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TRUST INDENTURE ACT OF 1939
(References in brackets ( ) are to title 15, United States Code) 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:
SEC. 301. (77aaa] This title, divided into sections as follows, may be cited as the “Trust Indenture Act of 1939":
TABLE OF CONTENTS
Sec. 301. Short title.
(a) Persons eligible for appointment as trustee.
(c) Applicability of section.
(a) Periodic reports.
(f) Parties may provide for additional evidence. Sec. 315. Duties and responsibility of the trustee.
(a) Duties prior to default.
(e) Undertaking for costs.
Sec. 316. Directions and waivers by bondholders; prohibition of impairment of hold
er's right to payment.
NECESSITY FOR REGULATION SEC. 302. [77bbb) (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, 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,