815 ILCS 5/7

Current through Public Act 103-1052

Section 815 ILCS 5/7 - Registration of Investment Fund Shares

All investment fund shares except those set forth under Section 2a of this Act, or those exempt under Section 3 of this Act, or those offered or sold in transactions exempt under Section 4 of this Act, or face amount certificate contracts required to be registered under Section 6 of this Act, shall be registered either by coordination or by qualification, as hereinafter in this Section provided, prior to their offer or sale in this State. Additional classes of shares that are of the same rank, general description, and characteristics as those currently registered may be added to a current registration under this Section upon the filing of an amendment and the payment of the additional fees as prescribed by the Secretary of State by rule or regulation. Any change in organization or plans of operation shall be disclosed to the Secretary of State by filing an amendment to a current registration and the payment of the additional fees as prescribed by the Secretary of State by rule or regulation.

A.Registration of Investment Fund Shares by Coordination.

(1) Investment fund shares which are being or have been registered under the Federal 1933 Act and the Federal 1940 Investment Company Act may be registered by coordination in the manner provided in this subsection A, if the effective date of the registration under the Federal 1933 Act is not more than 30 days before the filing with the Secretary of State.

(2) Investment fund shares may be registered by coordination by the filing with the Secretary of State by the issuer, by a controlling person or by a registered dealer of:

(a) One copy of the registration statement (without exhibits) descriptive of the investment fund shares on file with the Securities and Exchange Commission in its most recent form as of the date of the initial filing under this subsection A;

(b) An application, in such form and executed, verified, or authenticated by such person as the Secretary of State shall by rule or regulation prescribe, setting forth the title of the investment fund shares to be offered in this State under this subsection A and, if the applicant is electing the date of effectiveness of a post-effective amendment as its effective date as provided in Section 2.13 of this Act, specifying such date as the effective date for purposes of registration under this subsection A; and

(c) An undertaking to forward to the Secretary of State, in writing (which may be by electronic or facsimile transmission), any and all subsequent amendments of and supplements to the registration statement not later than the 7th day after the forwarding thereof to the Securities and Exchange Commission, or such longer period as the Secretary of State may permit by rule, regulation or order; and

(d) if the applicant is not a registered dealer, the name of at least one registered dealer for the investment fund shares being registered under this subsection A or a written statement setting forth the method of offer and sale in this State of the investment fund shares being registered in compliance with Section 8 of this Act.

(3) Registration of investment fund shares by coordination shall take effect automatically as of the effective date of the registration statement (or post-effective amendment) filed under the Federal 1933 Act, provided that on the effective date, the information required by sub-paragraphs (a), (b), and (d) and the undertaking required by sub-paragraph (c) of paragraph (2) of this subsection A have been on file with the Secretary of State for at least 10 business days, or such shorter period as the Secretary of State may permit by rule, regulation or order. If, however, the time period referred to in the preceding sentence shall not have expired on the effective date of the registration statement (or post-effective amendment) filed under the Federal 1933 Act, registration of such investment fund shares by coordination shall, upon the expiration of such time period, take effect automatically as of the effective date of the registration statement (or post-effective amendment) filed under the Federal 1933 Act.

(4) If the information required by sub-paragraphs (a), (b), and (d) and the undertaking required by sub-paragraph (c) of paragraph (2) of this subsection A are not filed with the Secretary of State prior to the effective date of the registration statement (or post-effective amendment) filed under the Federal 1933 Act, any registration of investment fund shares by coordination under this subsection A shall take effect automatically as soon as all of the following conditions have been satisfied:

(a) the information required by sub-paragraphs (a), (b), and (d) and the undertaking required by sub-paragraph (c) of paragraph (2) of this subsection A have been on file with the Secretary of State for 10 business days, or for such shorter period as the Secretary of State may permit by rule, regulation or order;

(b) the registration statement or post-effective amendment filed under the Federal 1933 Act is then in effect; and

(c) the prospectus then on file with the Secretary of State satisfies the requirements of Section 10(a)(3) of the Federal 1933 Act.

(5) The applicant shall furnish to the Secretary of State written notice (which may be by electronic or facsimile transmission) confirming the date of effectiveness and the title of the investment fund shares registered under the Federal 1933 Act, no later than the close of business on the second business day following the date on which registration statement becomes effective under the Federal 1933 Act.

(6) No action by the Secretary of State shall be necessary to evidence the effectiveness of the registration by coordination under this subsection A. The Secretary of State may, at his or her discretion, provide a statement attesting to such registration, which statement shall be in such form as the Secretary of State may deem appropriate.

(7) Notwithstanding the foregoing, the issuer, controlling person or registered dealer who filed the application set forth in subparagraph (b) of paragraph (2) of this subsection A may request, in writing (which may be by electronic or facsimile transmission) prior to or upon notice of effectiveness under the Federal 1933 Act, a waiver of automatic effectiveness of the registration of investment fund shares and the Secretary of State may, at his or her discretion, grant such waiver of automatic effectiveness. Upon the grant by the Secretary of State of the request of waiver of automatic effectiveness, such registration of investment fund shares shall become effective automatically on the date that the issuer, controlling person or registered dealer who filed the application set forth in subparagraph (b) of paragraph (2) of this subsection A notifies the Secretary of State in writing.

B.Registration of Investment Fund Shares by Qualification. Investment fund shares may be registered by qualification in the manner provided in this subsection B.

(1) An application for registration by qualification shall be made by the issuer, by a controlling person or by a registered dealer together with the examination fee established pursuant to Section 11a of the Act, which shall not be returnable in any event. Such application shall be signed, verified, or authenticated by the applicant and filed with the Secretary of State. The application shall set forth:

(a) The name and address of the issuer;

(b) The title of the investment fund shares; and

(c) The names and addresses of the persons creating or sponsoring the investment fund shares.

(2) If the issuer, dealer, or controlling person has not filed a registration statement or post-effective amendment which is then in effect under the Federal 1933 Act, there shall be filed with the application:

(a) A specimen copy of the investment fund shares, if any, or a copy of the form of the instrument to evidence the investment fund shares, if any;

(b) (Blank);

(c) (Blank);

(d) An opinion of counsel as to the legality of the investment fund shares;

(e) An undertaking to file promptly (not later than 2 business days after the occurrence of any event which requires a material change in the prospectus) with the Secretary of State any and all amendments of and supplements to the prospectus as theretofore filed under this subsection B, together with any additional information, document or undertaking which the Secretary of State, at his or her discretion, deems material, accompanied by the amendment filing fee established pursuant to Section 11a of this Act or, in lieu thereof, a notification in writing that all offers and sales of the investment fund shares have been suspended pending the filing with the Secretary of State of the amendment of or supplement to the prospectus;

(f) A written statement setting forth the name of at least one registered dealer for the investment fund shares being registered under this subsection B or an application for registration of a salesperson or a written statement setting forth the method of offer and sale in this State of the investment fund shares being registered in compliance with Section 8 of this Act.

(3) In addition, there shall be filed with the application such additional information and material in such form as the Secretary of State may by rule, regulation or order prescribe and a prospectus which contains, but is not limited to the following:

(a) The date and form of organization of the fund or trust;

(b) The authorized and issued capitalization of the fund or trust and a description of the investment fund shares being registered and of all authorized securities;

(c) A schedule of the types of deductions which may be made from the trust or corporate or fund assets and the income therefrom or the avails thereof as charges prior to distribution to holders of the investment fund shares;

(d) The names and addresses of all of the fund's or trust's officers and directors, or persons performing similar functions, their business experience during the preceding 5 years and the remuneration paid to each by the fund or trust or any affiliate thereof during the fiscal year last past and proposed to be paid for the then current fiscal year;

(e) A brief description of any pending material legal proceeding, and of any material legal proceeding known to be contemplated by governmental authorities involving the fund or trust;

(f) A statement of the plan of operation, management policies and provisions and restrictions in respect of investment and reinvestment of principal funds and undistributed income therefrom;

(g) A statement of the plan and intention in respect of distributions of ordinary income and capital gains, which statement shall disclose the taking of adequate measures for specific separation and identification of distributions arising from ordinary income and those arising from profits realized from the disposition of securities;

(h) Specimen computations illustrating typical applications of the formulae to be used in determining asset value, offering price and liquidating price of the investment fund shares; and

(i) The following financial statements in respect of the issuer if the investment fund shares represent shares of an issuing corporation, or in respect of the trust fund, if the investment fund shares represent beneficial interests in a trust fund:

(i) a balance sheet as of a date within 135 days prior to the date of submitting the application. If such balance sheet is not certified by an independent certified public accountant, the prospectus shall also contain a balance sheet certified by an independent certified public accountant as of the close of the fund's last fiscal year, unless such fiscal year ended within 135 days prior to the time of filing the application, in which case the certified balance sheet may be as of the end of the preceding fiscal year;

(ii) a detailed statement of income and expenses and of profits realized and losses sustained from the sale of securities for each of the three fiscal years (or for the period of existence of the issuer if less than 3 years) next preceding the date of the certified balance sheet and for the period, if any, between the date of the certified balance sheet and the date of the most recent balance sheet. Such statements shall be certified by an independent certified public accountant for the periods ending with the date of the certified balance sheet;

(iii) an analysis of each surplus account (or, in lieu thereof, a statement of changes in net assets) for each period for which a statement of income and expenses is filed, certified by an independent certified public accountant for the periods for which certified statements of income and expenses are submitted; and

(iv) such other financial statements and supporting schedules as the Secretary of State may by rule or regulation prescribe.

(4) The Secretary of State may make or cause to be made an examination of matters pertaining to the investment fund shares as to which registration is sought under this subsection B and the persons creating, sponsoring or having general charge of the distribution of the investment fund shares, or any of them, and may require the applicant to advance sufficient funds to defray all actual expenses of such examination. An itemized statement of such expenses shall be furnished to the applicant.

(5) No investment fund shares shall be registered under this subsection B unless the underlying securities or cash are and are to be deposited and held under an appropriate agreement for the benefit of the holders of the investment fund shares with and by a trustee or custodian which is a clearing corporation, bank, trust company or member of a national securities exchange registered under the Federal 1934 Act, provided that any such bank or trust company shall have an aggregate capital, surplus and undivided profits of at least $2,000,000 and any such member of a national securities exchange shall have capital stock, additional paid-in capital and retained earnings of at least $2,000,000 if a corporation or partnership capital of at least $2,000,000 if a partnership and further provided that any such member of a national securities exchange shall comply with the provisions of the Federal 1940 Investment Company Act and the rules and regulations of the Securities and Exchange Commission promulgated under that Act relating to the custody of the underlying securities of investment funds.

(6) The Secretary of State shall within a reasonable time examine the application and documents filed with him or her and may make such additional examination pursuant to paragraph (4) of this subsection B as he or she may deem appropriate, and unless the Secretary of State makes a determination that the application and documents so filed do not conform to the requirements of this subsection B, or there is a proceeding pending under Section 11 of this Act, the Secretary of State shall register the investment fund shares for offer and sale in this State under this subsection B.

C.Pending Application and Filing Fee. No application for registration of investment fund shares shall be deemed to be filed or pending and no investment fund shares covered by such application shall be deemed to be registered under subsection A of this Section 7 unless a filing fee in the amount established pursuant to Section 11a of this Act has been paid, which fee shall not be returnable in any event. No application shall be deemed to be filed or pending and no investment fund shares covered by such application shall be deemed to be registered under subsection B of this Section 7 unless the examination fee and filing fee established pursuant to Section 11a of this Act have been paid, which fees shall not be returnable in any event.

D.Amendatory statements and required fees. The Secretary of State may by rule or regulation require the filing of an amendatory statement and prescribe its form and content. The fee for filing the statement shall be established pursuant to Section 11a of this Act. The fee shall not be returnable in any event.

E.Discontinuance of Registration. An amendatory statement or statements may be submitted by the applicant at any time, and from time to time, when it is desired to discontinue registration in respect of one or more classes, series, or portfolios and if the Secretary of State shall find that such discontinuance is not against the public interest, such amendatory statement or statements shall be filed by the Secretary of State without charge, but such discontinuance of registration shall not entitle the applicant to any refund of any fees previously paid in respect of such discontinued class or classes, series, or portfolios.

F.Effective Period and Sales Reports.

(1) A registration of investment fund shares under this Section 7, unless sooner terminated by the voluntary action of the applicant or by action of the Secretary of State under Section 11 hereof, shall continue in force and effect for a period of one year from the date of registration or renewal of registration (or such other period of time as the Secretary of State may prescribe by rule or regulation or order), without limitation as to number of shares or aggregate amount; provided, however, that in the case of investment fund shares registered under subsection B of this Section 7, the issuer which has no registration statement then in effect under the Federal 1933 Act and the Federal 1940 Investment Company Act shall promptly file with the Secretary of State throughout such registration period, one copy of each monthly, quarterly, semi-annual, annual or other periodic report and financial statement sent to holders of its outstanding investment fund shares, and one copy of each statement and report relating to such investment fund shares filed with any regulatory authority or agency of the Federal Government.

(2) The Secretary of State may, at his or her discretion, require each issuer, controlling person or registered dealer on whose behalf a registration of investment fund shares is effected under this Section 7 to file a report, in such form and of such content and for such time period as the Secretary of State may by rule or regulation prescribe, stating the aggregate dollar amount of investment fund shares sold to Illinois residents. The civil remedies provided for in subsection A of Section 13 of this Act and the civil remedies of rescission and appointment of a receiver, conservator, ancillary receiver or ancillary conservator provided for in subsection I of Section 11 and in subsections F and G of Section 13 of this Act and the civil remedies of restitution, damages and disgorgement of profits provided for in subsection I of Section 11 of this Act shall not be available against any person by reason of the failure to file any such report or on account of the contents of any such report.

G.Renewal of Registration. A registration of investment fund shares in effect under subsection A or B of this Section 7 may be renewed by the issuer by filing an application for renewal of registration with the Secretary of State no later than 10 business days prior to the date upon which such registration would otherwise expire or such lesser period as the Secretary of State may prescribe by rule or regulation, in such form and executed, verified, or authenticated by such person as the Secretary of State shall prescribe by rule or regulation. Such application shall be accompanied by a prospectus in its most current form together with a renewal fee established pursuant to Section 11a of this Act, which shall not be returnable in any event. A renewal of registration of securities shall take effect as of the date and time that the prior registration under subsection A of this Section 7 or prior renewal under this paragraph (1) would otherwise have expired (or such alternative date as the Secretary of State may prescribe by rule or regulation) and thereafter shall be deemed to be a new registration of the investment fund shares covered thereby. The Secretary of State may by rule or regulation prescribe an additional fee for the failure to file timely an application for renewal and limit the number of times a registration may be renewed.

H.The applicant or registrant shall notify the Secretary of State, by written notice (which may be by electronic or facsimile transmission), within 2 business days after its receipt of any stop order, denial, order to show cause, suspension or revocation order, injunction or restraining order, or similar order entered or issued by any state, federal or other regulatory authority or by any court, concerning the investment fund shares which are being or have been registered in this State or any other securities of the issuer currently being or proposed to be offered to the public, if the matter which is the subject of, or the failure to disclose the existence of, such order would in this State constitute a violation of subsection E, F, G, H, I or J of Section 12 of this Act. The obligation contained in this subsection H shall continue until such time as offers and sales of the investment fund shares registered under this Section 7 are no longer being made in this State by the applicant or registrant.

I.Any document being filed pursuant to this Section 7 shall be deemed filed, and any fee being paid pursuant to this Section 7 shall be deemed paid, upon the date of actual receipt thereof by the Secretary of State.

J.The Secretary of State may require by rule or regulation the payment of an additional fee for the filing of information or documents required to be filed by this Section 7 which have not been filed in a timely manner. Such fees shall be deposited into the Securities Investors Education Fund and use to promote public awareness of the dangers of securities fraud.

815 ILCS 5/7

P.A. 89-209, eff. 1/1/1996; 89-626, eff. 8/9/1996; 90-70, eff. 7/8/1997.