Interval Fund Modernization; Expansion of Multiple Share Class to Registered Closed-End Management Investment Companies and Business Development Companies

Securities and Exchange Commission

The Securities and Exchange Commission (the "Commission") is proposing to amend the rule under the Investment Company Act of 1940 that allows registered closed-end management investment companies and business development companies (collectively, "regulated closed-end funds") to make repurchase offers to shareholders at net asset value ("NAV") at periodic intervals pursuant to a fundamental policy ("interval funds"). The proposed amendments would increase flexibility in the rule's repurchase offer framework and modify the rule's liquidity management requirements. The proposal is designed to modernize the framework applicable to these funds by allowing them to better match the liquidity profile of the assets in which they invest, while continuing to provide the operational infrastructure and investor protection of the Investment Company Act of 1940. We also propose amending certain rules that would permit regulated closed-end funds to issue multiple share classes, consistent with routine exemptive relief provided to these funds, and to require certain related disclosure in funds' prospectuses. We further propose to require disclosures in all regulated closed-end fund shareholder reports, a legend in their prospectuses, and an increase in the dollar amount used for the prospectus expense example, to provide investors with information about fund expenses similar to that provided by registered open-end funds. As a result of these amendments for interval funds and multiple share class regulated closed-end funds, we propose to rescind existing related exemptive orders.