On April 21, 2020, the US Securities and Exchange Commission proposed new rule 2a-5 under the Investment Company Act of 1940, as amended (the “Investment Company Act”), which is intended to address valuation practices and the role of the board of directors with respect to the fair value of the investments of an investment company or business development company registered under the Investment Company Act (each, a “fund”). Specifically, proposed rule 2a-5 would establish requirements in connection with the determination of fair value in good faith of fund investments for purposes of Section 2(a)(41) of the Investment Company Act, as well as permit a fund’s board of directors to assign this fair value determination to the fund’s investment adviser, subject to board oversight and certain other conditions.
A closer look at the key requirements under the proposal are described in the following Mayer Brown Legal Update:
SEC Proposes Valuation Rule for Registered Funds (authored by Peter McCamman, Adam Kanter, Leslie Cruz and Stephanie Monaco).
If you have any questions about the issues raised in this Legal Update or would like assistance with SEC regulatory or other related matters, please contact any of the above attorneys in our Investment Management practice.