On February 28, 2019, the staff of the Securities and Exchange Commission’s Division of Investment Management issued a no-action letter to the Independent Directors Council permitting board members of a business development company to vote by telephone, video conference or other remote means in certain circumstances. This modernized position softens, but does not eliminate, the unnecessary burden for BDCs and their boards to adhere to certain in-person voting requirements. For example, the Investment Company Act of 1940 and rules thereunder provide that the approval or renewal of an advisory contract requires the vote of directors at an in-person board meeting. The no-action relief may be relied upon if a director is unable to meet at an in-person board meeting as a result of unforeseen or emergency circumstances. Such circumstances could include illness or death, including of family members, weather events or natural disasters, acts of terrorism and disruptions in travel that prevent some or all directors from attending an in-person board meeting. Additionally, either no material changes may be proposed at the board meeting to the existing contract, plan or arrangement or the material aspects of the proposed new contract, plan or arrangement must have been previously discussed at a prior in-person board meeting (without a vote). If relying upon the no-action relief, the directors are required to ratify the prior approval at the next in-person board meeting. A copy of the no-action letter may be found using the following link: http://business.cch.com/srd/independent-directors-council-022819.pdf
