Asset-Backed Securities Issuers (ICA Rule 3a-7)

Overview

An issuer of “asset-backed securities” (“ABS”) can benefit from an exclusion from the definition of “investment company” subject to conditions, including that (i) it does not issue redeemable securities, (ii) the securities that it does issue make payments to holders based primarily on the cashflows from the assets that the issuer owns, (iii) its securities sold in public offerings are rated investment grade (that restriction does not apply to securities sold in private placements to accredited investors, sales to qualified institutional buyers and to sales to certain persons involved in the organization of the issuer or an affiliate), and (iv) its assets generally convert into cash within a finite time period. ABS issuers also may benefit from exclusions from the CFTC’s definition of “commodity pool.” See generally the topic page on the CPO / CTA Registration Requirement and the no-action letters on that page. For information about the offering of ABS issuers, see the topic page on Asset-Backed Securities.

For a comprehensive list of exemptions and exclusions from registration available to investment companies, see the topic page on Exemptions from Registration under the Investment Company Act.

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