934, it shall be unlawful'.
(2) INVESTMENT ADVISERS ACT OF 1940- Section 210(b) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-10(b)) is amended by striking
`subsections (c) and (e) of section 209' and inserting `subsections (c)
and (d) of section 209 of this title and section 24(c) of the Securities
Exchange Act of 1934'.

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SEEKING ASSOCIATION.
(a) AUTHORITY OF THE COMMISSION TO SANCTION BROKERS AND DEALERS FOR FOREIGN
VIOLATIONS- Section 15(b) (15 U.S.C. 78o(b)) of the Securities Exchange
Act of 1934 is amended--
(1) in paragraph (4)(B), by inserting after `misdemeanor' the following:
`or of a substantially equivalent crime by a foreign court of competent
jurisdiction';
(2) in paragraph (4)(B)(i), by inserting after `burglary,' the following:
`any substantially equivalent activity however denominated by the laws of
the relevant foreign government,';
(3) in paragraph (4)(B)(ii)--
(A) by inserting after `transfer agent,' the following: `foreign person
performing a function substantially equivalent to any of the above,';
(B) by inserting after `(7 U.S.C. 1 et seq.)' the following: `or any
substantially equivalent foreign statute or regulation';
(4) in paragraph (4)(B)(iii), by inserting after `securities' the following:
`, or substantially equivalent activity however denominated by the laws
of the relevant foreign government';
(5) in paragraph (4)(B)(iv), by inserting after `United States Code' the
following: `, or a violation of a substantially equivalent foreign statute';
(6) in paragraph (4)(C)--
(A) by inserting after `transfer agent,' the following: `foreign person
performing a function substantially equivalent to any of the above,';
(B) by inserting after `Commodity Exchange Act' each time it appears the
following: `or any substantially equivalent foreign statute or regulation';
and
(C) by inserting after `insurance company,' the following: `foreign entity
substantially equivalent to any of the above,'; and
(7) by inserting after subparagraph (F) of paragraph (4) the following:
`(G) has been found by a foreign financial regulatory authority to have--
`(i) made or caused to be made in any application for registration or
report required to be filed with a foreign financial regulatory authority,
or in any proceeding before a foreign financial regulatory authority with
respect to registration, any statement that was at the time and in the
light of the circumstances under which it was made false or misleading with
respect to any material fact, or has omitted to state in any application
or report to the foreign financial regulatory authority any material fact
that is required to be stated therein;
`(ii) violated any foreign statute or regulation regarding transactions
in securities, or contracts of sale of a commodity for future delivery,
traded on or subject to the rules of a contract market or any board of trade;
`(iii) aided, abetted, counseled, commanded, induced, or procured the
violation by any person of any provision of any statutory provisions enacted
by a foreign government, or rules or regulations thereunder, empowering a
foreign financial regulatory authority regarding transactions in securities,
or contracts of sale of a commodity for future delivery, traded on or
subject to the rules of a contract market or any board of trade, or has
been found, by a foreign financial regulatory authority, to have failed
reasonably to supervise, with a view to preventing violations of such
statutory provisions, rules, and regulations, another person who commits
such a violation, if such other person is subject to his supervision.'.
(b) EXTENSION OF DEFINITION OF STATUTORY DISQUALIFICATION TO INCLUDE FOREIGN
VIOLATIONS- Section 3(a)(39) of such Act (15 U.S.C. 78c(a)(39)) is amended--
(1) in subparagraph (A)--
(A) by inserting after `self-regulatory organization,' the following:
`foreign equivalent of a self-regulatory organization, foreign or
international securities exchange,'; and
(B) by inserting after both `(7 U.S.C. 7),' and `(7 U.S.C. 21),', the
following: `or any substantially equivalent foreign statute or regulation,';
(C) by inserting after `contract market', the following: `or foreign
equivalent';
(2) by striking subparagraph (B) and inserting the following:
`(B) is subject to--
`(i) an order of the Commission, other appropriate regulatory agency,
or foreign financial regulatory authority--
`(I) denying, suspending for a period not exceeding 12 months, or revoking
his registration as a broker, dealer, municipal securities dealer,
government securities broker, or government securities dealer or limiting
his activities as a foreign person performing a function substantially
equivalent to any of the above; or
`(II) barring or suspending for a period not exceeding 12 months his
being associated with a broker, dealer, municipal securities dealer,
government securities broker, government securities dealer, or foreign
person performing a function substantially equivalent to any of the above;
`(ii) an order of the Commodity Futures Trading Commission denying,
suspending, or revoking his registration under the Commodity Exchange Act
(7 U.S.C. 1 et seq.); or
`(iii) an order by a foreign financial regulatory authority denying,
suspending, or revoking the person's authority to engage in transactions in
contracts of sale of a commodity for future delivery or other instruments
traded on or subject to the rules of a contract market, board of trade,
or foreign equivalent thereof;';
(3) by redesignating subparagraphs (D) and (E) as subparagraphs (E) and
(F), respectively;
(4) by inserting after subparagraph (C) the following:
`(D) by his conduct while associated with any broker, dealer, municipal
securities dealer, government securities broker, government securities
dealer, or any other entity engaged in transactions in securities, or
while associated with an entity engaged in transactions in contracts of
sale of a commodity for future delivery or other instruments traded on
or subject to the rules of a contract market, board of trade, or foreign
equivalent thereof, has been found to be a cause of any effective suspension,
expulsion, or order by a foreign or international securities exchange or
foreign financial regulatory authority empowered by a foreign government
to administer or enforce its laws relating to financial transactions as
described in subparagraph (A) or (B) of this paragraph;';
(5) in subparagraph (E) (as redesignated by paragraph (3) of this subsection)
by striking `(A), (B), or (C)' and inserting `(A), (B), (C), or (D)'.
(6) in subparagraph (F) (as redesignated) by striking `(D) or (E)' and
inserting `(D), (E), or (G)' and by inserting after `such paragraph (4)'
the first place it appears the following: `or any other felony'.
(c) CONFORMING AMENDMENTS- The Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.) is amended--
(1) in sections 15(b)(6), 15B(c)(2), 15B(c)(4), 15C(c)(1)(A), 15C(c)(1)(C),
17A(c)(3)(A), and 17A(c)(4)(C), by striking `(A), (D), or (E)' and inserting
`(A), (D), (E), or (G)'; and
(2) in section 15C(f)(2), by striking `or the rules or regulations under
any such other provision' and inserting `the rules or regulations under
any such other provision, or investigations pursuant to section 21(a)(2)
of this title to assist a foreign securities authority'.

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Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))
is amended by adding at the end thereof the following new paragraph:
`(51) The term `foreign financial regulatory authority' means any (A) foreign
securities authority, (B) other governmental body or foreign equivalent
of a self-regulatory organization empowered by a foreign government to
administer or enforce its laws relating to the regulation of fiduciaries,
trusts, commercial lending, insurance, trading in contracts of sale of a
commodity for future delivery, or other instruments traded on or subject
to the rules of a contract market, board of trade, or foreign equivalent,
or other financial activities, or (C) membership organization a function
of which is to regulate participation of its members in activities listed
above.'.

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SEEKING ASSOCIATION WITH A REGISTERED INVESTMENT ADVISER OR INVESTMENT COMPANY.
(a) INVESTMENT COMPANY ACT OF 1940- Section 9(b) of the Investment Company
Act of 1940 (15 U.S.C. 80a-9(b)) is amended--
(1) by striking `or' at the end of paragraphs (1) and (2);
(2) by striking the period at the end of paragraph (3) and inserting a
semicolon; and
(3) by inserting after paragraph (3) the following:
`(4) has been found by a foreign financial regulatory authority to have--
`(A) made or caused to be made in any application for registration
or report required to be filed with a foreign securities authority,
or in any proceeding before a foreign securities authority with respect
to registration, any statement that was at the time and in light of the
circumstances under which it was made false or misleading with respect to
any material fact, or has omitted to state in any application or report
to a foreign securities authority any material fact that is required to
be stated therein;
`(B) violated any foreign statute or regulation regarding transactions in
securities or contracts of sale of a commodity for future delivery traded
on or subject to the rules of a contract market or any board of trade;
`(C) aided, abetted, counseled, commanded, induced, or procured the
violation by any other person of any foreign statute or regulation regarding
transactions in securities or contracts of sale of a commodity for future
delivery traded on or subject to the rules of a contract market or any
board of trade;
`(5) within 10 years has been convicted by a foreign court of competent
jurisdiction of a crime, however denominated by the laws of the relevant
foreign government, that is substantially equivalent to an offense set
forth in paragraph (1) of subsection (a); or
`(6) by reason of any misconduct, is temporarily or permanently enjoined
by any foreign court of competent jurisdiction from acting in any of the
capacities, set forth in paragraph (2) of subsection (a), or a substantially
equivalent foreign capacity, or from engaging in or continuing any conduct
or practice in connection with any such activity or in connection with
the purchase or sale of any security.'.
(b) INVESTMENT ADVISERS ACT OF 1940- Section 203(e) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-3(e)) is amended--
(1) in paragraph (2) by inserting after `misdemeanor' the following: `or of a
substantially equivalent crime by a foreign court of competent jurisdiction';
(2) in paragraph (2)(A), by inserting after `burglary,' the following:
`any substantially equivalent activity however denominated by the laws of
the relevant foreign government,';
(3) in paragraphs (2)(B) and (3)--
(A) by inserting after `transfer agent,' the following: `foreign person
performing a function substantially equivalent to any of the above,'; and
(B) after `Commodity Exchange Act' each place it appears, the following:
`or any substantially equivalent statute or regulation';
(4) in paragraph (2)(C), by inserting after `securities' the following:
`or substantially equivalent activity however denominated by the laws of
the relevant foreign government';
(5) in paragraph (2)(D) by inserting after `United States Code' the
following: `, or a violation of a substantially equivalent foreign statute';
(6) in paragraph (3)--
(A) by inserting after `court of competent jurisdiction' the following:
`, including any foreign court of competent jurisdiction,'; and
(B) by inserting after `insurance company,' the following: `foreign entity
substantially equivalent to any of the above,';
(7) in paragraph (5), by inserting after `this title,' the following:
`the Commodity Exchange Act,';
(8) by inserting after paragraph (6) the following new paragraph:
`(7) has been found by a foreign financial regulatory authority to have--
`(A) made or caused to be made in any application for registration
or report required to be filed with a foreign securities authority,
or in any proceeding before a foreign securities authority with respect
to registration, any statement that was at the time and in light of the
circumstances under which it was made false or misleading with respect to
any material fact, or has omitted to state in any application or report
to a foreign securities authority any material fact that is required to
be stated therein;
`(B) violated any foreign statute or regulation regarding transactions in
securities or contracts of sale of a commodity for future delivery traded
on or subject to the rules of a contract market or any board of trade;
`(C) aided, abetted, counseled, commanded, induced, or procured the
violation by any other person of any foreign statute or regulation regarding
transactions in securities or contracts of sale of a commodity for future
delivery traded on or subject to the rules of a contract market or any board
of trade, or has been found, by the foreign financial regulatory authority,
to have failed reasonably to supervise, with a view to preventing violations
of statutory provisions, and rules and regulations promulgated thereunder,
another person who commits such a violation, if such other person is
subject to his supervision.'.
(c) CONFORMING AMENDMENT- Section 203(f) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b-3(f)) is amended by striking `paragraph (1), (4),
or (5)' and inserting `paragraph (1), (4), (5), or (7)'.

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REGULATORY AUTHORITY.
(a) INVESTMENT COMPANY ACT OF 1940- Section 2(a) of the Investment Company
Act of 1940 (15 U.S.C. 80a-2(a)) is amended by inserting after paragraph
(48) the following:
`(49) `Foreign securities authority' means any foreign government or
any governmental body or regulatory organization empowered by a foreign
government to administer or enforce its laws as they relate to securities
matters.
`(50) `Foreign financial regulatory authority' means any (A) foreign
securities authority, (B) other governmental body or foreign equivalent
of a self-regulatory organization empowered by a foreign government to
administer or enforce its laws relating to the regulation of fiduciaries,
trusts, commercial lending, insurance, trading in contracts of sale of a
commodity for future delivery, or other instruments traded on or subject
to the rules of a contract market, board of trade or foreign equivalent,
or other financial activities, or (C) membership organization a function
of which is to regulate the participation of its members in activities
listed above.'.
(b) INVESTMENT ADVISERS ACT OF 1940- Section 202(a) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-2(a)) is amended by inserting after
paragraph (22) the following:
`(23) `Foreign securities authority' means any foreign government, or
any governmental body or regulatory organization empowered by a foreign
government to administer or enforce its laws as they relate to securities
matters.
`(24) `Foreign financial regulatory authority' means any (A) foreign
securities authority, (B) other governmental body or foreign equivalent
of a selfregulatory organization empowered by a foreign government to
administer or enforce its laws relating to the regulation of fiduciaries,
trusts, commercial lending, insurance, trading in contracts of sale of a
commodity for future delivery, or other instruments traded on or subject
to the rules of a contract market, board of trade or foreign equivalent,
or other financial activities, or (C) membership organization a function
of which is to regulate participation of its members in activities listed
above.'.

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FOREIGN SECURITIES AUTHORITY.
Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is amended
by adding at the end thereof the following new subsection:
`(f) Notwithstanding any other provision of law, the Commission may accept
payment and reimbursement, in cash or in kind, from a foreign securities
authority, or made on behalf of such authority, for necessary expenses
incurred by the Commission, its members, and employees in carrying out any
investigation pursuant to section 21(a)(2) of this title or in providing
any other assistance to a foreign securities authority. Any payment
or reimbursement accepted shall be considered a reimbursement to the
appropriated funds of the Commission.'.

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This title may be cited as the `Shareholder Communications Improvement
Act of 1990'.

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TITLE III

-SHAREHOLDER COMMUNICATIONS

(a) SECTION 14(b)- Section 14(b)(1) of the Securities Exchange Act of 1934
(15 U.S.C. 78n(b)(1)) is amended by--
(1) striking `section 12 of this title' and inserting `section 12 of this
title, or any security issued by an investment company registered under
the Investment Company Act of 1940,'; and
(2) striking `or authorization' and inserting `authorization, or information
statement'.
(b) SECTION 14(c)- Section 14(c) of the Securities Exchange Act of 1934
(15 U.S.C. 78n(c)) is amended by striking `title' and inserting `title, or
a security issued by an investment company registered under the Investment
Company Act of 1940,'.

c8ad91f0d4450b498aabd86a8d09a6e3666b79c28afeb10c16680f6cd8549e1e

The amendments made by section 302 of this title shall take effect upon
the expiration of 180 days after the date of enactment of this Act.

b78851010c67360cbe20e3ce52a92f22ca75d9b25a22022d830888eef954f8ed

This title may be cited as the `Trust Indenture Reform Act of 1990'.

db5c86afced5fde4f5356227eba469fcaa21e0f6c4a700a4b817104706226dd7

TITLE IV

-TRUST INDENTURE ACT OF 1939

Section 303(8) of the Trust Indenture Act of 1939 (15 U.S.C. 77ccc(8))
is amended by inserting `section 305 or' after `provided for in'.

dd1ef78ee834b6082d04ae43f935f969408b68dd2cc0c8821708ea0defe36326

Section 304 of the Trust Indenture Act of 1939 (15 U.S.C. 77ddd) is amended--
(1) in subsection (a)--
(A) by striking paragraph (3);
(B) in paragraph (4)(A), by striking `, as heretofore amended,';
(C) by redesignating paragraphs (4)(A) and (4)(B) as paragraphs (3) and
(4), respectively; and
(2) by striking subsection (d) and inserting the following:
`(d) The Commission may, by rules or regulations upon its own motion, or
by order on application by an interested person, exempt conditionally or
unconditionally any person, registration statement, indenture, security or
transaction, or any class or classes of persons, registration statements,
indentures, securities, or transactions, from any one or more of the
provisions of this title, if and to the extent that such exemption is
necessary or appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by this title. The
Commission shall by rules and regulations determine the procedures under
which an exemption under this subsection shall be granted, and may, in
its sole discretion, decline to entertain any application for an order of
exemption under this subsection.'.

4e0c2561a04ef38e491968131455bba5d4fca710a6378f7dfaa023b319f14633

Section 305 of the Trust Indenture Act of 1939 (15 U.S.C. 77eee) is amended--
(1) in subsection (a)(1), by striking `or has a conflicting interest as
defined in subsection (b) of section 310';
(2) in subsection (b)--
(A) by striking `The Commission shall issue' and inserting `(1) Except
as may be permitted by paragraph (2) of this subsection, the Commission
shall issue';
(B) by redesignating paragraph (1) as subparagraph (A);
(C) by inserting `or' at the end thereof;
(D) by striking paragraph (2);
(E) by redesignating paragraph (3) as subparagraph (B);
(F) in such subparagraph (B), by striking `or has any conflicting interest
as defined in subsection (b) of section 310'; and
(G) by adding at the end of subsection (b) the following new paragraph:
`(2) In the case of securities registered under the Securities Act of 1933,
which securities are eligible to be issued, offered, or sold on a delayed
basis by or on behalf of the registrant, the Commission shall not be required
to issue an order pursuant to paragraph (1) of subsection (b) of section
305 for failure to designate a trustee eligible to act under subsection
(a) of section 310 if, in accordance with such rules and regulations as
may be prescribed by the Commission, the issuer of such securities files
an application for the purpose of determining such trustee's eligibility
under subsection (a) of section 310. The Commission shall issue an order
prior to the effective date of such application refusing to permit the
application to become effective, if it finds that any person designated
as trustee under such indenture is not eligible to act as such under
subsection (a) of section 310, but no order shall be issued except after
notice and opportunity for hearing within the periods and in the manner
required with respect to refusal orders pursuant to section 8(b) of the
Securities Act of 1933. If after notice and opportunity for hearing the
Commission issues an order under this provision, the obligor shall within
5 calendar days appoint a trustee meeting the requirements of subsection
(a) of section 310. No such appointment shall be effective and such refusal
order shall not be rescinded by the Commission until a person eligible to
act as trustee under subsection (a) of section 310 has been appointed. If
no order is issued, an application filed pursuant to this paragraph shall
be effective the tenth day after filing thereof or such earlier date as the
Commission may determine, having due regard to the adequacy of information
provided therein, the public interest, and the protection of investors.'.

cec0a2b9b06c70e7bafdc012d99d8aa2fc2e3081b7c4d71f46b0af88c29f62b5

Section 309(b) of the Trust Indenture Act of 1939 (15 U.S.C. 77iii(b))
is amended by inserting after `such Act' the following: `, or the failure
of the issuer to file an application as provided for by section 305(b)(2)'.

8f39ccadba13922522afddc7f202b65a732c84e792f4aacbe267cb67654f4f14

Section 310(a) of the Trust Indenture Act of 1939 (15 U.S.C. 77jjj(a))
is amended--
(1) by inserting at the end of paragraph (1) the following: `The Commission
may, pursuant to such rules and regulations as it may prescribe, or by order
on application, permit a corporation or other person organized and doing
business under the laws of a foreign government to act as sole trustee under
an indenture qualified or to be qualified pursuant to this title, if such
corporation or other person (i) is authorized under such laws to exercise
corporate trust powers, and (ii) is subject to supervision or examination
by authority of such foreign government or a political subdivision thereof
substantially equivalent to supervision or examination applicable to United
States institutional trustees. In prescribing such rules and regulations or
making such order, the Commission shall consider whether under such laws,
a United States institutional trustee is eligible to act as sole trustee
under an indenture relating to securities sold within the jurisdiction of
such foreign government.';
(2) by striking `The indenture to be qualified shall require that there
shall' in paragraph (1) and inserting `There shall';
(3) by striking `thereunder' in paragraph (1) and inserting `under every
indenture qualified or to be qualified pursuant to this title';
(4) by inserting `or a corporation or other person permitted to act as
trustee by the Commission' before `(referred to' in paragraph (1);
(5) by striking `The indenture to be qualified shall require that such
institution' in paragraph (2) and inserting `Such institution';
(6) by striking `such indenture shall provide that' in paragraph (3);
(7) by striking `the indenture to be qualified shall require that' in
paragraph (4); and
(8) by inserting `shall' after `the indenture trustee or trustees' in
paragraph (4).

755d1209c8a1b940808017e7be31f5746a80f4170303f9c0f328f9b892b417e0

Section 310(a) of the Trust Indenture Act of 1939 (15 U.S.C. 77jjj(a))
is amended by adding at the end thereof the following new paragraph:
`(5) No obligor upon the indenture securities or person directly or
indirectly controlling, controlled by, or under common control with such
obligor shall serve as trustee upon such indenture securities.'.

c6ada2152bebd0d55b74cfd2f47ffda892c4262437b7caebe48583ad9616a86f

Section 310(b) of the Trust Indenture Act of 1939 (15 U.S.C. 77jjj(b))
is amended to read as follows:
`(b) If any indenture trustee has or shall acquire any conflicting interest
as hereinafter defined--
`(i) then, within 90 days after ascertaining that it has such conflicting
interest, and if the default (as defined in the next sentence) to which such
conflicting interest relates has not been cured or duly waived or otherwise
eliminated before the end of such 90-day period, such trustee shall either
eliminate such conflicting interest or, except as otherwise provided below
in this subsection, resign, and the obligor upon the indenture securities
shall take prompt steps to have a successor appointed in the manner provided
in the indenture;
`(ii) in the event that such trustee shall fail to comply with the provisions
of clause (i) of this subsection, such trustee shall, within 10 days after
the expiration of such 90-day period, transmit notice of such failure to
the indenture security holders in the manner and to the extent provided
in subsection (c) of section 313; and
`(iii) subject to the provisions of subsection (e) of section 315, unless
such trustee's duty to resign is stayed as provided below in this subsection,
any security holder who has been a bona fide holder of indenture securities
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of
such trustee, and the appointment of a successor, if such trustee fails,
after written request thereof by such holder to comply with the provisions
of clause (i) of this subsection.
`For the purposes of this subsection, an indenture trustee shall be deemed
to have a conflicting interest if the indenture securities are in default
(as such term is defined in such indenture, but exclusive of any period
of grace or requirement of notice) and--
`(1) such trustee is trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of an obligor upon the indenture securities are outstanding or
is trustee for more than one outstanding series of securities, as hereafter
defined, under a single indenture of an obligor, unless--
`(A) the indenture securities are collateral trust notes under which the
only collateral consists of securities issued under such other indenture,
`(B) such other indenture is a collateral trust indenture under which the
only collateral consists of indenture securities, or
`(C) such obligor has no substantial unmortgaged assets and is engaged
primarily in the business of owning, or of owning and developing and/or
operating, real estate, and the indenture to be qualified and such other
indenture are secured by wholly separate and distinct parcels of real estate:
Provided, That the indenture to be qualified shall automatically be deemed
(unless it is expressly provided therein that such provision is excluded)
to contain a provision excluding from the operation of this paragraph other
series under such indenture, and any other indenture or indentures under
which other securities, or certificates of interest or participation in
other securities, of such an obligor are outstanding, if--
`(i) the indenture to be qualified and any such other indenture or indentures
(and all series of securities issuable thereunder) are wholly unsecured and
rank equally, and such other indenture or indentures (and such series) are
specifically described in the indenture to be qualified or are thereafter
qualified under this title, unless the Commission shall have found and
declared by order pursuant to subsection (b) of section 305 or subsection
(c) of section 307 that differences exist between the provisions of the
indenture (or such series) to be qualified and the provisions of such
other indenture or indentures (or such series) which are so likely to
involve a material conflict of interest as to make it necessary in the
public interest or for the protection of investors to disqualify such
trustee from acting as such under one of such indentures, or
`(ii) the issuer shall have sustained the burden of proving, on application
to the Commission and after opportunity for hearing thereon, that trusteeship
under the indenture to be qualified and such other indenture or under more
than one outstanding series under a single indenture is not so likely to
involve a material conflict of interest as to make it necessary in the public
interest or for the protection of investors to disqualify such trustee from
acting as such under one of such indentures or with respect to such series;
`(2) such trustee or any of its directors or executive officers is an
underwriter for an obligor upon the indenture securities;
`(3) such trustee directly or indirectly controls or is directly or
indirectly controlled by or is under direct or indirect common control
with an underwriter for an obligor upon the indenture securities;
`(4) such trustee or any of its directors or executive officers is a
director, officer, partner, employee, appointee, or representative of an
obligor upon the indenture securities, or of an underwriter (other than
the trustee itself) for such an obligor who is currently engaged in the
business of underwriting, except that--
`(A) one individual may be a director and/or an executive officer of the
trustee and a director and/or an executive officer of such obligor, but
may not be at the same time an executive officer of both the trustee and
of such obligor,
`(B) if and so long as the number of directors of the trustee in office
is more than nine, one additional individual may be a director and/or an
executive officer of the trustee and a director of such obligor, and
`(C) such trustee may be designated by any such obligor or by any underwriter
for any such obligor, to act in the capacity of transfer agent, registrar,
custodian, paying agent, fiscal agent, escrow agent, or depositary, or in
any other similar capacity, or, subject to the provisions of paragraph (1) of
this subsection, to act as trustee, whether under an indenture or otherwise;
`(5) 10 per centum or more of the voting securities of such trustee is
beneficially owned either by an obligor upon the indenture securities or by
any director, partner or executive officer thereof, or 20 per centum or more
of such voting securities is beneficially owned, collectively by any two
or more of such persons; or 10 per centum or more of the voting securities
of such trustee is beneficially owned either by an underwriter for any
such obligor or by any director, partner, or executive officer thereof,
or is beneficially owned, collectively, by any two or more such persons;
`(6) such trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default as hereinafter defined--
`(A) 5 per centum or more of the voting securities, or 10 per centum or more
of any other class of security, of an obligor upon the indenture securities,
not including indenture securities and securities issued under any other
indenture under which such trustee is also trustee, or
`(B) 10 per centum or more of any class of security of an underwriter for
any such obligor;
`(7) such trustee is the beneficial owner of, or holds as collateral security
for an obligation which is in default as hereinafter defined, 5 per centum
or more of the voting securities of any person who, to the knowledge
of the trustee, owns 10 per centum or more of the voting securities of,
or controls directly or indirectly or is under direct or indirect common
control with, an obligor upon the indenture securities;
`(8) such trustee is the beneficial owner of, or holds as collateral
security for an obligation which is in default as hereinafter defined,
10 per centum or more of any class of security of any person who, to
the knowledge of the trustee, owns 50 per centum or more of the voting
securities of an obligor upon the indenture securities;
`(9) such trustee owns, on the date of default upon the indenture securities
(as such term is defined in such indenture but exclusive of any period of
grace or requirement of notice) or any anniversary of such default while
such default upon the indenture securities remains outstanding, in the
capacity of executor, administrator, testamentary or inter vivos trustee,
guardian, committee or conservator, or in any other similar capacity,
an aggregate of 25 per centum or more of the voting securities, or of any
class of security, of any person, the beneficial ownership of a specified
percentage of which would have constituted a conflicting interest under
paragraph (6), (7), or (8) of this subsection. As to any such securities of
which the indenture trustee acquired ownership through becoming executor,
administrator or testamentary trustee of an estate which include them,
the provisions of the preceding sentence shall not apply for a period of
not more than 2 years from the date of such acquisition, to the extent that
such securities included in such estate do not exceed 25 per centum of such
voting securities or 25 per centum of any such class of security. Promptly
after the dates of any such default upon the indenture securities and
annually in each succeeding year that the indenture securities remain in
default the trustee shall make a check of its holding of such securities
in any of the above-mentioned capacities as of such dates. If the obligor
upon the indenture securities fails to make payment in full of principal
or interest under such indenture when and as the same becomes due and
payable, and such failure continues for 30 days thereafter, the trustee
shall make a prompt check of its holdings of such securities in any of the
above-mentioned capacities as of the date of the expiration of such 30-day
period, and after such date, notwithstanding the foregoing provisions of
this paragraph, all such securities so held by the trustee, with sole or
joint control over such securities vested in it, shall be considered as
though beneficially owned by such trustee, for the purposes of paragraphs
(6), (7), and (8) of this subsection; or
`(10) except under the circumstances described in paragraphs (1), (3),
(4), (5) or (6) of section 311(b) of this title, the trustee shall be or
shall become a creditor of the obligor.
`For purposes of paragraph (1) of this subsection, and of section 316(a)
of this title, the term `series of securities' or `series' means a series,
class or group of securities issuable under an indenture pursuant to whose
terms holders of one such series may vote to direct the indenture trustee,
or otherwise take action pursuant to a vote of such holders, separately
from holders of another such series: Provided, That `series of securities'
or `series' shall not include any series of securities issuable under an
indenture if all such series rank equally and are wholly unsecured.
`The specification of percentages in paragraphs (5) to (9), inclusive,
of this subsection shall not be construed as indicating that the ownership
of such percentages of the securities of a person is or is not necessary
or sufficient to constitute direct or indirect control for the purposes
of paragraph (3) or (7) of this subsection.
`For the purposes of paragraphs (6), (7), (8), and (9) of this subsection--
`(A) the terms `security' and `securities' shall include only such securities
as are generally known as corporate securities, but shall not include any
note or other evidence of indebtedness issued to evidence an obligation
to repay moneys lent to a person by one or more banks, trust companies,
or banking firms, or any certificate of interest or participation in any
such note or evidence of indebtedness;
`(B) an obligation shall be deemed to be in default when a default in
payment of principal shall have continued for thirty days or more, and
shall not have been cured; and
`(C) the indenture trustee shall not be deemed the owner or holder of (i)
any security which it holds as collateral security (as trustee or otherwise)
for any obligation which is not in default as above defined, or (ii) any
security which it holds as collateral security under the indenture to be
qualified, irrespective of any default thereunder, or (iii) any security
which it holds as agent for collection, or as custodian, escrow agent or
depositary, or in any similar representative capacity.
`For the purposes of this subsection, the term `underwriter' when used with
reference to an obligor upon the indenture securities means every person
who, within one year prior to the time as of which the determination is
made, was an underwriter of any security of such obligor outstanding at
the time of the determination.
`Except in the case of a default in the payment of the principal of or
interest on any indenture security, or in the payment of any sinking or
purchase fund installment, the indenture trustee shall not be required to
resign as provided by this subsection if such trustee shall have sustained
the burden of proving, on application to the Commission and after opportunity
for hearing thereon, that--
`(i) the default under the indenture may be cured or waived during a
reasonable period and under the procedures described in such application, and
`(ii) a stay of the trustee's duty to resign will not be inconsistent with
the interests of holders of the indenture securities. The filing of such
an application shall automatically stay the performance of the duty to
resign until the Commission orders otherwise.
`Any resignation of an indenture trustee shall become effective only upon
the appointment of a successor trustee and such successor's acceptance of
such an appointment.'.

6bc20f151f8042998846c6b14caaef52501897d55e8fc7be50ef2c3a6ab51860

Section 311 of the Trust Indenture Act of 1939 (15 U.S.C. 77kkk) is amended--
(1) by striking `the indenture to be qualified shall provide that' in the
first paragraph of subsection (a);
(2) by striking `The indenture to be qualified shall provide that, if'
at the beginning of the third paragraph of subsection (a) and inserting `If';
(3) by striking `four months' and `four months' ' each place they appear
in subsection (a) and inserting `three months' and `three months' ',
respectively;
(4) by inserting at the end of subsection (a) the following: `In any case
commenced under the Bankruptcy Act of July 1, 1898, or any amendment thereto
enacted prior to November 6, 1978, all references to periods of three
months shall be deemed to be references to periods of four months.'; and
(5) by striking `may' in the first line of subsection (b) and inserting
`shall automatically be deemed (unless it is expressly provided therein
that any such provision is excluded) to'.

0dcb94c57df714d851ca3172ddf57e483ac507ac60ab3a4e744c7a94078ccd8f

Section 312 of the Trust Indenture Act of 1939 (15 U.S.C. 77lll) is amended--
(1) by striking `The indenture to be qualified shall contain provisions
requiring each obligor' in subsection (a) and inserting `Each obligor';
(2) in subsection (a), by striking `indenture securities to' and inserting
`indenture securities shall'; and
(3) by striking `The indenture to be qualified shall also contain provisions
requiring that, within' in subsection (b) and inserting `Within'.

8ba86d49d4ae4d5d699a0c820345389d1e3c4cbb3238dfdff40b14b5d0915551

Section 313(a) of the Trust Indenture Act of 1939 (15 U.S.C. 77mmm(a))
is amended--
(1) by striking `The indenture to be qualified shall contain provisions
requiring the indenture trustee to' and inserting `The indenture trustee
shall';
(2) by inserting after `a brief report with respect to' the following:
`any of the following events which may have occurred within the previous
12 months (but if no such event has occurred within such period no report
need be transmitted):';
(3) by inserting after the paragraph designation at the beginning of
paragraphs (1), (4), and (5) the following: `any change to';
(4) in paragraph (1) by striking `, or in lieu thereof, if to the best
of its knowledge it has continued to be eligible and qualified under such
section, a written statement to such effect'; and
(5)(A) by redesignating paragraphs (2) through (7) as paragraphs (3)
through (8), respectively; and
(B) by inserting after paragraph (1) the following:
`(2) the creation of or any material change to a relationship specified
in paragraph (1) through (10) of section 310(b);'.

a1179445a466cd6db5e19148ef0482d0d82907a2fdf7b24d2155018ecd3f4c36

Section 313 of the Trust Indenture Act of 1939 (15 U.S.C. 77mmm) is amended--
(1) by striking `The indenture to be qualified shall also contain provisions
requiring the indenture trustee to' in subsection (b) and inserting `The
indenture trustee shall';
(2) by striking `The indenture to be qualified shall also provide that
reports' in subsection (c) and inserting `Reports'; and
(3) by striking `The indenture to be qualified shall also provide that a
copy' in subsection (d) and inserting `A copy'.

77964725b91ff9e444ffc4818d73a4a84fd3c50f052269b8125520e714dc2628

Section 314 of the Trust Indenture Act of 1939 (15 U.S.C. 77nnn) is amended--
(1) by striking `The indenture to be qualified shall contain provisions
requiring each' in subsection (a) and inserting `Each';
(2) by inserting `shall' after `thereby' in such subsection;
(3) by striking `to' after the paragraph designation at the beginning of
paragraphs (1), (2), and (3) of subsection (a);
(4) by striking `and' at the end of paragraph (2) of subsection (a);
(5) by striking the period at the end of paragraph (3) of subsection (a)
and inserting `; and';
(6) by adding at the end of subsection (a) the following new paragraph:
`(4) furnish to the indenture trustee, not less often than annually, a brief
certificate from the principal executive officer, principal financial
officer or principal accounting officer as to his or her knowledge
of such obligor's compliance with all conditions and covenants under
the indenture. For purposes of this paragraph, such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under the indenture.';
(7) by striking `such indenture shall contain provisions requiring' in
subsection (b);
(8) by striking `securities to furnish' in subsection (b) and inserting
`securities shall furnish';
(9) by striking `The indenture to be qualified shall contain provisions
requiring the obligor' in subsection (c) and inserting `The obligor';
(10) by striking `securities to furnish' in subsection (c) and inserting
`securities shall furnish';
(11) by striking `such indenture shall contain provisions' in subsection (d)
and inserting `the obligor upon the indenture securities shall furnish to
the indenture trustee a certificate or opinion of an engineer, appraiser,
or other expert as to the fair value';
(12) by striking `requiring the obligor upon the indenture securities to
furnish to the indenture trustee a certificate or opinion of an engineer,
appraiser or other expert as to the fair value' in paragraphs (1), (2)
and (3) of subsection (d);
(13) by striking `If the indenture to be qualified so provides,' at the
beginning of the penultimate sentence of subsection (d) and inserting
`The indenture to be qualified shall automatically be deemed (unless it is
expressly provided therein that such provision is excluded) to provide that';
(14) by striking `specified in the indenture' in the penultimate sentence
of subsection (d) and inserting `duly authorized to make such certificate
or opinion by the obligor from time to time'; and
(15) by inserting in subsection (e) `(other than certificates provided
pursuant to subsection (a)(4) of this section)' after `indenture'.

0b8f5050fe1b1cbb09be1c0a81137faa1e6fed326101dd08cf6a6f6b8d446d0b

Section 315 of the Trust Indenture Act of 1939 (15 U.S.C. 77ooo) is amended--
(1) by striking `The indenture to be qualified may' in subsections (a) and
(e) and inserting `The indenture to be qualified shall automatically be
deemed (unless it is expressly provided therein that any such provision
is excluded) to';
(2) by striking `such indenture shall contain provisions requiring the
indenture trustee to examine' in subsection (a) and inserting `the indenture
trustee shall examine';
(3) by striking `The indenture to be qualified shall contain provisions
requiring the indenture trustee to' in subsections (b) and (c) and inserting
`The indenture trustee shall';
(4) by striking `That such indenture may' in the proviso in subsection (b)
and inserting `That such indenture shall automatically be deemed (unless
it is expressly provided therein that such provision is excluded) to'; and
(5) by striking `such indenture may' in paragraphs (1), (2), and (3)
of subsection (d) and inserting `such indenture shall automatically be
deemed (unless it is expressly provided therein that any such provision
is excluded) to'.

34685f9ec218cd30485dd3a2dcd8c60e84837f9ea73f44fb9c621e7b9cb0f9b8

OF RIGHT TO PAYMENT; RECORD DATES.
Section 316 of the Trust Indenture Act of 1939 (15 U.S.C. 77ppp) is amended--
(1) by striking `may contain provisions' after `qualified' in subsection
(a) and inserting `may contain provisions' before `authorizing the holders'
in paragraph (2) of subsection (a);
(2) by inserting `shall automatically be deemed (unless it is expressly
provided therein that any such provision is excluded) to contain provisions'
before `authorizing the holders' in paragraph (1) of subsection (a);
(3) by inserting `or if expressly specified in such indenture, of any
series of securities' after `principal amount of the indenture securities'
in paragraphs (1) and (2) of subsection (a);
(4) by striking `The indenture to be qualified shall provide that,
notwithstanding' in subsection (b) and inserting `Notwithstanding';
(5) by striking `thereof' in subsection (b) and inserting `of the indenture
to be qualified'; and
(6) by adding at the end thereof the following new subsection:
`(c) The obligor upon any indenture qualified under this title may set a
record date for purposes of determining the identity of indenture security
holders entitled to vote or consent to any action by vote or consent
authorized or permitted by subsection (a) of this section. Unless the
indenture provides otherwise, such record date shall be the later of 30
days prior to the first solicitation of such consent or the date of the
most recent list of holders furnished to the trustee pursuant to section
312 of this title prior to such solicitation.'.

766676faa3afaed027ae39238357f6fcc5a4815e607a9cb44bd6acad3162106e

Section 317 of the Trust Indenture Act of 1939 (15 U.S.C. 77qqq) is amended--
(1) by striking `to be qualified shall contain provisions' in subsection
(a) and inserting `trustee shall be authorized';
(2) by striking `authorizing the indenture trustee' in paragraph (1);
(3) by striking `authorizing such trustee' from paragraph (2); and
(4) by striking `The indenture to be qualified shall provide that each'
in subsection (b) and inserting `Each'.

72c9bc9d8b4e0afb823270a339e2cea58a9fe543c69808b1bbd0f6ebc18e15dd

Section 318 of the Trust Indenture Act of 1939 (15 U.S.C. 77rrr) is amended--
(1) by striking subsection (a) and inserting the following:
`SEC. 318. (a) If any provision of the indenture to be qualified limits,
qualifies, or conflicts with the duties imposed by operation of subsection
(c) of this section, the imposed duties shall control.';
(2) by adding at the end thereof the following new subsection:
`(c) The provisions of sections 310 to and including 317 that impose
duties on any person (including provisions automatically deemed included
in an indenture unless the indenture provides that such provisions are
excluded) are a part of and govern every qualified indenture, whether
or not physically contained therein, shall be deemed retroactively to
govern each indenture heretofore qualified, and prospectively to govern
each indenture hereafter qualified under this title and shall be deemed
retroactively to amend and supersede inconsistent provisions in each such
indenture heretofore qualified. The foregoing provisions of this subsection
shall not be deemed to effect the inclusion (by retroactive amendment or
otherwise) in the text of any indenture heretofore qualified of any of
the optional provisions contemplated by section 310(b)(1), 311(b), 314(d),
315(a), 315(b), 315(d), 315(e), or 316(a)(1).'.

24533a9e8fc18a888efbb4c387f78924bf8e77a7c52291c843e94ac7cef8f048

Section 322(b) of the Trust Indenture Act of 1939 (15 U.S.C. 77vvv(b))
is amended by inserting `or duty' after `any liability'.
Attest:
Clerk.
HR 1396 EAH----2
HR 1396 EAH----3
HR 1396 EAH----4

9650208b7d0803e5fa451b7d7172b1898021c3b137ab1e059ef9589d9d1712db

Shareholder Communications Improvement Act of 1989 — HR. 1396

Other Sections

TITLE I

TITLE II

TITLE III

TITLE IV

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