SEC Issues COVID-19 Relief Orders for Funds & Investment Advisors

Thoughtware Alert Mar 26, 2020
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On March 13, 2020, the SEC announced regulatory relief for funds and investment advisors whose operations may be affected by coronavirus disease 2019 (COVID-19). This relief is designed to enable funds and advisors to meet certain regulatory obligations and continue their operations, while recognizing there may be temporary disruptions beyond their control.

If you plan to rely on an order, there are requirements to notify SEC staff of your intention to rely on the order and to disclose information on your website about your intention to do so.

SEC orders provide the following temporary exemptive relief:

Relief Related to the Investment Company Act of 1940

  • Registered management investment companies, business development companies and any investment adviser or principal underwriter of such companies from Investment Company Act sections and rules requiring certain agreements, plans or arrangements be approved by the company’s board of directors by an in-person vote due to circumstances related to the current or potential effects of COVID-19 (relief is from March 13, 2020, to June 15, 2020)
  • Registered management investment companies and unit investment trusts affected by COVID-19 from Form N-CEN and Form N-PORT filing deadlines (relief is for the original due date on or after March 13, 2020, but on or prior to April 30, 2020)
  • Registered management investment companies and unit investment trusts affected by COVID-19 from annual and semiannual report transmittal deadlines (relief is for the original due date on or after March 13, 2020, but on or prior to April 30, 2020), and
  • Registered closed-end investment companies and business development companies affected by COVID-19 from the requirement to file Form N-23C-2 at least 30 days prior to calling or redeeming securities (relief is from March 13, 2020, to June 15, 2020)

Relief Related to the Investment Advisers Act of 1940

  • Registered investment advisers and exempt reporting advisers affected by COVID-19 to file an amendment to Form ADV or file reports on Form ADV part 1A, respectively
  • Registered investment advisers affected by COVID-19 from requirements to deliver amended brochures, brochure supplements or a summary of material changes to clients where the disclosures aren’t able to be timely delivered because of circumstances related to COVID-19, and
  • Private fund advisers affected by COVID-19 from Form PF filing requirements
  • The time period for relief is limited to filing or delivery obligations for which the original due date is on or after March 13, 2020, but on or prior to April 30, 2020

SEC Statement of Delivery of Fund Prospectuses

The SEC also took the position—as described in the orders—that it wouldn’t provide a basis for SEC enforcement action if a registered fund doesn’t deliver to investors the current prospectus of the registered fund where the prospectus isn’t able to be timely delivered because of circumstances related to COVID-19, subject to the conditions described in the orders.

SEC Guidance for Conducting Annual Meetings in Light of COVID-19 Concerns

The staff of the Division of Corporation Finance and the Division of Investment Management issued guidance to assist issuers, shareholders and other market participants affected by COVID-19 with meeting their obligations under the federal proxy rules.  

  • If an issuer has already mailed and filed its definitive proxy materials, it can notify shareholders of a change in the date, time or location of its annual meeting without mailing additional soliciting materials or amending its proxy materials if it:
    • Issues a press release
    • Files the announcement on the EDGAR database
    • Takes all reasonable steps to inform intermediaries in the proxy process
  • To the extent an issuer plans to conduct a virtual or hybrid shareholder meeting, it must notify its shareholders, intermediaries and other market participants of such plans and provide clear directions as to the logistical details (note the ability to conduct a virtual meeting is governed by state law, where permitted, and the issuer’s governing documents)
  • Issuers are encouraged, to the extent feasible under state law, to provide shareholder proponents or their representatives with the ability to present their proposals through alternative means, such as by phone, during the 2020 proxy season

For further information or assistance related to these latest orders, contact your BKD Trusted Advisor™ or use the Contact Us form below.

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