RegAlert2019-10-17
Added · Updated
SEC Investment Management FAQ: Business Development Companies and Section 61(a) of the Investment Company Act of 1940
The Division of Investment Management staff clarifies that non-traded business development companies may comply with section 61(a)(2)(D)(ii) of the Investment Company Act of 1940 by offering either a single repurchase offer or four separate quarterly offers, with repurchase prices based on current net asset value. The staff indicates it would not recommend enforcement action if a non-traded BDC repurchases shares more quickly than the statutory four-quarter schedule, provided it discloses the anticipated schedule and considers the impact on remaining shareholders. Additionally, the staff states that such repurchases are not required to be conducted under section 23(c) of the 1940 Act or sections 13(e) and 14(e) of the Securities Exchange Act of 1934, although utilizing those frameworks is permitted. The obligation to offer repurchase rights applies even if a non-traded BDC lists its shares on a national securities exchange after receiving the requisite approval, but these rights do not transfer to subsequent purchasers.
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Oct. 17, 2019
The staff of the Division of Investment Management has prepared the following responses to inquiries received in connection with section 61(a) of the Investment Company Act of 1940 (the “1940 Act”). These responses are meant to assist business development companies (“BDCs”) that have obtained the requisite approvals for lowering their asset coverage in offering and conducting repurchases of their shares in accordance with section 61(a)(2)(D)(ii) of the 1940 Act. If you have questions or would like to provide feedback on these FAQs, please contact the Division’s Chief Counsel’s Office at (202) 551-6821.
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Source: Securities and Exchange Commission — original document · Summary generated with machine assistance and reviewed before publication; the authoritative text is the regulator's original document. How RegAlert works
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