SEC Issues Guidance on Deregistration of Investment Companies

The staff of the SEC Division of Investment Management (the "staff") issued a Guidance Update regarding the deregistration of investment companies and the accompanying Form N-8F. In the Guidance, the staff stated that it reviews Form N-8F applications on a rolling basis and that, if there are no deficiencies in an application, the staff will prepare a notice to inform the public that the application has been filed. Generally, the guidance notes, the staff issues notices of deregistration on the last Friday of every month. Following a 25-day period, the SEC will then issue an order granting a request to deregister unless a hearing regarding the application has been ordered.

The staff provided guidance on responding to specific sections on Form N-8F which, among other items, included the following:

• Item 2: This item requests the fund's name. The response should provide the name of the registrant as it appears on EDGAR and should not include the name of any particular series of the registrant.
• Item 11: This item requests information regarding the fund's adviser. If the fund is a unit investment trust ("UIT"), the response to this item should be "not applicable" or include an explanation that the fund does not have an adviser.
• Item 15(a): This item requests information regarding whether the fund's board of directors has approved the action leading to deregistration. For a UIT, the response to this item should be "not applicable" or include an explanation that, as a UIT, the fund does not have a board. However, in the case of an insurance company separate account organized as a UIT, this remains the correct response even if the board of the insurance company associated with the separate account has approved the action leading to deregistration. In the case of a UIT that is liquidating in accordance with its terms, the response may include a statement to that effect.
• Item 25: An applicant filing on the basis of "Abandonment of Registration" may either be (a) a fund that registered but, prior to offering securities publicly, determined to wind up or (b) a fund that will continue to operate but qualifies for an exclusion from the definition of "investment company" under Investment Company Section 3(c)(1) or 3(c)(7). In many cases, applicants filing for "Abandonment" do not identify clearly which of these categories applies, making it difficult for the staff to evaluate whether deregistration on this basis is appropriate. The staff offers the following guidance for responding to the form when the fund is winding up or becoming a private fund.
  • Funds winding up. In the case of a fund that has never offered securities publicly and plans to wind up, the applicant should check "no" in Item 25 and include the following in either Item 12 or Item 25: Applicant has never made a public offering of its securities and does not propose to make a public offering or engage in business of any kind.
  • Registered funds becoming private funds. In the case of a fund that will continue to operate as a private fund, the applicant should check "yes" in Item 25.
  • Separate accounts becoming private funds. In the case of an insurance company separate account that will continue to operate as a private fund, the response to Item 25 should set out the information described above.

See: Staff Guidance.