New SEC Rule Amendments to Help Closed-End Funds, BDCs

“The amendments we are adopting will modernize the offering process for eligible funds in a way that, as borne out by our experience with operating companies, will benefit both investors in these funds and the companies in which they invest,” according to SEC Chairman Jay Clayton.

“It is my hope, particularly when many of our small and medium sized businesses are facing profound challenges not of their own making, that these and other modernization efforts will provide those businesses more efficient access to financing,” he said in a statement.

The rule amendments call for the implementation of certain provisions of the Small Business Credit Availability Act and the Economic Growth, Regulatory Relief and Consumer Protection Act relating to BDCs and other closed-end funds, the SEC said. More specifics on the amendments can be found on the SEC website.

BDCs are a type of closed-end fund established by statute that mainly invest in small and developing companies. Congress established BDCs in 1980 to make capital more readily available to small, developing and financially troubled companies that did not have ready access to the public capital markets or other forms of conventional financing. In 2018, Congress directed the SEC to adopt rules that allow BDCs and other closed-end investment companies to use the securities offering rules that are already available to operating companies.