Securities Lawyer's Deskbook                          published by The University of Cincinnati College of Law

Rule 22c-1 -- Pricing of Redeemable Securities for Distribution, Redemption and Repurchase

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1. No registered investment company issuing any redeemable security, no person designated in such issuer's prospectus as authorized to consummate transactions in any such security, and no principal underwriter of, or dealer in, any such security shall sell, redeem, or repurchase any such security except at a price based on the current net asset value of such security which is next computed after receipt of a tender of such security for redemption or of an order to purchase or sell such security: Provided, That:
   
   
   1. This paragraph shall not prevent a sponsor of a unit investment trust (hereinafter referred to as the "Trust") engaged exclusively in the business of investing in eligible trust securities (as defined in Rule 14a-3(b)) from selling or repurchasing Trust units in a secondary market at a price based on the offering side evaluation of the eligible trust securities in the Trust's portfolio, determined at any time on the last business day of each week, effective for all sales made during the following week, if on the days that such sales or repurchases are made the sponsor receives a letter from a qualified evaluator stating, in its opinion, that:
      
      
      1. In the case of repurchases, the current bid price is not higher than the offering side evaluation, computed on the last business day of the previous week; and
         
         
      2. In the case of resales, the offering side evaluation, computed as of the last business day of the previous week, is not more than one-half of one percent ($5.00 on a unit representing $1,000 principal amount of eligible trust securities) greater than the current offering price.
         
         
   2. This paragraph shall not prevent any registered investment company from adjusting the price of its redeemable securities sold pursuant to a merger, consolidation or purchase of substantially all of the assets of a company which meets the conditions specified in Rule 17a-8.
      
      
2. For the purposes of this section,
   
   
   1. The current net asset value of any such security shall be computed no less frequently than once daily, Monday through Friday, at the specific time or times during the day that the board of directors of the investment company sets, in accordance with paragraph (e) of this section [Editor's note: It appears this should be "paragraph (d) of this section,".] except on:
      
      
      1. Days on which changes in the value of the investment company's portfolio securities will not materially affect the current net asset value of the investment company's redeemable securities;
         
         
      2. Days during which no security is tendered for redemption and no order to purchase or sell such security is received by the investment company; or
         
         
      3. Customary national business holidays described or listed in the prospectus and local and regional business holidays listed in the prospectus; and
         
         
   2. A "qualified evaluator" shall mean any evaluator which represents it is in a position to determine, on the basis of an informal evaluation of the eligible trust securities held in the Trust's portfolio, whether-
      
      
      1. The current bid price is higher than the offering side evaluation, computed on the last business day of the previous week, and
         
         
      2. The offering side evaluation, computed as of the last business day of the previous week, is more than one-half of one percent ($5.00 on a unit representing $1,000 principal amount of eligible trust securities) greater than the current offering price.
         
         
3. Notwithstanding the provisions above, any registered separate account offering variable annuity contracts, any person designated in such account's prospectus as authorized to consummate transactions in such contracts, and any principal underwriter of or dealer in such contracts shall be permitted to apply the initial purchase payment for any such contract at a price based on the current net asset value of such contract which is next computed:
   
   
   1. Not later than two business days after receipt of the order to purchase by the insurance company sponsoring the separate account ("insurer"), if the contract application and other information necessary for processing the order to purchase (collectively, "application") are complete upon receipt; or
      
      
   2. Not later than two business days after an application which is incomplete upon receipt by the insurer is made complete, Provided, That, if an incomplete application is not made complete within five business days after receipt,
      
      
      1. The prospective purchaser shall be informed of the reasons for the delay, and
         
         
      2. The initial purchase payment shall be returned immediately and in full, unless the prospective purchaser specifically consents to the insurer retaining the purchase payment until the application is made complete.
         
         
   3. As used in this section:
      
      
      1. Prospective Purchaser shall mean either an individual contractowner or an individual participant in a group contract.
         
         
      2. Initial Purchase Payment shall refer to the first purchase payment submitted to the insurer by, or on behalf of, a prospective purchaser.
         
         
4. The board of directors shall initially set the time or times during the day that the current net asset value shall be computed, and shall make and approve such changes as the board deems necessary.

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