SEC Adopts Amendments to Redemption Fee Rule and Extends Compliance Dates

Date: September 27, 2006

Overview

On September 27, 2006, the Securities and Exchange Commission adopted amendments to Rule 22c-2 under the Investment Company Act of 1940. The amendments:

  • Limit the types of intermediaries with which funds must enter into written shareholder information agreements,
  • Address the rule’s applicability to situations where there are “chains of intermediaries;” and
  • Clarify the consequences of a fund’s failure to execute a shareholder information agreement with an intermediary.

When the Commission adopted Rule 22c-2 in March 2005, it established a compliance date of October 16, 2006. The Commission has now extended the compliance date for portions of the rule. The revised compliance dates are as follows:

October 16, 2006 - Date by which a fund’s board must consider the adoption of a redemption fee.

April 16, 2007 - Date by which a fund must enter into shareholder information agreements with intermediaries.

October 16, 2007 - Date by which a fund must be able to request and promptly receive shareholder identity and transaction information under its shareholder information agreements.

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