[Federal Register Volume 85, Number 54 (Thursday, March 19, 2020)]
[Notices]
[Pages 15841-15843]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-05705]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 33817/March 13, 2020]
Investment Company Act of 1940; Order Under Section 6(C) and
Section 38(A) of the Investment Company Act of 1940 Granting Exemptions
From Specified Provisions of the Investment Company Act and Certain
Rules Thereunder; Commission Statement Regarding Prospectus Delivery
The current outbreak of coronavirus disease 2019 (COVID-19) was
first reported on December 31, 2019. The disease has led to disruptions
to transportation, including buses, subways, trains and airplanes, and
the imposition of quarantines around the world. The Commission has
heard from industry representatives that COVID-19 may present
challenges for boards of directors of registered management investment
companies and business development companies (``BDCs'') to travel in
order to meet the in-person voting requirements under the Investment
Company Act of 1940 (the ``Investment Company Act'' or ``the Act'') and
rules thereunder. In addition, we recognize that registered management
investment companies and unit investment trusts (together, ``registered
funds'') may face challenges if, as a result of COVID-19, personnel of
registered fund managers or other third-party service providers that
are necessary to prepare these reports become unavailable, or only
available on a limited basis, in: (i) Preparing or transmitting annual
and semi-annual shareholder reports; and/or (ii) timely filing Forms N-
CEN and N-PORT. We also understand that due to recent market movements
certain registered closed-end funds (``closed-end funds'') and BDCs may
seek to call or redeem securities and may face challenges in providing
the advance notice required under Rule 23c-2. Finally, we appreciate
that there may be difficulties in the timely delivery of registered
fund prospectuses. In light of the current situation, we are issuing
this Order providing an exemption from certain requirements of the
Investment Company Act and a statement regarding prospectus delivery
obligations of registered funds.
Section 6(c) of the Investment Company Act provides that the
Commission may conditionally or unconditionally exempt any person,
security or transaction, or any class or classes of persons, securities
or transactions, from any provision or provisions of the Investment
Company Act, or any rule or regulation thereunder, if and to the extent
that such exemption is necessary or appropriate in the public interest
and consistent with the protection of investors and the purposes fairly
intended by the policy and provisions of the Investment Company Act.
Section 38(a) of the Investment Company Act provides that the
Commission may make, issue, amend and rescind such rules and
regulations and such orders as are necessary or appropriate to the
exercise of the powers conferred upon the Commission under the
Investment Company Act.
I. Time Period for the Exemptive Relief
The time period for the relief specified in this Order is as
follows:
For the relief in Sections II and V of this Order, the
relief is limited to the period from and including the date of this
Order to June 15, 2020.
For the relief in Sections III and IV of this Order, the
relief is limited to filing or transmittal obligations, as applicable,
for which the original due date is on or after the date of this Order
but on or prior to April 30, 2020.
The Commission intends to continue to monitor the current
situation. The time period for any or all of the relief may, if
necessary, be extended with any additional conditions that are deemed
appropriate, and the Commission may issue other relief as necessary or
appropriate.
II. In-Person Board Meeting Requirements for Registered Management
Investment Companies and BDCs
In light of the current and potential effects of COVID-19, the
Commission finds that the exemptions set forth below:
are necessary and appropriate in the public interest and
consistent with the protection of investors and the purposes fairly
intended by the policy and provisions of the Investment Company Act;
and are necessary and appropriate to the exercise of the powers
conferred on it by the Investment Company Act.
The necessity for prompt action of the Commission does not permit
prior notice of the Commission's action.
Accordingly, it is ordered, pursuant to Sections 6(c) and 38(a) of
the Act:
That for the period specified in Section I, a registered management
investment company or BDC and any investment adviser of or principal
underwriter for such registered management investment company or BDC is
exempt from the requirements imposed under sections 15(c) and 32(a) of
the Investment Company Act and Rules 12b-1(b)(2) and 15a-4(b)(2)(ii)
under the Investment Company Act that votes of the board of directors
of either the registered management investment company or BDC be cast
in person, provided that:
(i) Reliance on this Order is necessary or appropriate due to
circumstances related to current or potential effects of COVID-19;
(ii) the votes required to be cast at an in-person meeting are
instead cast at a meeting in which directors may participate by any
means of communication that allows all directors participating to hear
each other simultaneously during the meeting; and
(iii) the board of directors, including a majority of the directors
who are not interested persons of the registered management investment
company or BDC, ratifies the action taken pursuant to this exemption by
vote cast at the next in-person meeting.
III. Forms N-CEN and N-PORT Filing Requirements
Disruptions to transportation, and limited access to facilities,
personnel, and third party service providers as a result of COVID-19
could hamper the efforts of registered funds with filing obligations to
meet their filing deadlines. At the same time, investors and the
Commission have an interest in the timely availability of required
information about their investments, and we remind registered funds who
are
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relying on this Order to continue to evaluate their obligations to make
materially accurate and complete disclosures in accordance with the
federal securities laws.
In light of the current and potential effects of COVID-19, the
Commission finds that the exemptions set forth below:
Are necessary and appropriate in the public interest and
consistent with the protection of investors and the purposes fairly
intended by the policy and provisions of the Investment Company Act;
and are necessary and appropriate to the exercise of the powers
conferred on it by the Investment Company Act.
The necessity for prompt action of the Commission does not permit
prior notice of the Commission's action.
Accordingly, it is ordered, pursuant to Section 6(c) and 38(a) of
the Investment Company Act:
That for the period specified in Section I, a registered fund that
is required to file Form N-CEN pursuant to Rule 30a-1 under the
Investment Company Act, or Form N-PORT pursuant to Rule 30b1-9 under
the Investment Company Act, is temporarily exempt from such form filing
requirements where the conditions below are satisfied.
Conditions
(a) The registered fund is unable to meet a filing deadline due to
circumstances related to current or potential effects of COVID-19;
(b) Any registered fund relying on this Order promptly notifies the
Commission staff via email at IM-EmergencyRelief@sec.gov stating:
(1) That it is relying on this Order;
(2) a brief description of the reasons why it could not file its
report on a timely basis; and
(3) the estimated date by which it expects to file the report.
(c) Any registered fund relying on this Order includes a statement
on the applicable registered fund's public website briefly stating that
it is relying on this Order and the reasons why it could not file its
reports on a timely basis;
(d) The registered fund required to file such Form N-CEN or Form N-
PORT files such report as soon as practicable, but not later than 45
days after the original due date; and
(e) Any Form N-CEN or Form N-PORT filed pursuant to this Order must
include a statement of the filer that it relied on this Order and the
reasons why it was unable to file such report on a timely basis.
IV. Transmittal of Annual and Semi-Annual Reports to Investors Required
by the Investment Company Act and the Rules Thereunder
For the reasons cited in Section III above, we believe that relief
is warranted for the preparation or transmittal by registered funds of
annual and semi-annual reports to investors. In light of the current
and potential effects of COVID-19, the Commission finds that the
exemptions set forth below:
Are necessary and appropriate in the public interest and consistent
with the protection of investors and the purposes fairly intended by
the policy and provisions of the Investment Company Act; and are
necessary and appropriate to the exercise of the powers conferred on
it by the Act.
The necessity for prompt action of the Commission does not permit
prior notice of the Commission's action.
Accordingly, it is ordered, pursuant to Sections 6(c) and 38(a) of
the Investment Company Act: That for the period specified in Section I,
a registered management investment company is temporarily exempt from
the requirements of Section 30(e) of the Investment Company Act and
Rule 30e-1 thereunder to transmit annual and semi-annual reports to
investors where the conditions below are satisfied; and
For the period specified in Section I, a registered unit investment
trust is temporarily exempt from the requirements of Section 30(e) of
the Investment Company Act and Rule 30e-2 thereunder to transmit annual
and semi-annual reports to unitholders where the conditions below are
satisfied.
Conditions
(a) The registered fund is unable to prepare or transmit the report
due to circumstances related to current or potential effects of COVID-
19;
(b) Any registered fund relying on this Order promptly notifies the
staff via email at IM-EmergencyRelief@sec.gov stating:
(1) that it is relying on this Order;
(2) a brief description of the reasons why it could not transmit
its report on a timely basis; and
(3) the estimated date by which it expects to transmit the report;
(c) Any registered fund relying on this Order includes a statement
on the applicable registered fund's public website briefly stating that
it is relying on this Order and the reasons why it could not prepare
and transmit its reports on a timely basis; and
(d) The registered fund transmits the reports to shareholders as
soon as practicable, but not later than 45 days after the original due
date and files the report within 10 days of its transmission to
shareholders.
V. Timing of Filing Form N-23c-2 With the Commission Required by the
Investment Company Act and the Rules Thereunder
For the reasons cited in Section III above, we believe that relief
is warranted for closed-end funds and BDCs with respect to the 30-day
notice requirement in Rule 23c-2(b) under the Investment Company Act.
In light of the current and potential effects of COVID-19, the
Commission finds that the exemptions set forth below:
Are necessary and appropriate in the public interest and consistent
with the protection of investors and the purposes fairly intended by
the policy and provisions of the Act; and are necessary and
appropriate to the exercise of the powers conferred on it by the
Act.
The necessity for prompt action of the Commission does not permit
prior notice of the Commission's action.
Accordingly, it is ordered, pursuant to Section 6(c) and 38(a) of
the Investment Company Act:
That for the period specified in Section I, closed-end funds and
BDCs are temporarily exempt from the requirement to file with the
Commission notices of their intention to call or redeem securities at
least 30 days in advance under Sections 23(c) and 63, as applicable, of
the Investment Company Act and Rule 23c-2 thereunder if such company
files a Form N-23C-2 (``Notice'') with the Commission fewer than 30
days prior to, including the same business day as, the company's call
or redemption of securities of which it is the issuer where the
conditions below are satisfied:
Conditions
(a) The closed-end fund or BDC (``Company'') relying on this Order:
(1) Promptly notifies Commission staff via email at IM-EmergencyRelief@sec.gov stating:
a. That it is relying on this Order; and
b. a brief description of the reasons why it needs to file a Notice
fewer than 30 days in advance of the date set by the Company for
calling or redeeming the securities of which it is the issuer;
(2) ensures that the filing of the Notice on an abbreviated time
frame is permitted under relevant state law and the Company's governing
documents;
(3) files a Notice that contains all the information required by
Rule 23c-2 prior to:
a. Any call or redemption of existing securities;
b. the commencement of any offering of replacement securities; and
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c. providing notification to the existing shareholders whose
securities are being called or redeemed.
VI. Commission Statement Regarding Prospectus Delivery
For the reasons cited in Section III above, the Commission takes
the position that it would not provide a basis for a Commission
enforcement action if a registered fund does not deliver to investors
the current prospectus of the registered fund where the prospectus is
not able to be timely delivered because of circumstances related to
COVID-19 and delivery was due during the limited period specified
below, provided that the sale of shares to the investor was not an
initial purchase by the investor of shares of the registered fund and:
(1) The registered fund:
(a) Notifies Division of Investment Management staff via email at
IM-EmergencyRelief@sec.gov stating: (1) That it is relying on this
Commission position; (2) a brief description of the reasons why it or
any other person required could not deliver the prospectus to investors
on a timely basis; and (3) the estimated date by which it expects the
prospectus to be delivered;
(b) Publishes on its public website that it intends to rely on the
Commission position and briefly states the reasons why it could not
deliver the prospectus on a timely basis;
(c) Publishes its current prospectus on its public website; and
(2) Delivery was originally required on or after the date of this
Order but on or prior to April 30, 2020, and the prospectus is
delivered to investors as soon as practicable, but not later than 45
days after the date originally required.
By the Commission.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-05705 Filed 3-18-20; 8:45 am]
BILLING CODE 8011-01-P