SEC Extends Conditional Relief Relaxing Deadlines under the Investment Company Act and Investment Advisers Act if Affected By COVID-19 Subject to Notice to the SEC and to Investors

As discussed in our prior publication, on March 13, the Securities and Exchange Commission (SEC) issued two orders under the Investment Company Act of 1940 (the Investment Company Act) and the Investment Advisers Act of 1940 (the Investment Advisers Act) relaxing requirements for in-person board meetings and extending deadlines for certain filing and delivery requirements.

On March 25, the SEC issued two new orders which supersede and extend the filing periods covered by the earlier action. The SEC has extended the deadline for advisers to file Form ADV until June 30, has allowed fund boards to meet virtually and avoid meeting in person until August 15, and has extended the deadline for delivery of certain shareholder reports and fund filings until June 30, subject to notice to the SEC and to fund shareholders.  

Below is a summary of the SEC actions.

Investment Company Act

In-Person Board Meeting Requirements Permitted to be Virtual

A registered management investment company or business development company (BDC) and any investment adviser of or principal underwriter for such registered management investment company or BDC is exempt from the requirements that votes of the board of directors be cast in person, provided that:

• Reliance on this New Order is necessary or appropriate due to circumstances related to 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; and
• The board of directors, including a majority of the directors who are not interested persons, ratifies the action taken pursuant to this exemption by vote cast at the next in-person meeting.

The relief under this section lasts from March 13 to August 15.

Forms N-CEN and N-PORT Filing Requirements

A registered fund that is 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 filing these forms with the SEC if:

• The fund is unable to meet a filing deadline due to circumstances related to current or potential effects of COVID-19;
• Any fund relying on this order promptly notifies the SEC staff via email at IM-EmergencyRelief@sec.gov stating that it is relying on this order;
• Any fund relying on this order must disclose on its website that it is relying on this order to not file these forms;
• The fund files the applicable report as soon as practicable, but not later than 45 days after the original due date; and
• Any Form N-CEN or Form N-PORT filed late pursuant to the order must include a statement that the fund relied on the order, and the reasons why it was unable to file the report on time.

The relief under this section is limited to filing obligations for which the original due date is on or after March 13 but on or prior to June 30.

Annual and Semi-Annual Reports to Investors Deadlines Extended

Investment companies and unit investment trusts are temporarily exempt from the requirements of Section 30(e) of the Investment Company Act and Rule 30e-1, which require these funds to deliver annual and semi-annual reports to investors, if the following conditions are satisfied:

• The fund or trust is unable to prepare or transmit the report due to circumstances related to current or potential effects of COVID-19;
• The fund or trust relying on this order promptly notifies the SEC staff via email at IM-EmergencyRelief@sec.gov stating that it is relying on this order;
• The fund or trust relying on this order includes a statement on the applicable fund or trust’s public website briefly stating that it is relying on this order; and
• The fund or trust transmits the late reports to shareholders as soon as practicable, but not later than 45 days after the original due date and files the report within 10 days of its transmission to shareholders.

The relief under this section lasts from March 13 to June 30.

Deadlines for Filing Form N-23C-2 Relating to Notices of Redemption Extended

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 (Notice) with the SEC 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 where the conditions below are satisfied:

The closed-end fund or BDC relying on this order must:

• promptly notify SEC staff via email at IM-EmergencyRelief@sec.gov stating that it is relying on this extension;
• ensure that the filing of the Notice on an abbreviated time frame is permitted under relevant state law and the company’s governing documents; and
• file a Notice that contains all the information required by Rule 23c-2 prior to: (i) any call or redemption of existing securities; (ii) the commencement of any offering of replacement securities; and (iii) providing notification to the existing shareholders whose securities are being called or redeemed.

The relief under this section is lasts from March 13 to August 15.

Prospectus Delivery Requirements Relaxed

The SEC takes the position that it would not provide a basis for a 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 and delivery was due during the limited period specified below, provided that the sale of shares to the investor was not an initial purchase by the investor of shares of the registered fund and the following conditions are satisfied:

• The registered fund: (i) notifies SEC staff via email at IM-EmergencyRelief@sec.gov stating that it is relying on this SEC position; (ii) publishes on its public website that it intends to rely on the SEC position; and (iii) publishes its current prospectus on its public website; and
• Delivery was originally required on or after March 25 but on or prior to June 30 and the prospectus is delivered to investors as soon as practicable, but not later than 45 days after the date originally required.

Investment Advisers Act ADV and Form PF Filing Deadlines Extended

Form ADV and Form PF Filing Requirements

• A registered investment adviser is exempt from the requirements: (a) under Rule 204-1 under the Investment Advisers Act to file an amendment to Form ADV; and (b) under Rule 204-3(b)(2) and (b)(4) related to the delivery of Form ADV Part 2 (or a summary of material changes) to existing clients;
• An exempt reporting adviser is exempt from the requirements under Rule 204-4 under the Investment Advisers Act to file reports on Form ADV; and
• A registered investment adviser that is required by Section 204(b) of and Rule 204(b)-1 under the Investment Advisers Act to file Form PF is exempt from those requirements.

The above relief is limited to filing or delivery obligations, as applicable, for which the original due date is on or after March 13 but on or prior to June 30. The adviser must satisfy the following conditions:

• The adviser is unable to meet a filing deadline or delivery requirement due to circumstances related to current or potential effects of COVID-19;
• The adviser relying on the order with respect to the filing of Form ADV or delivery of its brochure, summary of material changes, or brochure supplement promptly notifies the SEC staff via email at IARDLive@sec.gov and discloses on its public website (or if it does not have a public website, promptly notifies its clients and/or private fund investors of) that it is relying on this order;
• Any investment adviser relying on this order with respect to filing Form PF required by Rule 204(b)-1 must promptly notify the SEC via email at FormPF@sec.gov stating that it is relying on this order; and
• The investment adviser files the Form ADV or Form PF, as applicable, and delivers the brochure (or summary of material changes) and brochure supplement required by Rule 204-3(b)(2) and (b)(4) under the Investment Advisers Act, as soon as practicable, but not later than 45 days after the original due date for filing or delivery, as applicable.

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