SEC Adopts Amendments to Redemption Fee Rule and Extends Compliance Dates

Date: September 27, 2006


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.


This advisory may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgement of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel. This document may be considered attorney advertising in some jurisdictions. Some of the design images and photographs in this document may be of actors depicting fictional scenes.