On March 13, 2020, the Securities and Exchange Commission (“SEC”) announced conditional, temporary relief for funds (available here) and both registered and exempt reporting investment advisers (available here) impacted by COVID-19. The relief covers in-person board meetings by fund boards and certain filing and delivery requirements for both advisers and funds. Funds and advisers that wish to take advantage of the relief must satisfy the conditions set forth in the applicable orders.
Relief Related to In-Person Board Meetings
The relief exempts mutual funds, closed-end funds, rgistered management investment companies, business development companies, and any investment adviser or principal underwriter for such an entity from the requirements under Sections 15(c) and 32(a) of the Investment Company Act and Rules 12b-1(b)(2) and 15a-4(b)(2)(ii) thereunder that votes of the board of directors of such companies be cast in person, provided that:
- Reliance on the above relief is necessary or appropriate due to circumstances related to 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, including a majority of non-interested directors, ratifies the action taken at the next in-person meeting.
Unless extended, this relief applies until June 15, 2020.
Relief Related to Filings and Delivery Requirements.
The SEC’s relief also extends to a variety of filing and delivery requirements (detailed below) applicable to advisers and funds. The SEC’s relief applies to the following filing and delivery requirements:
In each case, the relief is limited to advisers and funds that are unable to prepare or transmit the required report due to circumstances related to COVID-19 and requires the entity relying on the relief to provide “prompt” notice to the SEC staff of such a fact at IM-EmergencyRelief@SEC.gov. The notice to the SEC must provide the information as specified in the applicable SEC relief order.
- A registered fund 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 filing requirements, subject to conditions articulated in the orders.
- Registered management investment companies are 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 conditions articulated in the orders are satisfied
- Registered unit investment trusts are 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.
- Closed-end funds and BDCs are temporarily exempt from the requirement to file with the SEC 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 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.
- The SEC also stated that it would not provide a basis for an SEC 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, subject to the conditions described in the Orders.
Unless extend, this relief applies until April 30, 2020, except that the relief related to Form N-23C-2 applies until June 15, 2020.