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


The
Investment Company Act of 1940





Section 19 -- Payments or Distributions


  1. Dividends; restriction; exception. It shall be unlawful for any registered investment company to pay any dividend, or to make any distribution in the nature of a dividend payment, wholly or partly from any source other than--

    1. such company's accumulated undistributed net income, determined in accordance with good accounting practice and not including profits or losses realized upon the sale of securities or other properties; or

    2. such company's net income so determined for the current or preceding fiscal year;

    unless such payment is accompanied by a written statement which adequately discloses the source or sources of such payment. The Commission may prescribe the form of such statement by rules and regulations in the public interest and for the protection of investors.

  2. Long-term capital gains; limitation. It shall be unlawful in contravention of such rules, regulations, or orders as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors for any registered investment company to distribute long-term capital gains, as defined in the Internal Revenue Code of 1954 [26 USCS § § 1 et seq.], more often than once every twelve months.


Legislative History


Aug. 22, 1940, ch 686, Title I, § 19, 54 Stat. 821; Dec. 14, 1970, P.L. 91-547, § 11, 84 Stat. 1422.


Notice to Users: The Deskbook is made available with the understanding that the University of Cincinnati College of Law is not engaged in rendering legal, accounting or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. See Terms and Conditions of Use.  UC Brand Ingot

© Copyright 1998-2009, University of Cincinnati, All Rights Reserved
 Contact: ronald.jones@uc.edu