SEC Staff Grants a Closed-End Fund No-Action Relief Under Rule 486(b) Covering Securities Other Than Common Stock

February 22, 2018

The staff of the Division of Investment Management (Staff) of the U.S. Securities and Exchange Commission (SEC or Commission) on February 14, 2018 issued a no-action letter (Letter) that would specifically permit the requesting registered closed-end fund (Requesting Fund) to file immediately effective amendments to its shelf registration statement, pursuant to Rule 486(b) under the Securities Act of 1933 (Securities Act), where the registration statement covers the issuance of securities other than common stock.

Highlights

  • Absent no-action or other relief to rely on Rule 486(b) (Rule 486(b) relief), each post-effective amendment to a shelf registration statement of a closed-end management investment company (closed-end fund) other than an interval fund must be reviewed by the Staff and declared effective by the Commission.
  • Rule 486(b) allows interval funds to avoid the standard SEC review process and file immediately effective amendments that solely update fund financial statements and/or make certain specified changes to their shelf registration statements.
  • Previous no-action letters granting Rule 486(b) relief to closed-end funds (Previous Rule 486(b) Letters) generally included reference to the fact that the requesting closed-end funds had shelf registration statements on file under which the funds could issue common stock.
  • The Letter is significant because the Staff specifically acknowledged that the Requesting Fund has filed, and had declared effective by the Commission, a shelf registration statement pursuant to which the Requesting Fund has registered, and may issue, common stock, preferred stock, subscription rights representing rights to purchase common stock (subscription rights), and debt securities.

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