of this title, or the provisions of any applicable law, the consent of the holders of securities outstanding under any such indenture or agreement; or "(2) would impose an undue burden on the issuer, having due regard to the public interest and the interests of investors." SEC. 3. Subsection (b) of section 305 of the Trust Indenture Act of 1939, as amended, is amended to read as follows: "(b) If the Commission finds, after notice given prior to the effective date of a registration statement and after opportunity for hearing (at a time fixed by the Commission) within fifteen days after such notice, that "(1) the security to which such registration statement relates has not been or is not to be issued under an indenture; “(2) such indenture does not conform to the requirements of sections 310 to 318, inclusive; or "(3) any person designated as trustee under such indenture is not eligible to act as such under subsection (a) of section 310 or has any conflicting interest as defined in subsection (b) of section 310; the Commission shall issue an order refusing to permit the registration statement to become effective until the objections on which such order is based have been met. If and when the Commission deems that such objections have been met, the Commission shall so declare and the registration statement shall become effective at the time provided in subsection (a) of section 8 of the Securities Act of 1933, or upon the date of such declaration-whichever date is the later." SECURITIES AND EXCHANGE COMMISSION-COMPARATIVE PRINT OF PROPOSED AMENDMENTS TO THE TRUST INDENTURE ACT OF 1939, AS AMENDED [Deletions in brackets; additions in italics] Section 1 would amend paragraph (8) of section 304(a) of the Trust Indenture Act of 1939, as amended, as follows: “(a) The provisions of this title shall not apply to any of the following securities: *** "(8) any security which has been or is to be issued otherwise than under an indenture, but this exemption shall not be applied within a period of twelve consecutive months to more than [$250,000] $500,000 aggregate principal amount of any securities of the same issuer; or" Section 2 would amend subsection (c) of section 304 of the Trust Indenture Act of 1939, as amended, as follows: "(c) The Commission shall, on application by the issuer and after opportunity for hearing thereon, by order exempt from any one or more provisions of this title any security issued or proposed to be issued under any indenture under which, at the time such application is filed, securities referred to in paragraph (3) of subsection (a) of this section are outstanding or on January 1, 1959, such securities were outstanding, if and to the extent that the Commission finds that compliance with such provision or provisions, through the execution of a supplemental indenture or otherwise "(1) would require, by reason of the provisions of such indenture, or the provisions of any other indenture or agreement made prior to the enactment of this title, or the provisions of any applicable law, the consent of the holders of securities outstanding under any such indenture or agreement; or "(2) would impose an undue burden on the issuer, having due regard to the public interest and the interests of investors." Section 3 would amend subsection (b) of section 305 of the Trust Indenture Act of 1939, as amended, as follows: "(b) [The Commission shall issue an order prior to the effective date of registration refusing to permit such a registration statement to become effective, if it finds that-] If the Commission finds, after notice given prior to the effective date of a registration statement and after opportunity for hearing (at a time fixed by the Commission) within fifteen days after such notice, that "(1) the security to which such registration statement relates has not been or is not to be issued under an indenture; “(2) such indenture does not conform to the requirements of sections 310 to 318, inclusive; or "(3) any person designated as trustee under such indenture is not eligible to act as such under subsection (a) of section 310 or has any conflicting interest as defined in subsection (b) of section 310; [but no such 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 and when the Commission deems that the objections on which such order was based have been met, the Commission shall enter an order rescinding such refusal order, and the registration shall become effective at the time provided in section 8(a) of the Securities Act of 1933, or upon the date of such rescission, whichever shall be the later.] the Commission shall issue an order refusing to permit the registration statement to become effective until the objections on which such order is based have been met. If and when the Commission deems that such objections have been met, the Commission shall so declare and the registration statement shall become effective at the time provided in subsection (a) of section 8 of the Securities Act of 1933, or upon the date of such declaration, whichever date is the later. SUPPLEMENT In section 3, the language between the last bracketed material and the final sentence of the section should be revised to read as follows: "the Commission shall issue an order suspending the effectiveness of the registration statement until the objections on which such order is based have been met." SUPPLEMENT TO COMPARATIVE PRINT OF PROPOSED AMENDMENTS TO THE TRUST INDENTURE ACT OF 1939, AS AMENDED [Deletions in brackets; additions in italics] Section 1 would amend paragraph (8) of section 304 (a) of the Trust Indenture Act of 1939, as amended, as follows: “(a) The provisions of this title shall not apply to any of the following securities: *** "(8) any security which has been or is to be issued otherwise than under an indenture, but this exemption shall not be applied within a period of twelve consecutive months to more than [$250,000] $500,000 aggregate principal amount of any securities of the same issuer; or”. Section 2 would amend subsection (c) of section 304 of the Trust Indenture Act of 1939, as amended, as follows: "(c) The Commission shall, on application by the issuer and after opportunity for hearing thereon, by order exempt from any one or more provisions of this title any security issued or proposed to be issued under any indenture under which, at the time such application is filed, securities referred to in paragraph (3) of subsection (a) of this section are outstanding or on January 1, 1959, such securities were outstanding, if and to the extent that the Commission finds that compliance with such provision or provisions, through the execution of a supplemental indenture or otherwise "(1) would require, by reason of the provisions of such indenture, or the provisions of any other indenture or agreement made prior to the enactment of this title, or the provisions of any applicable law, the consent of the holders of securities outstanding under any such indenture or agreement; or "(2) would impose an undue burden on the issuer, having due regard to the public interest and the interests of investors." Section 3 would amend subsection (b) of section 305 of the Trust Indenture Act of 1939, as amended, as follows: "(b) [The Commission shall issue an order prior to the effective date of registration refusing to permit such a registration statement to become effective, if it finds that-] If the Commission finds, after notice given prior to the effective date of a registration statement and after opportunity for hearing (at a time fixed by the Commission) within fifteen days after such notice, that-"(1) the security to which such registration statement relates has not been or is not to be issued under an indenture; "(2) such indenture does not conform to the requirements of sections 310 to 318, inclusive; or "(3) any person designated as trustee under such indenture is not eligible to act as such under subsection (a) of section 310 or has any conflicting interest as defined in subsection (b) of section 310; [but no such 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 and when the Commission deems that the objections on which such order was based have been met, the Commission shall enter an order rescinding such refusal order, and the registration shall become effective at the time provided in section 8(a) of the Securities Act of 1933, or upon the date of such rescission, whichever shall be the later.] the Commission shall issue an order refusing to permit the registration statement to become effective until the objections on which such order is based have been met. If and when the Commission deems that such objections have been met, the Commission shall so declare and the registration statement shall become effective at the time provided in subsection (a) of section 8 of the Securities Act of 1933, or upon the date of such declaration, whichever date is the later." SUPPLEMENT In section 3, the language between the last bracketed material and the final sentence of the section should be revised to read as follows: "the Commission shall issue an order suspending the effectiveness of the registration statement until the objections on which such order is based have been met." TRUST INDENTURE ACT OF 19391 AS AMENDED TO AUGUST 10, 1954 [PUBLIC NO. 253-76TH CONGRESS] [CHAPTER 411-1ST SESSION] [S. 2065] AN ACT To provide for the regulation of the sale of certain securities in interstate and foreign commerce and through the mails, and the regulation of the trust indentures under which the same are issued, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Act entitled "An Act to provide full and fair disclosure of the character of securities sold in interstate and foreign commerce and through the mails, and to prevent frauds in the sale thereof, and for other purposes", approved May 27, 1933, as amended, is amended by adding at the end thereof the following: Short Title TITLE III SECTION 301. This title, divided into sections as follows, may be cited as the "Trust Indenture Act of 1939": Necessity for Regulation SEC. 302. (a) Upon the basis of facts disclosed by the reports of the Securities and Exchange Commission made to the Congress pursuant to section 211 of the Securities Exchange Act of 1934 and otherwise disclosed and ascertained, it is hereby declared that the national public interest and the interest of investors in notes, bonds, debentures, evidences of indebtedness, and certificates of interest or participation therein, which are offered to the public, are adversely affected (1) when the obligor fails to provide a trustee to protect and enforce the rights and to represent the interests of such investors, notwithstanding the fact that (A) individual action by such investors for the purpose of protecting and enforcing their rights is rendered impracticable by reason of the disproportionate expense of taking such action, and (B) concerted action by such investors in their common interest through representatives of their own selection is impeded by reason of the wide dispersion of such investors through many States, and by reason of the fact that information as to the names and addresses of such investors generally is not available to such investors; (2) when the trustee does not have adequate rights and powers, or adequate duties and responsibilities, in connection with matters relating to the protection and enforcement of the rights of such investors; when, notwithstanding the obstacles to concerted action by such investors, and the general and reasonable assumption by such investors that the trustee is under an affirmative duty to take action for the protection and enforcement of their rights, trust indentures (A) generally provide that the trustee shall be under no duty to take any such action, even in the event of default, unless it receives notice of default, demand for action, and indemnity, from the holders of substantial percentages of the securities outstanding thereunder, and (B) generally relieve the trustee from liability even for its own negligent action or failure to act; (3) when the trustee does not have resources commensurate with its responsibilities, As amended by Public Law No. 577, 83d Congress, approved August 10, 1954, and effective 60 days after the date of its enactment. The text prior to amendment, if any, is set forth in the footnotes. or has any relationship to or connection with the obligor or any underwriter of any securities of the obligor, or holds, beneficially or otherwise, any interest in the obligor or any such underwriter, which relationship, connection, or interest involves a material conflict with the interests of such investors; (4) when the obligor is not obligated to furnish to the trustee under the indenture and to such investors adequate current information as to its financial condition, and as to the performance of its obligations with respect to the securities outstanding under such indenture; or when the communication of such information to such investors is impeded by the fact that information as to the names and addresses of such investors generally is not available to the trustee and to such investors; (5) when the indenture contains provisions which are misleading or deceptive, or when full and fair disclosure is not made to prospective investors of the effect of important indenture provisions; or (6) when, by reason of the fact that trust indentures are commonly prepared by the obligor or underwriter in advance of the public offering of the securities to be issued thereunder, such investors are unable to participate in the preparation thereof, and, by reason of their lack of understanding of the situation, such investors would in any event be unable to procure the correction of the defects enumerated in this subsection. (b) Practices of the character above enumerated have existed to such an extent that, unless regulated, the public offering of notes, bonds, debentures, evidences of indebtedness, and certificates of interest or participation therein, by the use of means and instruments of transportation and communication in interstate commerce and of the mails, is injurious to the capital markets, to investors, and to the general public; and it is hereby declared to be the policy of this title, in accordance with which policy all the provisions of this title shall be interpreted, to meet the problems and eliminate the practices, enumerated in this section, connected with such public offerings. Definitions SEC. 303. When used in this title, unless the context otherwise requires (1) Any term defined in section 2 of the Securities Act of 1933,2 and not otherwise defined in this section, shall have the meaning assigned to such term in such section 2. (2) The terms "sale", "sell", "offer to sell", "offer for sale", and "offer" shall include all transactions included in such terms as provided in paragraph (3) of section 2 of the Securities Act of 1933, except that an offer or sale of a certificate of interest or participation shall be deemed an offer or sale of the security or securities in which such certificate evidences an interest or participation if and only if such certificate gives the holder thereof the right to convert the same into such security or securities. (3) The term "prospectus" shall have the meaning assigned to such term in paragraph (10) of section 2 of the Securities Act of 1933, except that in the case of securities which are not registered under the Securities Act of 1933, such term shall not include any communication (A) if it is proved that prior to or at the same time with such communication a written statement if any required by section 306 was sent or given to the persons to whom the communication was made, or (B) if such communication states from whom such statement may be obtained (if such statement is required by rules or regulations under paragraphs (1) (2) of subsection (b) of section 306) and, in addition, does no more than identify the security, state the price thereof, state by whom orders will be executed and contain such other information as the Commission, by rules or regulations deemed necessary or appropriate in the public interest or for the protection of investors, and subject to such terms and conditions as may be prescribed therein, may permit.3 The words "as heretofore amended" were deleted after "Securities Act of 1933." (2) The term "sale" or "sell" shall include all transactions included in such term as provided in paragraph (3) of section 2 of the Securities Act of 1933, as heretofore amended, except that a sale of a certificate of interest or participation shall be deemed a sale of the security or securities in which such certificate evidences an interest or participation if and only if such certificate gives the holder thereof the right to convert the same into such security or securities. (3) The term "prospectus" shall have the meaning assigned to such term in paragraph (10) of section 2 of the Securities Act of 1933, as heretofore amended, except that in the case of securities which are not registered under the Securities Act of 1933, such term shall not include any communication (A) if it is proved that prior to or at the same time with such communication a written statement meeting the requirements of subsection (c) of |