SEC Extends Relief for Virtual Meetings of Fund Boards

Investment Management Update

Date: July 06, 2020

On June 19, the SEC announced that it was extending portions of a previously issued order (March Order) that, pursuant to Sections 6(c) and 38(a) of the Investment Company Act of 1940, as amended (1940 Act), granted exemptions from the 1940 Act’s in-person meeting requirements. In extending the March Order, the SEC noted that it continued to monitor the ongoing effects of COVID-19 and recognized the risks posed to boards of directors when traveling to meet the in-person voting requirements.

Specifically, the March Order exempts registered funds, business development companies (BDCs), advisers and underwriters of registered funds from the in-person board meeting requirements of Sections 15(c) and 32(a), Rules 12b-1(b)(2) and 15(a)-(4)(b)(ii) under the 1940 Act, for the period March 13, 2020, to December 31, 2020, so long as:

  • Reliance on the March Order is necessary due to the current or potential effects of COVID-19.
  • 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.
  • The board of directors, including a majority of the directors who are not interested persons of the registered investment company or BDC, ratifies the action taken pursuant to this exemption by a vote cast at the next in-person meeting.

The SEC noted that it was not extending relief provided in other sections of the March Order, including the accompanying statement regarding prospectus delivery, which will expire as provided.

FOR MORE INFORMATION

For more information, please contact:

Andrew J. Davalla
614.469.3353
Andrew.Davalla@ThompsonHine.com

Brian Doyle-Wenger
614.469.3294
Brian.Doyle-Wenger@ThompsonHine.com

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment 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.

© 2020 THOMPSON HINE LLP. ALL RIGHTS RESERVED.