Page:United States Statutes at Large Volume 72 Part 1.djvu/1672

 PUBLIC LAW 86-866-SEPT. 2, 1958 401.

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by a trust described in section 401(a) shall not be treated as a loan made without the receipt of adequate security if— " (1) such obligation is acquired— " (A) on the market, either (i) at the price of the obligation prevailing on a national securities exchange which is registered with the Securities and Exchange Commission, or (ii) if the obligation is not traded on such a national securities exchange, at a price not less favorable to the trust than the offering price for the obligation as established by current bid and asked prices quoted by persons independent of the issuer; " (B) from an underwriter, at a price (i) not in excess of the public offering price for the obligation as set forth in a prospectus or offering circular filed with the Securities and Exchange Commission, and (ii) at which a substantial portion of the same issue is acquired by persons independent of the issuer; or " (C) directly from the issuer, at a price not less favorable to the trust than the price paid currently for a substantial portion of the same issue by persons independent of the issuer; "(2) immediately following acquisition of such obligation— " (A) not more than 25 percent of the aggregate amount of obligations issued in such issue and outstanding at the time of acquisition is held by the trust, and " (B) at least 50 percent of the aggregate amount referred to in subparagraph (A) is held by persons independent of the issuer; and "(3) immediately following acquisition of the obligation, not more than 25 percent of the assets of the trust is invested in obligations of persons described in subsection (c)." (b)

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[72 S T A T.

LOANS TO EMPLOYERS W H O ARE PROHIBITED FROM PLEDGING

ASSETS.—Section 503 is further amended by adding after subsection (h) (as added by subsection (a) of this section) the following new subsection: " (i) LOANS W I T H RESPECT TO W H I C H EMPLOYERS ARE PROHIBITED FROM PLEDGING CERTAIN ASSETS.—Subsection (c)(1) shall not apply

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to a loan made by a trust described in section 401(a) to the employer (or to a renewal of such a loan or, if the loan is repayable upon demand, to a continuation of such a loan) if the loan bears a reasonable rate of interest, and if (in the case of a making or renewal) — "(1) the employer is prohibited (at the time of such making or renewal) by any law of the United States or regulation thereunder from directly or indirectly pledging, as security for such a loan, a particular class or classes of his assets the value of which (at such time) represents more than one-half of the value of all his assets; "(2) the making or renewal, as the case may be, is approved in writing as an investment which is consistent with the exempt purposes of the trust by a trustee who is independent of the employer, and no other such trustee had previously refused to give such written approval; and "(3) immediately following the making or renewal, as the case may be, the aggregate amount loaned by the trust to the employer, without the receipt of adequate security, does not exceed 25 percent of the value of all the assets of the trust. For purposes of paragraph (2), the term 'trustee' means, with respect to any trust for which there is more than one trustee who is independent of the employer, a majority of such independent' trustees.

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