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454

PUBLIC LAW 90-439-JULY 29, 1968

[82 STAT.

Public Law 90-439
July 29, 1968
1^^- ^^°J

AN ACT
Providing for full disclosure of corporate equity ownership of securities under
the Securities Exchange Act of 1934.

Be it enacted hy the Senate and House of Representatives of the
United States of America in Congress assemhled, That section 12 (i)
i934r°amendment. of the Sscurities Exchaiige Act of 1934 is amended by striking out
78 Stat. 568.
"sections 12, 13, 14(a), 14(c), and 16" and inserting in lieu thereof
15USC78Z.
"sections 12,13,14(a), 14(c), 14(d), 14(f), and 16".
15 use 78^m
^^^^' ?' ^^^^i^n 13 of the Securities Exchange Act of 1934 is amended
"*•
by adding at the end thereof the following new subsections:
" ( d ) (1) Any person who, after acquiring directly or indirectly the
beneficial ownership of any equity security of a class which is registered pursuant to section 12 of this title or any equity security issued
by a closed-end investment company registered under the Investment
15 us^c 8'oa 51 Compauy Act of 1940, is directly or indirectly the beneficial owner of
more than 10 per centum of such class shall, within ten days after such
acquisition, send to the issuer of the security at its principal executive office, by registered or certified mail, send to each exchange where
the security is traded, and file with the Commission, a statement containing such of the following information, and such additional information, as the Commission may by rules and regulations prescribe
as necessary or appropriate in the public interest or for the protection of investors—
" ( A ) the background and identity of all persons by whom or
on whose behalf the purchases have been or are to be effected;
" ( B ) the source and amount of the funds or other consideration
used or to be used in making the purchases, and if any part of the
purchase price or proposed purchase price is represented or is
to be represented by funds or other consideration borrowed or
otherwise obtained for the purpose of acquiring, holding, or
trading such security, * description of the transaction and the
names of the parties thereto, except that where a source of funds
is a loan made in the ordinary course of business by a bank, as
48 Stat. 883.
defined in section 3 ( a ) ( 6 ) of this title, if the person filing such
15 u s e 78c.
statement so requests, the name of the bank shall not be made
available to the public;
" ( C ) if the purpose of the purchases or prospective purchases
is to acquire control of the business of the issuer of the securities,
any plans or proposals which such persons may have to liquidate
such issuer, to sell its assets to or mer^e it with any other persons,
or to make any other major change in its business or corporate
structure;
" ( D ) the number of shares of such security which are beneficially owned, and the number of shares concerning which there
is a ri^ht to acquire, directly or indirectly, bj^ (i) such person,
and (ii) by each associate oi such person, giving the name and
address of each such associate; and
" ( E ) information as to any contracts, arrangements, or understandings with any person with respect to any securities of the
issuer, including but not limited to transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or guaranties of
profits, division of losses or profits, or the giving or withholding
of proxies, naming the persons with whom such contracts^ arrangements, or understandings have been entered into, and giving
the details thereof.

Securities Exchange Act of

82 STAT. ]

PUBLIC LAW 90-439-JULY 29, 1968

"(2) If any material change occurs in the facts set forth in the
statements to the issuer and the exchange, and in the statement filed
with the Commission, an amendment shall be transmitted to the issuer
and the exchange and shall be filed with the Commission, in accordance
with such rules and regulations as the Commission may prescribe as
necessary or appropriate in the public interest or for the protection of
investors.
"(3) When two or more persons act as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding, or disposing of securities of an issuer, such syndicate or group
shall be deemed a 'person' for the purposes of this subsection.
"(4) In determining, for purposes of this subsection, any percentage
of a class of any security, such class shall be deemed to consist of the
amount of the outstanding securities of such class, exclusive of any
securities of such class held by or for the account of the issuer or a
subsidiary of the issuer.
"(5) The provisions of this subsection shall not apply to—
" ( A ) any acquisition or offer to acquire securities made or
proposed to be made by means of a registration statement under
the Securities Act of 1933;
" ( B ) any acquisition of the beneficial ownership of a security
which, together with all other acquisitions by the same person
of securities of the same class during the preceding twelve
months, does not exceed 2 per centum of that class;
" ( C ) any acquisition of an equity security by the issuer of such
security;
" ( D ) any acquisition or proposed acquisition of a security
which the Commission, by rules or regulations or by order, shall
exempt from the provisions of this subsection as not entered
into for the purpose of, and not having the effect of, changing or
influencing the control of the issuer or otherwise as not comprehended within the purposes of this subsection.
" ( e ) ( 1 ) I t shall be unlawful for an issuer which has a class of
equity securities registered pursuant to section 12 of this title, or which
is a closed-end investment company registered under the Investment
Company Act of 1940, to purchase any equity security issued by it
if such purchase is in contravention of such rules and regulations as
the Commission, in the public interest or for the protection of investors, may adopt (A) to define acts and practices which are fraudulent, deceptive, or manipulative, and (B) to prescribe means reasonably designed to prevent such acts and practices. Such rules and
regulations may require such issuer to provide holders of equity
securities of such class with such information relating to the reasons
for such purchase, the source of funds, the number of shares to be purchased, the price to be paid for such securities, the method of purchase, and such additional information, as the Commission deems
necessary or appropriate in the public interest or for the protection
of investors, or which the Commission deems to be material to a
determination whether such security should be sold.
"(2) For the purpose of this subsection, a purchase by or for the
issuer or any person controlling, controlled by, or under common
control with the issuer, or a purchase subject to control of the issuer or
any such person, shall be deemed to be a purchase by the issuer."
SEC. 3. Section 14 of the Securities Exchange Act of 1934 is amended
by adding at the end thereof the following new subsections:

96-600 O - 69 - 32

455

"Person."

48 stat. 74.
^^ "^^ ^^^'

is use 78/.
^^ use soa-si.

^^ ^^'^ ^^"•

456

PUBLIC LAW 90-439-JULY 29, 1968

[82 STAT.

" ( d ) (1) It shall be unlawful for any person, directly or-indirectly,
by use of the mails or by any means or instrumentality of interstate
commerce or of any facility of a national securities exchange or otherwise, to make a tender offer for, or a request or invitation for tenders
of, any class of any equity security which is registered pursuant to
15 use 78/.
section 12 of this title, or any equity security issued by a closed-end
investment company registered under the Investment Company Act
15 use 80a-5i. of 1940, if, after consummation thereof, such person would, directly
or indirectly, be the beneficial owner of more than 10 per centum of
such class, unless at the time copies of the offer or request or invitation
are first published or sent or given to security holders such person
has filed w'ith the Commission a statement containing such of the
Ante. p. 454.
information specified in section 13(d) of this title, and such additional
information as the Commission may by rules and regulations prescribe
as necessary or appropriate in the public interest or for the protection
of investors. All requests or invitations for tenders or advertisements
making a tender offer or requesting or inviting tenders of such a security shall be filed as a part of such statement and shall contain such of
the information contained in such statement as the Commission may
by rules and regulations prescribe. Copies of any additional material
soliciting or requesting such tender offers subsequent to the initial
solicitation or request shall contain such information as the Commission may by rules and regulations prescribe as necessary or appropriate in the public interest or for the protection of investors, and
shall be filed with the Commission not later than the time copies of
such material are first published or sent or given to security holders.
Copies of all statements, in the form in which such material is furnished to security holders and the Commission, shall be sent to the
issuer not later than the date such material is first published or sent or
given to any security holders.
"Person."
«(£) When two or more persons act as a partnership, limited
partnership, syndicate, or other ^roup for the purpose of acquiring,
holding, or disposing of securities of an issuer, such syndicate or
group shall be deemed a 'person' for purposes of this subsection.
"(3) I n determining, for purposes of this subsection, any percentage of a class of any security, such class shall be deemed to consist of
the amount of the outstanding securities of such class, exclusive of
any securities of such class held by or for the account of the issuer or
a subsidiary of the issuer.
"(4) Any solicitation or recommendation to the holders of such
a security to accept or reject a tender offer or request or invitation for
tenders shall be made in accordance with such rules and regulations
as the Commission may prescribe as necessary or appropriate in the
public interest or for the protection of investors.
"(5) Securities deposited pursuant to a tender offer or request or
invitation for tenders may be withdrawn by or on behalf of the de'positor at any time until the expiration of seven days after the time
definitive copies of the offer or request or invitation are first published
or sent or given to security holders, and at any time after sixty days
from the date of the original tender offer or request or invitation, except as the Commission may otherwise prescribe by rules, regulations,
or order as necessary or appropriate in the public interest or for the
protection of investors.

82 STAT. ]

PUBLIC LAW 90-439-JULY 29, 1968

457

"(6) Where any person makes a tender offer, or request or invitation for tenders, for less than all the outstanding equity securities of
a class, and where a greater number of securities is deposited pursuant
thereto within ten days after copies of the offer or request or invitation are first published or sent or given to security holders than such
person is bound or willing to take up and pay for, the securities taken
up shall be taken up as nearly as may be pro rata, disregarding fractions, according to the number of securities deposited by each depositor. The provisions of this subsection shall also apply to securities
deposited within ten days after notice of an increase in the consideration offered to security holders, as described in paragraph (7), is
first published or sent or given to security holders.
"(7) Where any person varies the terms of a tender offer or request
or invitation for tenders before the expiration thereof by increasing
the consideration offered to holders of such securities, such person shall
pay the increased consideration to eac!h security holder whose securities
are taken up and paid for pursuant to the tender offer or request or
invitation for tenders whether or not such securities have been taken
up by such person before the variation of the tender offer or request
or invitation.
"(8) The provisions of this subsection shall not apply to any offer
for, or request or invitation for tenders of, any security—
" (A) proposed to be made by means of a registration statement
under the Securities Act of 1933;
48 stat. 74.
" ( B ) if the acquisition of such security, together with all other ^^ "^^ '''^^^
acquisitions by the same person of securities of the same class
during the preceding twelve months, would not exceed 2 per
centum of that class;
" ( C ) by the issuer of such security; or
" ( D ) which the Commission, by rules or regulations or by order,
shall exempt from the provisions of this subsection as not entered
into for the purpose of, and not having the effect of, changing or
influencing the control of the issuer or otherwise as not comprehended within the purposes of this subsection.
"(e) I t shall be unlawful for any person to make any untrue statement of a material fact or omit to state any material fact necessary in
order to make the statements made, in the light of the circumstances
under which they are made, not misleading, or to engage in any fraudulent, deceptive, or manipulative acts or practices, in connection with
any tender offer or request or invitation for tenders, or any solicitation
of security holders in opposition to or in favor of any such offer, request, or invitation.
" ( f ) If, pursuant to any arrangement or understanding with the
person or persons acquiring securities in a transaction subject to subsection (d) of this section or subsection (d) of section 13 of this title, 45^"'*' ^^ '*^^'
any persons are to be elected or designated as directors of the issuer,
otherwise than at a meeting of security holders, and the persons so
elected or d e s i ^ a t e d will constitute a majority of the directors of the
issuer, then, prior to the time any such person takes office as a director,
and in accordance with rules and regulations prescribed by the Commission, the issuer shall file with the Commission, and transmit to all
holders of record of securities of the issuer who would be entitled to
vote at a meeting for election of directors, information substantially
equivalent to the information which would be required by subsection
(a) or (c^ of this section to be transmitted if such person or persons
were nominees for election as directors at a meeting of such security
holders."
Approved July 29, 1968.