Federal Register: SEC Publishes Technical Corrections to Offering Process for BDCs and Closed-End Funds

Technical corrections to an SEC final rule and form amendments affecting business development companies ("BDCs") and registered closed-end investment companies were published in the Federal Register. The corrections make amendments to instructions cited in the Federal Register's original release of the final rule.

As previously covered, the amendments are intended to "modify the registration, communications, and offering processes" for BDCs and registered closed-end investment companies.

The new rule amendments:

• expand the definition of "well-known seasoned issuer" to capture eligible funds in order to permit them to quickly sell securities "off the shelf" using short-form registration statements, provided that such funds include disclosures in their annual reports;

• make Securities Act Rule 486 ("Effective Date of Post-Effective Amendments and Registration Statements Filed by Certain Closed-End Management Investment Companies") available to registered closed-end funds and BDCs that are involved in continuous offerings, so that they may immediately make effective changes to a registration statement;

• allow certain funds to use communications rules designed to reduce regulatory costs and provide information to investors more quickly (e.g., permitting the use of the "free writing prospectus");

• permit closed-end funds that function as interval funds to register an indefinite number of shares and pay SEC fees only when such shares are actually sold;

• eliminate the requirement for funds to provide new purchasers with copies of all previously filed materials, which instead may be made available on a website; and

• impose tagging requirements concerning registration statement information.

Affected funds will also be required to tag data in their registration statements. BDCs will be required to submit financial information of the same type that operating companies submit.

The rule, form amendments and technical corrections go into effect on August 1, 2020. The amendment regarding registration fee payments by interval funds and certain exchange-traded products will go into effect on August 1, 2021.