IDC Requests Additional Relief with Respect to Fund Board In-Person Voting Requirements

On September 2, 2021, the Unbiased Administrators Council submitted a letter to Sarah ten Siethoff, Performing Director of the SEC’s Division of Funding Administration, requesting a minimum of six months’ advance discover earlier than the SEC withdraws its present reduction from the Funding Firm Act of 1940’s in-person voting necessities relevant to fund boards. The IDC additionally requested that the SEC present fund boards with better flexibility concerning the 1940 Act’s in-person voting necessities on a everlasting foundation.

In March 2020, in response to the outbreak of the COVID-19 pandemic, the SEC issued an exemptive order offering reduction from sure 1940 Act provisions, together with the in-person voting necessities relevant to fund boards with respect to the approval or renewal of advisory and underwriting agreements, the approval or renewal of distribution preparations and the appointment of auditors, topic to sure circumstances. This reduction was initially supposed to be accessible solely via June 2020, however the SEC issued subsequent extensions later in March 2020 and once more in June 2020. Within the June 2020 order, the SEC acknowledged that the reduction would terminate upon subsequent public discover, offered that a minimum of two weeks’ discover can be given earlier than the expiration of the reduction. A abstract of the SEC’s present reduction is obtainable here.

The IDC cited the persevering with challenges fund boards face due to the COVID-19 pandemic, together with transportation limitations, vaccination considerations and rising COVID variants, in addition to the commonly favorable expertise fund boards have had assembly just about by way of videoconference through the pandemic. The IDC requested that the SEC not withdraw the present reduction earlier than the conclusion of the pandemic and that the SEC present a minimum of six months’ advance discover earlier than such withdrawal. The IDC acknowledged that such advance discover, amongst different issues, would offer better certainty and permit fund boards and different events to develop protocols and procedures to safely and successfully return to assembly in individual.

As well as, additionally citing the commonly favorable expertise fund boards have had assembly just about by way of videoconference, the IDC requested that the SEC present everlasting reduction from the 1940 Act’s in-person voting necessities in order that fund boards would have the flexibleness to meet just about after the conclusion of the pandemic. The IDC prompt that such reduction needs to be topic to sure circumstances, together with that boards undertake insurance policies and procedures for the conduct of digital conferences, together with applicable know-how and safety protocols; that administrators who take part just about give you the chance to interact in contemporaneous communications with different individuals; and that administrators have the means to establish every individual casting a vote just about throughout a board assembly.

A duplicate of the IDC’s letter is obtainable here.

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