Investment Company Status

It is crucial to determine the Investment Company Act (ICA) status of commingled or corporate vehicles that invest in securities. Those defined as investment companies under the Act are subject to its regulations, which prohibit an unregistered investment company from engaging in any business in interstate commerce and makes its contracts voidable.

As the capital markets have grown and evolved, complex structures have developed that raise concerns under the ICA. Representing a wide range of companies from the largest and most renowned financial institutions to start-ups, Dechert’s financial services group assists issuers in determining and managing their investment company status. Working with our corporate, securities, finance and real estate attorneys as well as representatives of the issuer, we analyze the company’s structure, ownership, balance sheet and other relevant information to determine whether it is an “investment company” required to register under the ICA.

Most commonly, Dechert is called upon to provide advice in connection with corporate financings, but we also act as ongoing or special counsel to companies dealing with acute status concerns. As this area continues to change, we have sought to shape policy through communications with the SEC staff on behalf of our clients. We have successfully addressed issues raised by the SEC relating to a company’s investment company status in the context of disclosure review and otherwise. We have also assisted companies in obtaining various types of SEC staff guidance as well as exemptive relief.

Dechert attorneys regularly counsel clients with regard to the applicability of the Investment Company Act of 1940 to all types of entities including U.S. domestic and international issuers, including collateralized debt obligation issuers, public and private investment funds and other companies, specialty finance companies, real estate companies, REITs and other investment vehicles, leasing companies, operating companies, joint ventures and incubators. We have also served as special counsel to law firms requiring specialized expertise in this area. Our clients include a wide range of companies from the largest and most renowned financial institutions to start-ups, both in the United States and abroad.