Growth Act Provides Parity For Closed-End Funds
The Economic Growth, Regulatory Relief and Consumer Protection Act, which was signed into law last month, modifies various regulatory requirements (see earlier posts on Regulation A+ and an Investment Act exemption). This includes changes for closed-end investment companies.
A closed-end company is a publicly-traded investment management company that sells a limited number of shares to investors in an IPO.
Section 509 requires the Securities and Exchange Commission to promulgate rules to allow a closed-end company to use the SEC’s offering and proxy rules that are available to other issues of securities. This will reduce filing requirements and restrictions of communications with investors in certain circumstances.
The SEC has one year from the date the Growth Act is enacted to propose, and two years to finalize, the rules. If the agency fails to meet these deadlines, qualifying closed-end companies will be deemed to be eligible issuers under the SEC’s regulations.