Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Regulation and Compliance > Federal Regulation > SEC

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

Your article was successfully shared with the contacts you provided.
SEC building (Photo: Diego Radzinschi/ALM)

The Securities and Exchange Commission voted to adopt rule amendments that will allow business development companies and other closed-end funds to benefit from the securities offering rules that are already available to operating companies.

The reforms will enable eligible funds to engage in the same “streamlined” registration process that has long been available to operating companies, including modernized communications and prospectus delivery procedures and requirements, the SEC said Wednesday.

The amendments were designed to “reduce regulatory costs and facilitate capital formation, particularly for small and mid-sized businesses, while modernizing disclosures to streamline the way in which funds provide valuable information to investors,” according to the SEC.

As a result of the reforms, most of which will become effective Aug. 1, BDCs and other closed-end funds will be better able to respond to market opportunities, the SEC said. Also included are disclosure requirements and new structured data requirements that will make it easier for investors and others to analyze fund data.

“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.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.